Complaints rise about South, North Omaha grant process as Friday announcement approaches

Up to $234 million in state funds are expected to be awarded

By: - January 25, 2024 5:45 am

OMAHA  — Dozens of North and South Omaha groups are expected to be awarded a chunk of up to $234 million in state funds on Friday for a variety of economic development projects.

Gov. Jim Pillen and Omaha Mayor Jean Stothert are among officials poised to announce the long-awaited decision on the grants during media events Friday.

An unprecedented effort to award multimillions of dollars in grants to North and South Omaha organizations is expected to help reverse generations of economic and social distress exacerbated by the pandemic. Shown here is North Omaha’s 24th and Lake Streets  intersection looking south. (Cindy Gonzalez/Nebraska Examiner)

But even before the winners are publicized, complaints are springing up — including Wednesday during legislative debate on a related but distinct proposal.

One South Omaha applicant who went through the lengthy process also has gone as far as to lodge complaints with the State Ombudsman’s Office, Attorney General’s Office, State Auditor’s Office and others.

‘Glaring’ errors alleged

Bob Pelshaw of the Pelshaw Group believes that the Department of Economic Development erred in scoring his application and at one point appeared to mistake his project for someone else’s.

He lists a number of concerns. 

In the end, the DED offered Pelshaw $50,000 — far below the nearly $10 million he had asked to help launch The Hub, a co-working business, art and training center in a South Omaha warehouse he planned to renovate.

Pelshaw asked the ombudsman for help in urging the DED to “correct glaring and intentional errors and to fairly rescore our project using all of the correct inputs.”

He hoped the attorney general would stop the grant distribution process until his and other scores were reviewed. 

But the Attorney General’s Office told the Nebraska Examiner on Wednesday that the DED is the appropriate agency to review the matter. The DED did not respond to a reporter’s questions. The Governor’s Office said the governor would discuss awards on Friday.

State Ombudsman Julie Rogers confirmed that her office had just received Pelshaw’s complaint and that her staff was in preliminary steps of reviewing it.

Authors of the Economic Recovery Act, Omaha State Sens. Justin Wayne and Terrell McKinney, and some other lawmakers voiced concerns Wednesday about the grant process.

The concerns came after Omaha State Sen. Mike McDonnell, a member of the North-South grant advisory committee, showed colleagues a list of apparent grant winners. The list reflected more than 120 organizations whose awards totaled about $234 million.

DED would not confirm whether the list, which was passed around Wednesday to lawmakers, was final.

‘Disconnect’

Wayne said a key concern is that so many of the awards were for $50,000, he questioned whether that was enough funding to create the kind of “transformational” change that lawmakers early on said they were seeking.

The largest two awards on the list were $39 million and $25 million.

Bob and Ilaamen Pelshaw of the Pelshaw Group (Courtesy of the Pelshaws)

The Olsson contractor group — originally hired to work with the legislative advisory committee to gather community input and vet applicants — in January 2023 whittled the field of about 365 applicants to 35 recommended projects. 

The DED later took over the selection process for the North and South Omaha grants.

State Sen. Lou Ann Linehan said she was not OK with what she called a “disconnect” between what architects of the Economic Recovery Act wanted and what appears to be happening.

In Pelshaw’s case, a $50,000 award for the Hub venture would not lead to the 400-plus jobs he and business partner wife Ilaamen initially projected.  There’s a possibility the vision could die altogether.

Pelshaw said the couple turned to other state officials when the DED stopped responding to their requests for proof that it followed “proper protocol” in scoring. The Pelshaws are filing a formal appeal to the DED demanding a rescore.

“I had to go for more drastic results,” Pelshaw said.

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Cindy Gonzalez
Cindy Gonzalez

Senior Reporter Cindy Gonzalez, an Omaha native, has more than 35 years of experience, largely at the Omaha World-Herald. Her coverage areas have included business and real estate development; regional reporting; immigration, demographics and diverse communities; and City Hall and local politics.

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