Nebraska's economic development director spent Wednesday defending her agency's handling of a roughly $235 million grant program meant to revive North and South Omaha, as state lawmakers in Lincoln pressed her on stalled projects, staff turnover and grantees who say they still cannot get straight answers from the state. Maureen Larsen, director of the Nebraska Department of Economic Development, told the Legislature's Economic Recovery Special Committee that her agency is working through a backlog of compliance issues even as monthly payments are scheduled to continue until each grant is paid in full or December 31, 2027, whichever comes first.
A Program Built to Transform Distressed Neighborhoods
The North and South Omaha Recovery Grant program was designed to funnel federal COVID-19 recovery dollars, later swapped for state-funded projects to give grantees more flexibility on spending deadlines, into some of Nebraska's most distressed communities. By January 2024, the program had awarded funds to about 130 groups for proposed projects ranging from youth facilities and health clinics to a South Omaha park plaza makeover and a planned North Omaha Global Teleservices headquarters. According to Nebraska Examiner, the program awarded about $235 million in various allotments to some 130 entities, and by the end of 2025 nearly 70% of those pledged dollars had been distributed to awardees.
The committee itself was established in 2022, and Wednesday's hearing drew four lawmakers: North Omaha Sen. Terrell McKinney, the lone original committee member; South Omaha Sen. Margo Juarez, a new addition to the panel; Omaha Sen. Christy Armendariz; and Lincoln Sen. Jason Prokop. The session limited testimony to invited DED administrators, meaning grantees themselves did not speak directly to the committee.
McKinney Presses on Communication Breakdowns
McKinney, who has tracked the program since its inception, reported that multiple grantees had communication problems with DED staff that affected project execution. He also raised concerns about changing reporting requirements and delays he attributed to turnover among DED staff, and he expressed worry that some capital projects could still miss the spending deadline. McKinney called for bottlenecks to be cleared sooner rather than later.
Larsen responded by offering to investigate specific complaints if lawmakers would provide names of affected grantees. She acknowledged high turnover in DED's Omaha office, the team working directly with North and South grantees, and said many Omaha-based DED employees have left for jobs with the very grantees they once worked with as state employees. She noted that DED cannot compete on pay with some nonprofits and private-sector employers but said the agency tries. The Pillen administration is hiring additional staff and temporary workers to increase capacity on the Omaha team, Larsen said.
No Projects Formally Closed, Some Nearly Finished
Larsen told lawmakers that no North-South grant projects have officially closed, though she said some are effectively finished. She said DED is awaiting final documentation after front-loading funding to recipients and maintained that DED is complying with auditor findings, statutory requirements, and its own rules while establishing new grant-management practices and policies. Grantees remain subject to reporting and receipt requirements. She encouraged grantees to finish their work promptly and said recipients remain subject to contractual and statutory requirements, with DED offering technical expertise along the way.
The statute governing the program, administered through DED's Economic Recovery and Incentives Division, directs grants to public and private entities to respond to the negative impact of COVID-19, according to the Nebraska Legislature. It also provides that remaining funds are paid monthly until a grant is paid in full or December 31, 2027, whichever occurs sooner.
Fallen Giant Films Remains a Flashpoint
No case has drawn more scrutiny than Fallen Giant Films, run by Randy J. Goodwin, who received a $5 million grant to build a film industry intended to retain youth and grow the local economy. DED has since cited significant noncompliance in the financial management of the company's grant funds and suspended the project's activities, with roughly $1.7 million still undisbursed, Nebraska Examiner has reported. The agency has said it corresponded with Fallen Giant nearly two dozen times since the suspension and conducted an onsite technical-support visit in February, while offering to release $65,215 for specified costs, including storage fees and key personnel, during the review.
DED has said it has not completely terminated any North-South grantee's funding outright, but three entities had received noncompliance letters and temporary funding suspensions.
Leadership Turnover at the Top
The hearing also came amid leadership changes inside DED's economic recovery division. Javier Saldaña Jr., the division's former administrator, left this year to become Omaha's deputy chief of staff for economic development, starting his new city post on May 26, according to the Omaha Daily Record. Ashley Drake has since been serving as interim administrator of that division. Larsen herself became DED's interim director in July 2025 before being named permanent director that November.
Lawmakers Reserve Judgment on Next Steps
Juarez, in her first hearing on the committee, expressed major concerns afterward and identified possible communication gaps about what DED expects from grantees. McKinney said after the meeting that he was still processing the discussion and awaiting answers to questions DED staff had not yet addressed, adding that he would remain concerned until the grant program and all of its projects are completed. Lawmakers would be the ones to decide next steps if projects remain unfinished as the December 31, 2027, payment cutoff approaches.
