Controversial South Side Bar Stiffed City for $330k on PEDP Loan
Wednesday, March 07, 2012
The South Side bar that was recently dealt an 11 day suspension of its liquor license after a 19-year-old male was shot in the establishment’s parking lot is also more than 2,000 days late on a taxpayer-funded loan from the city of Providence, GoLocalProv has learned.
Ada’s Creations, located at 1137 Broad Street, owes the city $331,716.25, according to the latest aging report from the Providence Economic Development Partnership (PEDP), which awarded the massive loan to the bar over five years ago.
The bar is one of the most glaring examples of what critics call a flawed program that has shelled out millions of dollars to city businesses, many of which have gone belly up or are at least three months behind on payments. Records show 34 businesses are more than 1,000 days past due on their city loan.
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The shooting occurred on Feb. 18 after the alleged shooter, a 21 year-old male, had been partying inside the bar. According to a police complaint, there had been fights both inside and outside the bar on the night of the incident. The Providence Journal reported over the weekend that the bar also had a complaint against it for serving alcohol after its 2 a.m. closing time.
Ada’s has long been a popular fundraising destination for local politicians. Campaign finance reports show candidates and elected officials –including former Attorney General Patrick Lynch, State Senator Juan Pichardo, State Rep. Grace Diaz and City Councilwoman Carmen Castillo – have spent $8,985.52 on fundraising expenses at the bar since 2006.
Asked if the city was concerned about a bar that owes the city so much money also having crime problems, city spokesman David Ortiz said. “Mayor Taveras is concerned by any incidents of violence in Providence” and referred the matter to PEDP lawyer Joshua Teverow.
Teverow did not respond to a request for comment in time for publication.
Loans Are Risky
In September, GoLocalProv first reported that a quarter of all city-backed loans were delinquent while also highlighting a series of questionable decisions made by the PEDP, which has 16 board members and is now chaired by Mayor Taveras.
In some cases, loan payments were put on hold for businesses and since 2008, loans that went to fund the Bank of America Skating Center and the Trinity Repertory Company were written off and converted to grants.
The funds for the program are awarded to the city through the Community Development Block Grant (CDBG) issued by the U.S. Department of Housing and Urban Development (HUD). At the time, Teverow and city officials said that PEDP loans are only awarded after businesses are twice turned down by banks, making them last resort options.
“Therefore everyone who gets a loan from us has either been rejected by two banks or has been offered a loan that is not sufficient to do the project,” Thomas Deller, the PEDP’s former executive director said. “As a result our loans are very risky. Second, given this risk and the present economic climate, we have greater potential for delinquency. With that said, 25% delinquency is high. However, it is not our goal to put people out of business, but to give them every chance to succeed. We are concerned, we will work with our clients to give them every opportunity to succeed and we will continue to evaluate new loans to ensure that we aren't taking too much risk.”
PEDP Under Federal Review
After learning of the high default rate, at least one City Councilman called for more oversight of the program. Councilman David Salvatore argued that Providence taxpayers have an interest in knowing whether loan recipients are going to create jobs in the city.
“The best way to make that happen is to be sure that all the decisions related to the PEDP funds are being made in the light of day, with the opportunity for public input along the way,” Salvatore said.
But the fund has also caught the attention of the federal government. In December, HUD spokesperson Rhonda Siciliano confirmed that all new PEDP loans must receive a written determination from the Community Planning and Development Offices in Boston and said the agency was planning to take a closer look at the delinquency rate of the loans.
Last week, Siciliano said, “we expect the review to begin in the next few weeks.”
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