Full Review of Providence Loan Program Coming
Thursday, December 08, 2011
The government agency that oversees the funds awarded to the Providence loan program that has come under scrutiny in recent months says it will begin a comprehensive review of the program at the beginning of the year.
As GoLocalProv first reported in October, about 25 percent of the small business loans dished out by the Providence Economic Development Partnership (PEDP) were at least 90 days past-due, leaving the city stuck with $3,358,637.67 in delinquent loans. A lawyer for the PEDP said the nonprofit agency was only pursuing collections against 11 companies that had received just shy of $1.4 million in funds.
Now the Department of Housing and Urban Development (HUD) says it wants to take a closer look at the delinquency rate of the loans. The PEDP’s funds come from HUD in the form of Community Development Block Grant (CDBG) money, which is awarded to cities across the country every year.
On Wednesday, HUD spokesperson Rhonda Siciliano confirmed that all new PEDP loans must receive a written determination from the Community Planning and Development Offices in Boston. She said HUD is currently looking at two loan requests at this time and noted that because of complaints received about the PEDP’s loan delinquency rate, “a full review of PEDP’s HUD-funded loan portfolio is expected to take place at the beginning of 2012.”
Questionable Tactics
The PEDP has a 16 member board that includes prominent members of the business community and politicians and is chaired by Mayor Angel Taveras. Jim Bennett, the city’s new Economic Development Director, oversees the program. Many of the loans that are currently past-due were awarded during Mayor David Cicilline’s administration.
The agency has been accused of using questionable tactics to hide the high delinquency rate, including making decisions to not write off several loans that are long past-due and simply converting other loans into grants.
Since 2008, a loan that went to the fund the Bank of America Skating Center and another that was awarded to the Trinity Repertory Company have been written off and converted to grants.
More Oversight
When GoLocalProv first reviewed the PEDP, the agency’s lawyer, Joshua Teverow, defended the organization’s practices, arguing that many businesses would not have been created without help from the city. He acknowledged that the default rates are higher than ever before, but said he believes the economy is the reason, not a failure to correctly assess applicants by the PEDP.
Both Teverow and Thomas Deller, the PEDP’s former executive director, have said the loans tend to be a risky endeavor for the city. In most cases, business owners must be turned away by two banks in order to qualify.
“It’s no guts, no glory,” Teverow said in October. “The nature of economic development is that you’re supposed to take a chance.”
But City Councilman David Salvatore has called for more oversight of the program. Salvatore has 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.
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Related Articles
- City Used Business Loan Fund to Help Pay for Skating Rink
- Providence Loan Fallout: Delinquent Organization Received Cash From State Too
- Providence Stiffed for Millions in Loan Money
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Comments:
donatello gori
8:12am on Thursday, December 08, 2011
And the million dollar question is: Who will be the scapegoat?
Charles Drago
11:39am on Thursday, December 08, 2011
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Actually, the question is "Who will David Cicilline try to scapegoat for his own (criminal?) mismanagement of the loan program?
For this juror:
Incompetence on the part of David Cicilline? Beyond reasonable doubt.
Lying about his own incompetence by David Cicilline? Beyond reasonable doubt.
Criminal acts related to the loans program committed by David Cicilline? Who knows? It would be no more or less likely than discovering that gambling is taking place in Casablanca.
Charles Drago
11:46am on Thursday, December 08, 2011
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As another news source has reported:
"The results of a six-month Hummel Report investigation into a taxpayer-funded business loan program run by the city of Providence. The program had a default rate so high under the Cicilline administration that federal officials overseeing the lending initiative have stepped in, wanting to know why. Jim Hummel discovers loans going to the politically-connected and some who never should have gotten the money to begin with.
"There were 97 loans made during the Cicilline years: 58 percent are either delinquent or in default, 20 percent are current, 14 percent have been paid off; and the rest have either been written off or the payments have been put on hold.
"By contrast from 1995 to September 2002 under the administration of former mayor Vincent Cianci: the city gave out 204 loans; 75 percent were paid off, 13 percent written off, 8 percent delinquent or in default and 4 percent are still current on payments."
So much for any attempts by David Cicilline to spin the numbers and/or to scapegoat Buddy Cianci.
Do voters in Rhode Island's 1st Congressional District want to send the lying, dishonorable David Cicilline back to Washington?
Should David Cicilline be sent to prison instead?
Stay tuned.
anthony sionni
11:50am on Thursday, December 08, 2011
“The nature of economic development is that you’re supposed to take a chance.” So let them use there own money then and not have the taxpayers pay for the loans!!!!
anthony sionni
11:55am on Thursday, December 08, 2011
I hope they check good into the S.P.D.C. and Urban League which ran ecotope/ Cleanscape. They were top on the delinquent list, there getting loans to create jobs, then they lay everyone off and close the company all the while there p[paying themselves nice big salaries right up until the end.Cicilline was the one giving out all the money,crook!