Some of the low- or no-interest loans, overseen by the city IDA and ranging from $3,500 to $100,000, haven’t shown any repayments at all since they were taken out, according to the report — in some cases not in five years or more.
George M. Hartsfield, chairman of the IDA’s board, says he can’t be sure those figures are accurate. He declines to comment further.
The IDA is an independent economic-development body that receives no money in the city budget. It acts essentially as a conduit for the city to make loans to businesses, which the city is forbidden by law to do so directly. Its roughly $225,000 annual budget is funded primarily by fees from bond deals it makes and by interest on investments. It is managed by seven volunteer board members appointed by City Council. It has no full-time staff.
The IDA loan programs in question — Enterprise Zone Incentive Loan (EZIL, pronounced “easel”) and the Commercial Area Revitalization Effort (CARE) programs — are meant to jump-start development in low-income areas of the city.
The reports, dated Dec. 31, 2001 and March 25, 2002, also say 23 businesses have defaulted on $555,566 worth of EZIL loans. Another 17 businesses are anywhere from three to 63 payments behind on $716,472 worth of CARE loans, the report says.
For example, as of Dec. 31, 2001, First Baptist Church, run by Delegate Dwight Jones, D-Richmond, was $19,153 in arrears on two loans totaling $105,500 that were to be used to develop 1416-1418 Hull St., according to the report. The larger of the loans, for $90,500, hadn’t received any payment for 17 months, the report says. (A message left for First Baptist official Tonya S. Scott wasn’t returned last week.)
Some current and former members of the IDA board say many of the loans showing as delinquent are actually the result of poor record keeping.
These people point out that the IDA’s books were kept for years by the city finance department. They maintain that the city so botched the job that many loans were never tracked and loan payments were never recorded. Although the IDA paid the city $100,000 a year to administer the loan programs and keep the books until 2001, “it was a complete mess,” says one former IDA board member. (The December 2002 report provided by the IDA says that no loans granted after July 2001 are delinquent.)
The board’s assistant secretary, attorney Ronald R. Wesley of Christian & Barton, says a 2000 audit found the IDA’s loan programs to be in order. Wesley provided Style with a review of loans and delinquencies dated Dec. 31, 2002, that reports $402,094 in delinquent loans out of $4.7 million in those two programs— a delinquency rate of 8.6 percent.
CARE loans are to be paid back in cash, while some EZIL loans can be forgiven with credits showing that the businesses increased their tax payments. Under the terms of the EZIL loans, a loan recipient could be considered in default if the business has not provided IDA with ITS tax records, has gone out of business or has moved out of the enterprise zone. — Greg Weatherford
