Providence suspends PEDP's loan powers

PROVIDENCE, RI (WPRI) - The Providence Economic Development Director suspended PEDP's power to make taxpayer funded loans following a review by a federal agency according to a spokesman for Mayor Angel Taveras.

David Ortiz told Target 12 what happens next will be discussed at the Providence Economic Development Partnership's meeting on Tuesday.  The non-profit agency’s by-laws empower the city’s mayor to serve as the chairman of its board. Records indicate, PEDP received $16.7 million in federal funds between 2003 and 2010.

Target 12 obtained the U.S. Department of Housing and Urban Development's ‘program review’ of PEDP that was released in July. HUD found that Providence ‘did not exercise adequate oversight over PEDP’. HUD also found that ‘procedures for loan modifications and write-offs were not adequate’. The document indicates HUD reviewed ‘selected business loans made during the period July 1, 2001-June10, 2011’.

Ortiz said Economic Development Director James Bennett made his decision to suspend PEDP's loan powers 'some time' after HUD's review was released. HUD requested an ‘action plan’ from PEDP within 30 days of its review. Ortiz said PEDP asked for and received an extension to put that plan together.  

According to PEDP records, the agency has approved millions of dollars in loans during the past decade. A U.S. Department of Commerce memo from June 2011 that was given to Target 12 stated that 21 of Providence EDC's 43 active loans were in default.  

Send news tips to Target 12 Investigator Walt Buteau at wbuteau@wpri.com and follow Walt on Twitter: @wbuteau