Providence's bad loans focus of meeting

PROVIDENCE, RI (WPRI) -  An embattled City of Providence not-for-profit agency that has made millions of dollars in taxpayer-funded loans that are now in default, will meet Tuesday to discuss a scathing "program review" by HUD.

The Providence Economic Development Partnership loans money to small businesses in the city. PEDP officials have said one requirement is that the applicants were turned down by at least 2 other financial institutions.

The U.S. Department of Housing and Urban Development, which has funded PEDP with millions of dollars, reviewed a decade of loans granted by the Providence agency from 2001 to 2011. According to its agenda, PEDP will meet Tuesday to review its ‘draft response’ to the ‘recommendations from HUD’.

Read HUD's Report

According to PEDP records forwarded to Target 12, as of this month, the Providence not-for-profit agency has more than $15.6 million dollars in outstanding loans to small businesses in the city. The same records indicate that 34 percent, or 42 of those loans, are in default. 12 percent, or 15 loans, are listed as delinquent.

Among the findings in the HUD report,  the federal agency ‘questioned or disallowed’ more than $1.5 million in money that HUD said PEDP used from its revolving loan fund, to pay for food, transportation, lodging and other administrative expenditures.

HUD ‘questioned or disallowed' $363,000 spent on those items in 2008, almost $543,000 in 2009 and more than $371,000 in 2010. The report indicated that all of this and the rest of $1.5 million was taxpayers' money, allocated to PEDP from the federal government.

In addition, HUD found that during the ten year period of loans that totaled millions of dollars, there was inadequate oversight, federal financial standards were not met and loan eligibility was not adequately documented.

Providence EDC director James Bennett who asked HUD to suspend PEDP’s loan granting powers after the report was released in July, did not return Target 12 phone calls for comment. The spokesman for Mayor Angel Taveras said neither Bennett nor the Mayor would be able to add any details to what might happen at Tuesday’s meeting.

PEDP by-laws empower the city’s mayor to serve as chairman of the agency's board. According to PEDP minutes, when Congressman David Cicilline was Mayor, he prompted the change that allowed the city's mayor to chair the PEDP board.

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