PROVIDENCE, R.I. (WPRI) - Board members for the Providence Economic Development Partnership (PEDP) on Wednesday approved an overhaul of the quasi-public agency's bylaws that will require board approval before all taxpayer-funded small business loans are issued.
The changes came seven months after the Department of Housing and Urban Development (HUD) cited the city for lacking "adequate oversight" over the agency in a scathing report that found that "approximately 60 percent" of all loans issued between 2001 and 2011 were in default.
In the past, staff members were allowed to sign off on loans of up to $75,000 without approval of the 15-member board, which is chaired by Mayor Angel Taveras. A seven-member loan committee approved all other loans.
Under the new rules, the loan committee will still vote on all loan applications, but final approval will be required by the board.
"The buck stops here with us," Taveras said during the meeting.
The PEDP's $15.6 million loan portfolio is funded in part through HUD's Community Development Block Grant (CDBG) program, but all new loans are on hold while HUD continues its review of the agency, according to spokeswoman Rhonda Siciliano.
"Except for prior approval from HUD, no CDBG-funded economic development activities have been funded, and no CDBG housing related activities are being carried out," Siciliano told WPRI.com. "The economic development program is being revamped and we are completing analysis on the loan portfolio to reach a resolution of findings."
The PEDP is expected to face further scrutiny next month from the Providence City Council, which has long asked for more oversight over the distribution of loans. Ways and Means Committee chairman David Salvatore said he plans to hold a hearing to discuss how the council can monitor the agency.
"Greater, more consistent oversight is a key component to restoring confidence in the Providence Economic Development Partnership," Salvatore told WPRI.com. "I commend Mayor Taveras for his reforms, which increase transparency and accountability."