I-Team: Providence owed millions in unpaid loans
A stack of newspapers rests on the front door step. But you take one look at the place and you know they're not going anywhere.
Weeds have sprouted up and padlocks keep the chains on a gate nice and tight. The Liberty Elm Diner is just one Providence-based business that is now out of business after borrowing taxpayer money. The diner turned off its lights owing $30,059.
The money was loaned out by the Providence Economic Development Partnership, a city agency that deals with significant sums of federal tax dollars. As of July, $16,912,794 has been loaned through different types of programs.
"The public should know where their tax dollars are being spent, whether they're local dollars or federal dollars, and at that point the city becomes an investor of these businesses," said Providence City Councilman David Salvatore, who has been a proponent of more transparency at PEDP.
As an investor, the city has struggled, it's a known fact. Many loans went into default and a scathing report last year by Housing and Urban Development said the "city did not exercise adequate oversight over PEDP."
"A lot of normal business practices were not being used. It wasn't transparent. They were not going through a board. We were not consulting HUD," said Jim Bennett, who told the NBC 10 I-Team that has all changed.
Bennett is Mayor Angel Taveras' new man on the ground at Economic Development. The agency has gone through a transformation as of late, taking a more professional approach. All new loans need the approval of the board of directors, including the mayor, according to Bennett.
However, a look at PEDP's books shows quite a few businesses with thousands of dollars still owed in back payments. The total adds up to $2.7 million.
City records show 34 loans, roughly one-third of all loans, are more than a year past due and nine loans are more than five years past due.
The now-closed Scoreboard Restaurant on Chalkstone Avenue is 2,946 days or 8 years past due on its loan.
Ada's Creations on Broad Street is a restaurant and bar in the south end. The business is on the hook for $269,424 and last made a payment in June 2012.
Owner Acelia Terrero filed for bankruptcy six years ago. Court papers showed a comfortable life. A neatly kept home in Cranston, a $55,000 Mercedes-Benz in the driveway, which she lost. She wasn't paying the bills or the loan to the city.
Terrero told the I-Team that she does have the intention of paying the money back.
"Yes, I'm meeting with people at City Hall. The city of Providence doesn't help in the time I needed it, for my entertainment license and they closed my business for two years. What can I do? I lost a lot of money," Terrero said.
"It's a great example, a glaring example of what we're trying to fix. I can tell you she won't be getting a loan from the city of Providence anymore," said Bennett.
Salvatore is thinking toward the future and has proposed an amendment to the code of ordinances requiring the director of planning to make quarterly reports to the council on any loans issued by PEDP.
"Anytime a loan is made it should be made in daylight with public input," Salvatore said.
The city has taken legal action against delinquent debtors, even putting liens on property. In June 2012, $1.5 million in bad debt was written off the books as uncollectable.
Bennett provided the I-Team with a recent HUD letter, which expressed progress was being made at PEDP.