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untanglingwebs
El Supremo
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People always say someone is" comparing apples to oranges" when noting that the comparison doesn't make sense. Well the Flint Journal tooka complex subject and made it totally incomprehensible when they compared three funding agencies whose financial resources came from totally different sources, operated under different rules and regulations, and had totally different boards of Directors. The result is a totally incoherent story of available resources.
The Flint Area Investment Fund (FAIF) was created when federal money was routed through the State of Michigan to the City of Flint for use in the Flint Enterprise Community only. It had a sunset date and had to adhere to federal regulations. Because no mechanism was in place at the time, the Community Capital Development Corporation (CCDC) was selected to maintain the fund and they received a management fee. As CCDC was on the brink of insolvency, this seemed like an acceptable solution at the time. The FAIF was to report to the Flint Area Enterprise Community (FAEC), a joint committee comprised of representatives from the area in Flint and Mount Morris Township that comprised the zone.
As time went on the FAIF refused to allow the FAEC officials to monitor their records, although 2 of the FAEC members sat on the board. Bank representatives and CCDC board members comprised the rest of the board. The audit fell 3 years behind and CCDC tried to increase the maintenance fees without approval of FAEC. The state and HUD had been remiss in their monitoring activities as well.
Under Williamson, the monitoring was ordered to take place. Records were incomplete and evidence of mismangement came to light. FAEC took back the funds and attorneys and forensic auditors came in. During meetings with the state, the state wanted the city to repay the mismanged funds. Now the ball is in HUDs hands. Police were unable to adequately prove who stole certain funds and the lengthy process never produced prosecutions, although in my opinion there was significant evidence of mismanagement.
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Home > Flint News
Flint loan programs still taking chances on local businesses despite mixed success
Published: Sunday, June 13, 2010, 9:00 AM Updated: Monday, June 14, 2010, 7:06 AM
Kristin Longley | Flint Journal
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FLINT, Michigan — It’s arguably one of the poorest areas in the nation, but city loan programs are still taking big chances on small business owners — hoping to inject life into Flint’s nearly barren economy.
Millions in loans have been given out since 1998 — and more than $3 million of the federal and state taxpayer funds (including interest) still hang in the balance.
It’s a huge pot of money for investments that have had mixed success over the past 10 years, including one high-profile case of two businessmen convicted of pocketing $1.2 million of the loans.
Of the 31 businesses that have active loans, five are in bankruptcy or foreclosure, and 10 have had significant loan restructuring.
Jeffrey LaMonde | The Flint JournalFrann Parker, right, 56, wanders the selection at the newly opened Witherbee's Market & Deli with Jamie Stevens, 24, both of Flint. Witherbee's, 601 King Ave. in downtown Flint, was one of several small businesses that received a loan from the Flint Economic Development Corp.
It’s a risk city officials are willing to take, however, as the area struggles amid a nationwide recession. The public financing options can be a lifeline to the community’s small business owners who have trouble getting credit or low-interest financing from banks.
The federal and state funds are specifically geared toward the hard-hit area that includes Flint and parts of Mt. Morris and Genesee townships. Most of it went to small businesses, though some homeowners also received mortgages in the early years of the program.
“There are some positive things going on,” said City Councilman Bernard Lawler, who sits on one of the loan boards. Councilman Sheldon Neeley, another loan board member, said the investments are a great value for both the city and the business owners.
They point to the newly opened Witherbees Market & Deli in downtown Flint as well as two recent investments that could bring more than 150 jobs as potential success stories.
One of the program’s stellar borrowers, David K. Berry received a $75,000 loan to open Raspberries Rhythm Café downtown in August. He said the 5-percent interest rate was unbeatable.
“The rate was just unheard of — it was that simple for me,” he said. “The support has been great.”
Still, 17 of the 43 active loans are behind on payments — and eight borrowers are more than six months behind.
If the loans aren’t repaid — and the loan program staff isn’t aggressive enough with collections — federal officials could subtract the funds from future grant awards, meaning fewer funds would be available for the business owners who need them.
The two main loan programs are the Flint Area Enterprise Community (formerly known as the Flint Area Investment Fund), which serves one of the poorest parts of Genesee County in a 10-square-mile area of Flint and Mt. Morris Township; and the Flint Economic Development Corp., eligible to all qualifying Flint businesses.
Mayor Dayne Walling, president of the EDC board, said the programs in recent months have taken significant steps to improve the loan process, including hiring banking and legal professionals to help guide the process.
Loan officials want to avoid abuses of the program, such as the case of Joseph P. Giacalone and Daniel Robin. In one of the largest local cases of theft of public money, the two men pleaded no contest to stealing $1.2 million in loans for a factory they never built.
That was an extreme case of loan misuse, but officials said there are other loans that have been a struggle to collect.
Oil Chem, an oil recycling company located on 12th Street, declared bankruptcy two weeks after taking out the last of its $250,000 loan, which was granted in January 2009.
With interest, the total bill is now $266,000 and loan officials must now wait on a payment plan as the company goes through the bankruptcy process, said Robert Goodman, loan officer for the Flint Area Enterprise Community.
Councilman Scott Kincaid said the company never should have been approved for a loan, especially since it was behind on its taxes at the time, according to county tax records.
Oil Chem owner Robert Massey could not be reached for comment Friday. A message was also left for his attorney.
Also, Hinky Dinky Market on King Avenue, which owes nearly $200,000 on its 2001 loan for $376,000, is now in foreclosure.
The most overdue is Rocky’s Pizza, which has two loans and hasn’t made a payment since November 2008, records show. He owes $285,000, more than the $267,000 he borrowed because of interest.
Rocky’s owner John Varner said he plans to lease the building to pay off the loan. After starting the business, health issues that included triple bypass heart surgery and back surgery contributed to his money problems, he said, but he’s hoping to have a renter soon.
“I think I’ve had it with this one,” he said.
Goodman said the loan programs try to work with the borrower whenever possible, rather than immediately seize the property.
“The problem is, in this economy we don’t want to become landowners anymore than anyone else does,” he said. “We’re stuck with a couple that have been out there a little bit longer, but we’re still working with them.”
Concerned the city hasn’t done enough to collect on some of the overdue loans, City Councilwoman Jackie Poplar has asked for monthly status reports. She also wants to monitor who is receiving the loans.
“I am very interested in the businesses in the African-American community getting the loans we need to be getting,” she said. “These people are struggling and they’re striving to do business.”
Walling said the changes the loan boards have made will ensure that the loan terms are fair, but also protect the public funds.
He said the EDC board recently approved loans for two “exciting projects.”
Metro Medical Ambulance is relocating from Burton to a new Clio Road location using a $200,000 loan. The company has about 85 employees, and hopes to have up to 200 when it’s finished expanding, Walling said.
Kettering University’s K. Joel Berry also will receive a $43,000 loan for his Global Energy Innovations, which is projected to bring up to 80 jobs in the coming years.
Walling said the loan programs are looking fund a wider diversity of enterprises, including alternative energy.
“Today, in this economic climate, this is an incredibly important tool for our small and mid-size businesses,” Walling said. “We want to encourage development in all parts of the city.”
Last edited by untanglingwebs on Fri Jul 02, 2010 8:49 pm; edited 1 time in total |
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Wed Jun 30, 2010 2:23 pm |
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Dave Starr
F L I N T O I D
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When you drive by Hinky Dinky at King & McClellan it's hard to see where they spent 376K on the place.
Haven't been in there since it was Fred Farah's back in the day. |
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I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Thu Jul 01, 2010 8:50 am |
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untanglingwebs
El Supremo
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| All new refrigeration units and freezers. Johnnie Coleman denied them a beer and wine license when he was councilman. They lost a lot of income that way. People who buy beer for a game on tv usually buy chips and other goodies. If they can't buy the beer they go where they can. Oddly enough the strip joint on Stewart wih multiple violations always got their license renewed. |
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Thu Jul 01, 2010 6:07 pm |
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