Lender: Minority Chamber 2-3 payments behind on $579K note - WRCBtv.com | Chattanooga News, Weather & Sports

Lender: Minority Chamber 2-3 payments behind on $579K note

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CHATTANOOGA (WRCB)-- Office furniture dealer Edward Bentley may have unique insight into the questions surrounding spending at the Tennessee Multicultural Chamber of Commerce (TMCC).

The TMCC member served on its Board of Directors for three years, leaving just as the Chamber was preparing to buy parcels in the 400 block of East Martin Luther King Boulevard, ostensibly to build new offices and a Business Center, for $4.4 million.

"I don't know how much funding it takes to get it up, but I would have liked to see it go up a long time ago," says Bentley. "I saw the monies being managed very well. I don't know what's happened since I left there."

"I was not there when loans were made," says David Johnson, President of Chattanooga Neighborhood Enterprise (CNE).

Johnson's group oversees Chattanooga's Community Development Financial Institutions (CCDFI) fund, which loaned $579,000 to the TMCC in October 2008.

The TMCC used $500,000 to buy two properties on MLK Boulevard. One was a vacant lot. Together, the Hamilton County Tax Assessor appraised them for no more than $211,000.

"It was fully anticipated that there would be a grant forthcoming that would pay off 50 percent of that $500,000 " Johnson says. "Had the grant come, the value of the loan and the value of the property would have been more in line."

That grant, from the U.S. Department of Housing & Urban Development, would have been worth $545,000, according to Chattanooga City Auditor Stan Sewell.

The TMCC also was counting on $300,000 worth of donated labor and material, Sewell says.

That leaves a balance of $3.55 million.

"The TMCC has provided us no plans, no guidance, for how it would have obtained or covered that amount," says Sewell.

Johnson reports that the TMCC is 60-90 days behind in its loan payments.

"Interest only," Johnson says. "The Multi-Cultural Chamber hasn't paid a penny of principal. The CCDFI is positioned to be able to foreclose on the properties and take ownership."

Johnson says the Fund did not, and does not consider it a conflict of interest that TMCC Director Sherrie Gilchrist is a member on the Fund's Board of Directors.

"She didn't vote on her Chamber's loan, she left the room when the Board voted," says Johnson.

Gilchrist has been unavailable for comment since Chattanooga City Council made Sewell's review public at its meeting Tuesday night. The TMCC had requested $150,000 in Chattanooga's budget year that began July 1, double its appropriation the previous fiscal year. Council denied the TMCC's request.

Gilchrist and other TMCC Board members failed to show up at Thursday's meeting of the Hamilton County Commission.

"It may be a misunderstanding," Commission Chairman Larry Henry says. "But until we get some satisfaction of some answer that have arisen, they're not in our budget and I don't anticipate them being in our budget."

Channel 3 also has learned that HUD is reviewing the circumstances of a $500,000 grant to the TMCC, $200,000 of which was used to buy three properties on MLK Boulevard, also for far more than their appraised values for tax purposes.

"The request will require the grantee to submit source documents (bills, invoices, etc.) to support the expenditure of all grant funds," HUD's Atlanta office spokesman Joe Phillips writes. "If this indicates any instances of waste, fraud or abuse, the Department would refer the matter to the Office of the Inspector General (OIG) as well as the Department of Justice."

The CNE also can recall its loans to the TMCC "at any time", Johnson says. "We have not made a decision to do so at this time."

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