Columbia explores seizing business that defaulted on $200,000 public loan

cleblanc@thestate.comFebruary 26, 2014 


The city of Columbia is considering taking legal action to seize two buildings along Gervais Street owned by a couple who borrowed $200,000 in public money and have defaulted on their 10-year-old loan.

The Commercial Revolving Loan Program oversight committee on Wednesday morning voted to begin exploring what the city can do to recoup more than $100,000 still owed by Gary A. and Michele Washington.

City staffers said, during an hourlong public discussion about questions surrounding the handling of the loan by Councilwoman Tameika Isaac Devine, who was the couple’s attorney on the loan, that the Washingtons have paid $17,306 of the loan amount.

But the city has written off $157,911 of the September 2004 original loan requested by the Washingtons so they could open Carolina Procurement Institute in two buildings, at 1811 and 1815 Gervais St.

Tina Herbert, the director of the city division that administers the loan program, told City Council about early attempts to find ways to recoup some of the balance of the money.

“So we’re going to get an appraisal to see if it’s worth going after the property,” Herbert said.

Senior assistant city manager Allison Baker quickly advised Herbert and council that it might cost more in legal and other fees than the city might get from such an attempt.

Council voted 6-0 to open the discussion to the public even though the meeting was scheduled to be held behind closed doors because it involves a potential legal matter. Devine did not attend. She said Tuesday she had a previously set out-of-state conference to attend.

Council not only opened the meeting but agreed to disclose pages of documents about the loan as well as city attorney Ken Gaines’ memo. Gaines wrote in the memo to council that Devine failed to record the city loan in the Richland County deed office but also did not follow the city’s loan-closing rules that require mortgage title insurance.

By not having a mortgage filed, the city lost its ability to get money from the Washingtons when they filed for bankruptcy, Gaines and a private lawyer the city hired have said.

Council cast no votes and made no decisions about whether to refer Devine’s handling of the loan to the S.C. Supreme Court’s Office of Disciplinary Counsel, which polices attorneys.

Devine said she has been a real estate attorney for 12 years. She was a member of City Council at the time she represented the Washingtons in closing two loans they used to buy the property and open Carolina Procurement.

The first loan, which covered most of the price, was from a bank, and the mortgage was properly filed, officials said. The city loan that used U.S. Department of Commerce funds was a second mortgage.

Devine acknowledged Tuesday to The State newspaper that she made a mistake in her handling of both loans. But the mistake was failing to get mortgage documents notarized.

She said that a security agreement she filed was tantamount to a mortgage. Devine also said that the city is not handling this kind of a misstep normally, including not contacting her directly for explanations. Further, she blames Councilman Cameron Runyan for seeking to turn her mistake into a political attack to “embarrass me and my law firm.”

Washington, a 51-year-old Columbia businessman, told the newspaper Wednesday that Devine is being unduly criticized.

More of the blame in improperly filing the mortgage financed with the city loan should fall on the bank and the city staff that evaluate loans before they are finalized, Washington said.

He remains willing to repay the city $5,840, an amount he said the loan committee told him in December was owed.

But he is not willing to repay the full loan because he did not make a mistake on filing paperwork.

“They were not willing to work with me,” he said of the December meeting during which he asked for a more lenient payment schedule as his business struggles to recover from bad times. “And that’s why my attorney said, ‘You don’t have to pay it anyway.’”

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