The city of Columbia on Wednesday paid back $280,000 to the federal government for an improper loan it made to City Council member Tameika Isaac Devine's mother.
The loan was made under the Sumter-Columbia Empowerment Zone program intended to create jobs in poor areas.
Veronica Isaac reimbursed the city last month. On Wednesday, city officials hand-delivered the repayment to the U.S. Department of Housing and Urban Development after an inquiry by The State newspaper.
The city might also have to repay a second loan for $179,000, this one linked to council member Daniel Rickenmann, unless city officials demonstrate within 30 days that the money was used properly, according to a decision issued by HUD this week.
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Devine and Rickenmann deny any impropriety; HUD alleged none.
But HUD expressed concerns that city employees granted the loans and said the city must re-train its employees in making future loans through the Sumter-Columbia Empowerment Zone program.
HUD also said the city must clean up its paperwork and management of the program.
Assistant city manager Allison Baker said he considers the repayment and retraining requirements part of "routine" HUD oversight of the program.
"We will do whatever the HUD office says we need to do to comply," he said.
The loans are the latest in what has been a seven-year stretch of controversy surrounding the $17 million, Clinton-era Empowerment Zone program.
In 2003, HUD shut down the city's $3 million in summer youth programs - programs that paid families to have their children attend - because they were unsustainable and ineffective.
Also that year, the city improperly loaned $247,000 to a startup company that wanted to build a youth group home in Fairfield County.
This year, the loans in question were:
- $280,000 to Veronica Isaac to purchase a building at 1419 Richland St. in downtown Columbia. Issac later rented the building to Jabber & Isaac, the law firm of her daughter, council member Devine.
- $179,000 to a pair of businessmen under the moniker CamBry Inc., who in 2008 had purchased City Council member Rickenmann's two Birds On a Wire restaurants. The pair, Bryan Singleton and Cameron Jordan Jr., went bankrupt in January, closed the restaurants and defaulted on the loan.
Concerning the loan to Vernonica Isaac, HUD questioned not whether it was proper to have Devine as a tenant, but rather that the money was used to transfer rather than create jobs in the Empowerment Zone. Isaac repaid the loan to the city, and the city used that money Wednesday to repay HUD.
Devine told The State on Wednesday she considers the issue closed because the money has been repaid.
"My parents didn't do anything wrong," she said. "They weren't aware of what all the federal regulations were. The staff believed they followed the federal guidelines."
Devine added that her parents paid the money back "because they didn't want to be in the middle of a controversy."
As for the loan linked to Rickenmann, HUD wants the city to prove it was used to purchase or support a business inside the Empowerment Zone.
One of the Birds on a Wire restaurants was on Devine Street, outside the Empowerment Zone. The other, on Main Street, was inside the zone.
Rickenmann has offered documents showing the sale was closed in February 2008, before CamBry received the Empowerment Zone loan in June.
HUD has said it has documentation from the city - a letter of commitment - that the money was part of the purchase.
Rickenmann maintains that a letter of commitment does not a deal make - that money from the Empowerment Zone loan was not used for the purchase of the restaurants.
"I did not receive (the Empowerment Zone) money," he told The State on Wednesday. He said he has asked HUD to issue a retraction on statements that indicate he did.
"I have not gotten a response," he said.
HUD gave the city until Dec. 25 to prove the money was used inside the Empowerment Zone or it must pay the loan back.
In addition to the loans, HUD:
- Rejected an Empowerment Zone plan to operate the North Main Street Plaza retail and office complex. The city purchased the plaza in 2008 from the Eau Claire Development Corp., for about $800,000.
- Turned back an Empowerment Zone plan to build a community center in North Columbia. The city has already spent about $900,000 to buy land on Busby Street near Farrow Road for the center.
Mayor Bob Coble said the city is moving quickly to address HUD's requirements. "We either have or will address all of these," he said.