published Sunday, July 17th, 2011

Troubled agency faces foreclosure on 2 Chattanooga properties


by Cliff Hightower
Multiple vacant lots are photographed Wednesday in the 400 block of MLK Blvd., leading up to the former Renewal Barber Shop at 423 MLK Blvd., seen in the background.
Multiple vacant lots are photographed Wednesday in the 400 block of MLK Blvd., leading up to the former Renewal Barber Shop at 423 MLK Blvd., seen in the background.
Photo by John Rawlston.
Follow us on Twitter for the latest breaking news

A TIMELINE


• July 1999: The Chattanooga African-American Chamber of Commerce is established.

• 2006: Chamber spends $200,000 of a $545,000 U.S. Department of Housing and Urban Development grant on land acquisition for a Business Solutions Center.

• 2007: Chamber changes its name to Tennessee Multicultural Chamber of Commerce; the Chamber spends $106,400 of a $500,000 HUD grant on planning and project development for a Business Solutions Center.

• October 2008: Chamber receives a $579,000 loan from Chattanooga Community Development Financial Institution to help acquire property for the Business Solutions Center.

• July 2011: City audit review highlights questionable financial practices, extravagant salaries and travel expenses and possible misappropriation of funding for tracts of land acquired for the Business Solutions Center.

Troubles keep mounting for the Tennessee Multicultural Chamber of Commerce.

The institution that lent the agency $579,000 in 2008 to buy two properties on East M.L. King Boulevard is considering foreclosing after the Chamber paid only interest on the loans for 33 months and now has missed its last two payments, its CEO said Friday.

“Right now, we feel very insecure,” said David Johnson, president of the nonprofit Chattanooga Community Development Financial Institution. “It makes us feel this loan will not be repaid.”

The Multicultural Chamber’s executive director, Sherrie Gilchrist, could not be reached for comment Friday.

Questions have swirled around the Chamber since publication of a June 19 Chattanooga Times Free Press article detailing discrepancies in the agency’s budget requests to the city and the county.

Concerns came to a head last week with a city audit review that alleged financial mismanagement at the Chamber and disclosed salaries and travel expenses that were far above those of other area nonprofit organizations. The review also found that the Chamber paid more for the properties than they were worth.

The City Council has asked for answers to 18 questions and an audit before it considers appropriating $75,000 to the organization. A pending inquiry by the U.S. Department of Housing and Urban Development over the Chamber’s use of federal money underscored the seriousness of the situation.

Yet with her reputation on the line and the agency’s future potentially at stake, Gilchrist never appeared before the City Council or County Commission to address their concerns. She did meet with Mayor Ron Littlefield but left with questions still unanswered, according to the mayor’s office.

By week’s end, some council members were still expressing support for the Chamber’s goal of helping minority-owned businesses get a leg up — but doubts persisted about its capacity to get the job done, and, perhaps, its viability.

“What I’m hearing is that we believe in the mission,” said Council Chairwoman Pam Ladd. “It sounds like it may not be feasible with the current program.”

LOAN DETAILS

The Chattanooga Community Development Financial Institution, a nonprofit organization set up to make loans to small business in urban neighborhoods, lent $579,000 to the Chamber in October 2008.

According to the city review, $507,000 was spent to buy two properties along M.L. King Boulevard that were valued at just $211,000. There is no record of what the rest of the money was spent on.

The properties were to help house a new Business Solutions Center that never has been built.

Johnson, who joined CCDFI two months after the loan was granted, said Friday he had no indication why the board decided to lend more money than the property was worth. Gilchrist, who was a board member of CCDFI at the time of the loan, did attend the meeting where it was approved but recused herself from voting, board minutes reflect.

He also said the financial institution was supposed to be given $250,000 from a grant the Chamber expected to receive soon after the loan was granted. That would have halved the amount owed.

But he said that grant money wasn’t forthcoming. Instead, the Chamber paid 8.5 percent interest on the loan for 33 months and stopped making those interest-only payments two months ago, he said.

The Chamber’s loan was supposed to be repaid in 24 months, Johnson said. But at the end of that period, the Chamber asked for an extension and was granted another year. That extension will expire around October and the Chamber cannot renew the loan, he said.

Johnson acknowledged that no appraisal was conducted on the two M.L. King properties for which the loan was issued. He said it is board discretion not to do appraisals, but he said in this instance board members felt it was not needed because of the anticipated grant money.

He said it was a bad loan that did not get repaid. He said paying only interest on the loan makes it problematic.

“The can ended up getting kicked down the road,” he said.

Johnson said the financial institution started shoring up its loan reserves months ago in anticipation the Chamber would go into default.

“We thought there was a good chance this loan would become nonperforming,” Johnson said.

The CCDFI receives its funding from a variety of major banks, as well as some private sources. The financial institution is chartered by the U.S. Treasury, so banks that do business with it and other community development financial institutions receive federal tax and investment credits, Johnson said.

Since those banks lend the money, CCDFI in turn has to pay them back.

Despite problems with this loan, the organization has made all its payments and is on sound footing, Johnson said.

Johnson, who also is president of Chattanooga Neighborhood Enterprise, emphasized that the loan in no way reflected on that organization. CNE is a separate entity, a nonprofit housing organization dedicated to providing Chattanoogans the chance to live in decent, affordable housing, according to its website. Johnson said CNE, too, is on sound financial footing.

WHAT IS THE FUTURE?

Several council members said last week that changes need to be made regarding the Chamber.

“They need to be accountable,” said Councilman Russell Gilbert. “And if they need to rearrange their organization, they need to rearrange their organization.”

Several council members said they wanted to see the Chamber first try to fix the problem from within. They agreed that helping minority-owned businesses is something that needs to continue. But they held their own opinions on how to do it.

Councilman Peter Murphy said he believes the Chamber should be given a chance.

“If you have a car that’s broken, it’s usually cheaper [to fix it] than buying a brand new car,” he said.

Ladd said there could be other possibilities. She said the Greater Chattanooga Chamber of Commerce or a like-minded entity or maybe even the Urban League could take over the duties.

Officials with the Chamber of Commerce and the Urban League said Friday no one has reached out to them. Warren Logan, CEO and president of the Urban League, said if such a proposal was made “we would just have to evaluate it.”

J.Ed. Marston, spokesman for the Greater Chamber of Commerce, said any such decision would have to be arrived at by the two bodies.

Councilman Andraé McGary said he could see three options for the Multicultural Chamber as far as city money: fund it, defund it or fund it with stipulations. He said he could see setting aside the $75,000 within the city budget and providing the money once all questions are answered.

He said he supports the Chamber, but believes other options may need to be considered.

“I don’t know if they are the entity to be funded,” he said. “If not, we’ll find some other entity to do it.”

18
Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
kevinwilson37 said...

The first step in determining the worth of a conventional mortgage refinance is to estimate the property value and the borrowers' equity in the home, use the "123 Mortgage Refinancing" to qualify for refinance

July 17, 2011 at 12:58 a.m.
harrystatel said...

"Johnson acknowledged that no appraisal was conducted on the two M.L. King properties for which the loan was issued. He said it is board [CCDFI] discretion not to do appraisals, but he said in this instance board members felt it was not needed because of the anticipated grant money."

"Johnson, who also is president of Chattanooga Neighborhood Enterprise, emphasized that the loan in no way reflected on that organization."

More incestuous political payola. Welcome to the Bell California of the East!

"Councilman Peter Murphy said he believes the [TMCC)Chamber should be given a chance."

No wonder the US government is broke. We have Pam Ladd, Peter Murphy, McGary and other stooges on the City Council who still want to give them taxpayer money.

A Harry Statel Frosty-Finger Salute to the Chattanooga City Council--The Worst that Money Can Buy!

Thank goodness Mayor Littlefield is investigating government corruption in Chattanooga. Here's his report. http://bit.ly/n4Emj2

July 17, 2011 at 6:38 a.m.
sage1 said...

What a crock......Well, my fellow Chattanoogans, least we forget: We WILL be electing a Mayor and nine Council members on the first Tuesday in March of every fourth year I do believe. Lets see.....that means that the next elections will be held on March 2, 2013 I believe? If we don't clean house at that time, we deserve what we get.

"If you do what you've always done.....You'll get what you've always gotten."

July 17, 2011 at 10:01 a.m.
fairmon said...

By what authority does the council hand out to those causes they deem "good" tax payer money without having those activities beyond the charter on a voter ballot? We need responsible, intelligent competent leadership with larger business management experience as council members. However, those meeting that criteria are too intelligent to seek the position. Why does the council not realize the majority of citizens would not support their hand out mentality. Voters would not allocate money to the EAC department, Hunter Arts and several others with nothing to do with charitable efforts to assist the needy and disabled.

The council is like the U.S. congress with both acting as prostitutes to every special cause.......they can't say no, it cost them votes. They find it easy to spend other peoples money and to demand more from them by increasing taxes and fees.

July 17, 2011 at 11:58 a.m.
sage1 said...

Payingattention - I went to and read that article you posted. I'm amazed, but not surprised. Known criminals paving the way and landslide real estate profits (80% in 3 years?)of taxpayers money to the family of a buddy. Government "business" as it's shadiest in my book.

July 17, 2011 at 12:41 p.m.
MasterChefLen said...

It is interesting how Sherrie Gilchrist, could not be reached for comment about many of these matters.

July 17, 2011 at 5:21 p.m.
mymy said...

cbtole said...

"Based upon their investigations, the case could then be referred to the U.S. Department of Justice."

Unfortunately, with the current corrupt DOJ she would have a free ride!

Too bad as much investigation and reporting is not done on City Government. Oh, they are the chosen by the TFP!

If the citizens do not vote the whole bunch out and choose the right Mayor, things will never get better.

July 17, 2011 at 6:29 p.m.
McRand said...

Huh? She want's 75 thousand more, for what? Attorneys fees? Think it'll be enough?

July 17, 2011 at 10:13 p.m.
NoMyth said...

The City and the TimesFreePress should publish every page of the city audit review highlighting the "questionable financial practices, extravagant salaries and travel expenses and possible misappropriation of funding for tracts of land acquired for the Business Solutions Center."

July 18, 2011 at midnight
chet123 said...

I'M A BLACK MAN...I CANT FIGURE OUT WHAT THEY REALLY DO....I KNOW SHERRIE GILCHRIST....DONT THINK SHE IS HOLDING A FULL HAND....WHY DID THE BOARD MEMBER EVEN ALLOW HER TO OPERATE AS CEO.....THIS IS NOT HER FIRST SCANDLE...SHE WAS A CHAIR OF TRUSTEE BOARD...MILLIONS OF DOLLARS DISAPPEARED INTO THIN AIR...SHERRIE GILCHRIST AND CROOKED PASTOR WAS STEALING CHURCH MONEY....CHECK OUT PASTOR OF NEW UNITED CHURCH OUST

July 18, 2011 at 11:47 a.m.
chet123 said...

BUGE...HOLD BACK YOUR RACIST COMMENT...I SEE NOONE IN THE BLACK COMMUNITY DEFENDING SHERRIE GILCHRIST AS YOU HAVE DEFENDED RHONDA THURMAN FOR HER WRONG DOING.

SO GO SOMEWHERE ELSE TO PLAY YOUR LITTLE RACE CARD!

July 18, 2011 at 11:53 a.m.
please login to post a comment

Other National Articles

videos »         

photos »         

e-edition »

advertisement
advertisement
400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.