The Tennessee Multicultural Chamber of Commerce has 30 days to repay a $579,000 loan or face foreclosure on the property bought with the money.
The payment demand came last week from the Chattanooga Community Development Financial Institution, which made the loan in 2009 to help build a business development center in the 400 block of East M.L. King Boulevard. The Chamber is two or three months behind in payments, and the business center has not been built.
"The board of the Chattanooga CDFI met last week," said David Johnson, president of CCDFI and Chattanooga Neighborhood Enterprise. "A decision was made to send a letter to the Multicultural Chamber."
Johnson said almost a month ago that CCDFI could foreclose because of "feeling uncomfortable" that the loan would not be repaid.
He would not divulge the contents of the letter, but two Chamber board members confirmed Wednesday the Multicultural Chamber received the letter.
"We will meet next week with our board and bring that letter to the board," board Chairman Walter Hitchcock said.
Executive Committee member John Taylor Sr. said, "We did receive the letter and we will address that issue, as far as it relates to the land."
Taylor said the Chamber has spoken with interested developers inside and outside Chattanooga about the property. He hinted that the Chamber might be looking for a buyer.
Pointing out that the Chamber's primary goal is helping to grow minority businesses, Taylor said, "We have to stay true to our mission -- we are not a developer."
"This is a great opportunity for redevelopment. Whether it's led by us or someone else, let's make something positive happen on M.L. King Boulevard," he said.
Chamber Executive Director Sherrie Gilchrist did not return calls for comment and was unavailable when a reporter went to the chamber office on Chestnut Street on Wednesday.
The Multicultural Chamber is being investigated by the FBI and the U.S. Department of Housing and Urban Development over financing for the never-built Business Solutions Center.
The inquiries were spurred after a Times Free Press investigation showed inconsistencies with budget requests turned in to Chattanooga and Hamilton County. A later review by City Auditor Stan Sewell showed possible financial mismanagement, questionable land deals and exorbitant salaries and travel expenses.
HUD gave the Chamber grants totaling $545,000 in 2005 and 2006 to buy three properties on M.L. King Boulevard. The CCDFI loan was to pay for two adjoining properties.
Altogether, the Chamber paid $1.2 million for five lots whose tax assessment was just more than $500,000. HUD has asked the Chamber to explain what happened to $238,400 from the grant. The FBI has inquired about the CCDFI loan.
Hitchcock and Taylor maintained Wednesday the Chamber still plans to develop the property
"We are working with inquiries [from] a couple of developers about redeveloping that land," Hitchcock said.
Taylor wouldn't give specifics or name names, saying he didn't want other potential investors to be deterred.
Board member Jerry Hanner Sr. said he isn't on the executive committee and had not seen the letter. He said Gilchrist has been in meetings recently working on a reorganization of the Chamber, but he expected her to brief the board at the meeting next week.
Taylor would not comment on the possibility of a Chamber reorganization, saying that the board chairman, Hitchcock, should address that issue. But he said the Chamber will go forward.
"I think going through this ordeal has strengthened the organization and given us a clear focus to zoom in and go forth with greater determination," he said.
Hitchcock could not be reached to discuss that issue Wednesday.