David Johnson, president of Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution, said Wednesday a $574,000 loan made to the Tennessee Multicultural Chamber of Commerce was to be used for three purposes:
$500,000: To buy land
$44,000: To pay interest on debt
$30,000: To pay for demolition on land
The U.S. Department of Housing and Urban Development on Wednesday demanded the Tennessee Multicultural Chamber of Commerce say how and where the agency spent $545,000 in federal dollars on a Business Solutions Center that's never been built.
And the holder of a separate $574,000 loan to the minority chamber said a decision could be made within days whether to foreclose on two of the chamber's five properties on M.L. King Boulevard.
HUD spokesman Joe Phillips said the department is seeking documentation such as bills and invoices spelling out how the chamber spent the $545,000 grant it received in 2005 and 2006.
He said the Multicultural Chamber has 15 days to respond when it receives HUD's letter of inquiry. He referred all other questions to the HUD Office of Inspector General, where a spokesman Wednesday said the office had no immediate comment.
David Johnson, president of Chattanooga Neighborhood Enterprise and Chattanooga Community Development Financial Institution, said the FBI has asked him about the $574,000 loan the financial institution made to the chamber in 2008 to help develop the business center.
"I asked if the CDFI or staff was the target of an investigation," Johnson said. "The answer was no."
He said the FBI asked about Multicultural Chamber Executive Director Sherrie Gilchrist's involvement at a September board meeting where the loan was approved. Gilchrist serves on the CCDFI board.
"They asked about her presence," he said.
He said the meeting's minutes reflect that she recused herself from the vote and left the meeting. The minutes also state that she made comments but not what those comments were.
Johnson said the financial institution's board could act "within the next few days" on the properties along M.L. King Boulevard. He said the chamber is past due 60 days on one note and 90 days on another.
"The option of foreclosure is always there," he said.
Gilchrist and Multicultural Chamber board member John Taylor did not return phone calls seeking comment.
The Tennessee Multicultural Chamber of Commerce became the target of FBI and HUD probes after a city review last week detailed possible financial mismanagement, questionable loans and land deals and extravagant salaries and travel expenses. The review was triggered by a Times Free Press investigation showing inconsistencies in the chamber's budget requests to Chattanooga and Hamilton County.
The Multicultural Chamber provided responses to 18 questions posed by the city review to the City Council on Tuesday and the County Commission on Wednesday.
At Wednesday's commission meeting, Taylor and Gilchrist told commissioners they were there not to ask for money but to restore the integrity of the organization.
Gilchrist told commissioners the group never used taxpayer money inappropriately.
"We have been really diligent to make sure the taxpayers' money is used the way it's supposed to be," she said. "We don't have anything to hide."
Taylor told commissioners the report on the city's review should have included talks with Gilchrist and board members.
"It was a report done in a vacuum," he said.
Questions linger around the loan and grant for the Business Solutions Center, slated to be built on M.L. King Boulevard. Five properties were bought for the proposed center.
Gilchrist told commissioners Wednesday that space in the center was to one day house both the Multicultural Chamber's offices and be rented out to small businesses.
Another aspect of the Business Solution Center deal was a possible land swap with the University of Tennessee at Chattanooga. The Multicultural Chamber said it hoped to swap property at the corner of Douglas and M.L. King Boulevard for UTC property at Maple Street and M.L. King.
"The University of Tennessee was in agreement," Multicultural Chamber officials said in their response to the city review.
UTC spokesman Chuck Cantrell said Wednesday the university showed some interest but has not made a decision about the swap.
"We never got to the actual decision-making process," he said.