Across an already sketchy landscape in regard to city finances, two Columbia City Council members have found themselves in a firefight with a federal agency because of their proximity to nearly $500,000 in federal empowerment zone loans.
 

City council member Tameika Devine. File photo

Council members Tameika Isaac Devine and Daniel Rickenmann are both named as having benefited from loans through the city in a report by the local office of the U.S. Department of Housing and Urban Development (HUD) that was recently made public. The concerns were made in a HUD Monitoring Review Report conducted in August and sent to the city on Sept. 15. The report is part of a periodic compliance review that audits how the city spends federal grant money.

One of the federal loans in question was for $280,000 and was acquired in April by Devine’s mother, Veronica Isaac, so she could buy a commercial building on Richland Street. That building now houses her daughter Tameika’s law firm. That loan violated federal requirements, according to HUD.

The HUD report also faulted Rickenmann for benefiting in January 2008 from a $179,000 loan that HUD said was given to a company called CamBry Inc., in order to help buy two Birds on a Wire restaurants partially owned by Rickenmann. CamBry Inc. filed for Chapter 7 bankruptcy in January 2009, according to the report. Rickenmann disputes the date of the loan and other details in the HUD report.
 

A monitoring review report by the Department of Housing and Urban Development says a federal loan given to Councilwoman Tameika Isaac’s mother does not meet the department’s guidelines. The loan financed the purchase of this Richland Street building, which houses Devine’s law firm. Photo by Graeme Fouste

The federal government issued the money in both cases but an entity called the Sumter-Columbia Empowerment Zone ultimately administered those funds through the city. The empowerment zone, or “EZ” as it’s listed in HUD documents, was created in 1999 as a way to create and retain jobs in blighted areas of the city by using money from the federal government.

The program was given more than $25 million and carries a current balance of about $5 million.

Some of that money wasn’t used properly, HUD says, and now they want it back.

Veronica Isaac used the $280,000 loan to relocate an existing law firm from outside the empowerment zone to inside the zone’s boundaries.
However, HUD guidelines specifically prohibit use of empowerment zone funds for relocating a business. The loan also violates the spirit of the federal loan requirements as it relates to creating jobs, according to HUD’s review.

The HUD review states that the Sumter-Columbia Empowerment Zone “must reimburse its Empowerment Zone line of credit in the amount of $280,000 in non-federal funds for the disallowed costs associated with the loan to Veronica Isaac.”

City Council did not have to vote on either of the loans; empowerment zone funds are distributed through the office of City of Columbia Community Development Director Tony Lawton.

“Considering the short life of the CamBry Inc. loan before it defaulted, and the issues that have surfaced regarding the aforementioned loan to Veronica Isaac, we have serious concerns about the [Sumter-Columbia Empowerment Zone’s] underwriting guidelines and internal processes for approving loans under its various loan programs that operate with Empowerment Zone funding,” reads the HUD report.

In other words, getting EZ money for projects that HUD deems ineligible shouldn’t be so, well … easy.

For her part, Councilwoman Devine has said she believes that no wrongdoing has taken place and any controversy surrounding the matter has been “blown out of proportion.”

Earlier this year, Devine had contemplated a run for mayor but decided against it.

Rickenmann appeared blindsided by seeing his name in the report and fired off a Sept. 29 letter to HUD that called the information regarding him “incorrect and misleading.” The review misrepresented facts surrounding a “legitimate business transaction,” he wrote.

The at-large councilman met with HUD officials at their Columbia field office on Oct. 1 and provided them with documents that he says dispute each point in the HUD report.

He also provided copies of checks, closing documents and contracts to Free Times that appear at odds with HUD’s review when it comes to some specifics of the loan in question.

Rickenmann says he is following up on his meeting with HUD by sending a letter that asks them to either respond with documentation supporting their claims in writing or retract the statements they made that were incorrect in the HUD report.

HUD regional spokesman Joe Philips, who is based out of Atlanta, said on Oct. 2 that he was unaware of the meeting.

Though a cover letter accompanying the HUD report is dated Sept. 15, Mayor Bob Coble says he didn’t receive it until Sept. 28.

Columbia Community Development director Tony Lawton says he received the report on Sept. 16 and doesn’t know why the mayor didn’t see it until nearly two weeks later.

City officials remain baffled about how the report became public.

“It’s obvious the media got this information before we received it,” Lawton says. “How that took place I really don’t know.”

HUD spokesman Philips says the city has until Oct. 15 to respond to the report, specifically with regard to the loan obtained by Councilwoman Devine’s mother.

“The one particular concern … was expressed with regards to the $280,000 expenditure.
[The loan] was initially determined to be an illegible expense,” Philips says. “If it’s determined after further review to be an illegible expense then that $280,000 will have to be repaid out of non-federal funding.”

Along with concerns about the specific loans involving Devine and Rickenmann, the report raises additional questions about the city’s administration of the empowerment zone.
Specifically, the report references insufficient implementation plans on several empowerment zone projects and raises concerns about the city’s guidelines for issuing loans.

Coble declined to comment further on the HUD report, saying only that he planned to read all the information available and take up the issue during the next council meeting. 


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