Gatsas on Monday told the aldermen's
"The reason this came to light is I wouldn't sign any more agreements," Gatsas said.
"I looked at a couple of them, and I don't know how they made the loan to them," he added. "There needs to be underwriting; there should be some criteria when folks are borrowing money."
The recommendation came the same day that the city's finance office provided its latest update on the RLF portfolio, showing that of the 17 businesses with outstanding loans from the city, 11 are in good standing or paid off, while six are overdue by more than 30 days or have been referred to the solicitor's office for legal action.
The tally represents an improvement from six months ago, when nearly half the loans were delinquent. At the same time, the finance office also recommended the aldermen agree to write off a
Gatsas recommended the city's RLF program, which is administered directly by the city's economic development office, work with the
Both city loan funds were originally created to spur the creation of small businesses and jobs. The interest rate on the loans is typically around 5 percent.
The city's RLF program was singled out as poorly managed in an audit of the economic development office following the abrupt resignation of its director in late 2012. The report noted a lack of documentation for loans and that fees weren't being assessed for late payments.
Since then, the city's finance office has been working with the legal department to improve collection on the loans. Every month, city officials have provided updates to the accounts committee on their efforts, and often they recount difficulties encountered in collecting on some of the loans. In several cases, the officials have recommended complete write-offs.
Deputy City Solicitor
Gatsas replied, "I don't disagree, but we are often the last resort."
Levasseur said: "Which tells us why we shouldn't be in this situation altogether. If you can't get a loan from a bank, you shouldn't be getting one from us."
The committee backed the mayor's recommendation for the city RLF program to bring in an underwriter to oversee any future loans.
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