Development chief says Ohio county gained control over delinquent loans

Portfolio said to be restored to ‘point of confidence.’ loans, including a true up of balances, interest, penalties, and efforts to collect the loans. Initiate background checks to prevent borrowers from receiving multiple loans if they are not in good s

CLEVELAND, OHIO — Cuyahoga County’s development chief says his office has now addressed a lack of policies and procedures that led to millions of dollars in unpaid economic development loans.

In a letter sent last week to the county’s inspector general, Ted Carter reported that the county’s portfolio has been restored to a “point of confidence” after 4,000plus hours of work by staff and consultants.

“Having said that, we will need to continue to devote appropriate management time, attention and resources to continue perfecting and improving the portfolio and economic development loan process,” Carter wrote.

According to Carter, his department:

Began issuing monthly invoices to borrowers in September. The invoices now have correct loan balances and fee structures.

Hired a loan portfolio manager at the end of November.

Created the county’s first loan policy manual.

Identified all delinquent loans and contacted borrowers.

Developed a complete inventory of loans and entered them into the loan servicing database.

Worked to standardize loan agreements to reduce complexity and achieve more consistency. That will include streamlining loan programs.

Inspector General Mark Griffin, who has been investigating the problems since 2015 and has issued two reports, said on Monday he has to review and evaluate the documents submitted by Carter to determine if the problems have been resolved.

In April, county officials announced that the county had loaned millions of dollars to 270 companies over the past decade, but that the Economic Development Department had no policies or procedures to keep track of repayments and that paperwork on many loans was missing.

On June 30, when Griffin issued what he thought was his final report on the problems, county officials said they had successfully documented the scope of the problem. They said they had discovered more loans, bringing the total to 297, and found more than 80 cartons of files containing 4 million pages, all of which were scanned and digitized for analysis.

In September, county officials told a County Council committee that they were still working on the issues and efforts were underway to collect on 99 delinquent loans, totaling $9.7 million with principal and interest.

Griffin said at that time that he was not satisfied with the progress and wanted Carter to respond to his concerns.

Carter, who has been working on the delinquent loan issues since he arrived in January 2016, provided detailed responses to Griffin on Dec. 12. Following is a summary of several of Griffin’s recommendations and Carter’s responses:

The department now has a complete inventory of active loans, entered into the loan servicing database, known as Portfol, except for one loan in active litigation. mailed to borrowers.

The loan portfolio manager is required to initiate background checks.