City aims to unfreeze funds

Audit being done in order to access additional federal money to loan to businesses

The city of Lorain is in the process of having an audit conducted in order to get access to additional federal funding to loan to businesses.

In a July 30 meeting of City Council’s Finance/Claims Committee, Mayor Chase Ritenauer said following recent conversations with the Economic Development Administration in Chicago, Lorain will seek to have an independent audit completed by the end of 2018.

“My question was, as this goes along, at some point you have to unfreeze these funds,” Ritenauer said. “These are valuable dollars we need to be able to have in our arsenal if someone wants to come and open a business. They get that, but they’re following protocol.”

The $2.3 million in funding from the Economic Development Administration and the U.S. Department of Housing and Urban Development was frozen several years ago following an audit that revealed an unallowable expenditure.

The audit process will identify the specific federal programs the frozen funds are attributed to.

In working with federal officials, Ritenauer said unfreezing these funds and completing the audit as quickly as possible is a top priority.

The audit process will identify the specific federal programs the frozen funds are attributed to.

“The unfortunate reality is an audit gives you reasonable assurance,” Ritenauer said. “And it was a few years back when the audit…dinged one particular case, and then that really started the analysis of what has transpired. My objective is to try to fix it.

“But you’re absolutely right, it’s a frustration of mine that this bubbles along

for how many years and it’s our collective responsibility: administration, Council and department heads and staff to figure out how we move forward.”

Council-at-Large member Mary Springowski strongly urged the city to push the audit forward.

“I think that it’s very important that we fast track this audit and get this done because having the revolving development business loan and programs available to new potential businesses in this city is going to be critical to economic development and revitalization of the city,” Springowski said. “So, we need to push that and it needs to be a number one priority.”

The mayor envisions using the additional funding as a gap financing program in providing low-interest

loans for new businesses that want to operate in the city but may lack access to traditional financing sources enabling them to help with certain types of start-up costs.

“We also want to make sure we are applying good business sense measured with the fact that people are coming to us because they want a better interest rate,” Ritenauer said. “And two, because they might not be able to get conventional financing.

“I see the program as being used as a gap financing program especially if the borrower was able to get some conventional financing. That is an important component to consider. I think HUD likes that, I think that’s what they want us to look at moving forward.”