Nonprofit's project in jeopardy

Five Rivers' withdrawals Investigating Five Rivers: Read the complete series

Members of Georgetown County's council and school board said Wednesday they question whether Five Rivers Community Development Corp. has the money to build a proposed training and retail center in Choppee, and that insufficient funding could derail the nonprofit agency's project. The U.S. Department of Housing and Urban Development confirmed Wednesday that Five Rivers has withdrawn between $30,000 and $55,000 from its federal budget appropriations almost every month since December. There is $377,100 left from $1.35 million the agency received.

Georgetown County Councilman Ron Charlton told The Sun News that he and county officials have concerns about Five Rivers. "The question is, can they go in there and do the things they say they can do?" Charlton said. "It doesn't look good." There is $377,100 left from the $1.35 million that the agency received over two years. Five Rivers also failed to tell county officials about a $45,000 mortgage it has on property it wants to swap with the county as part of the training and retail center project. That mortgage would have to be paid before a land swap could occur, county officials said.

S.C. Secretary of State Mark Hammond said Wednesday his office declined financial statements submitted last month by Five Rivers because of missing information on those forms. Hammond said his office, which regulates nonprofits, is in the early stages of investigating Five Rivers' finances and may forward information about the agency to the Internal Revenue Service. The state's inquiry was sparked by an investigation of Five Rivers by The Sun News. Beulah White, Five Rivers' executive director, has not returned telephone and e-mail messages left by The Sun News over the past week. Five Rivers' board members have decided to comment only through chairman Sam Livingston, who would not comment Wednesday. The board ultimately is responsible for the agency's operation and finances. Documents obtained by The Sun News show Five Rivers has spent most of the federal money it said it planned to use for the training and retail center. Furthermore, grants that the agency said would help pay for the project were never approved. Georgetown County Council is scheduled to vote Tuesday on whether to approve a land swap that would give Five Rivers three acres of county-owned property adjacent to the Choppee Regional Resource Center on Choppee Road. That is where Five Rivers wants to build its training and retail center. In return, the county would get 3.03 acres of land that Five Rivers owns near the intersection of U.S. 521 and U.S. 17 Alternate, commonly known as Nine Mile Curve. That land is adjacent to a county fire station. In addition, Five Rivers wants to buy two acres of county- owned land at the Choppee site for about $18,000, giving the nonprofit agency a total of five acres. The county's school board also must give its consent for the land deal to occur. The school district gave the Choppee land to the county but reserved the right to give final say on what development takes place there. School board Chairman Joe Crosby said the board likely will withdraw its consent for the Five Rivers project at the board's Sept. 19 meeting. "In light of recent developments, we don't feel comfortable giving our consent," Crosby said. "There are concerns about the grants we thought [Five Rivers] had secured for the project and the viability of the project." County Councilman David Hood said he is skeptical of the project and that Five Rivers has not provided sufficient financial details. "Any project that they bring forward needs to be highly scrutinized, and there has to be strict financial accountability and appropriate oversight," Hood said. "At this point, I certainly don't feel comfortable voting to approve it." County Councilman Jerry Oakley said the land deal will not happen until Five Rivers pays off a $45,000 mortgage it has on the Nine Mile Curve property. "That would have to be addressed before we could go forward," Oakley said. "I can't see County Council going ahead with a swap and incurring that debt." Oakley also said he wonders how Five Rivers will pay for the center without the grants the agency hoped to get. The state's Commerce Department denied a $200,000 grant to Five Rivers last year because the agency did not answer questions about how the money would be used. Five Rivers also could not guarantee that only low- to middle-income residents would use the facility, according to department spokeswoman Rose Dangerfield. White told The Sun News in June that Five Rivers had a $250,000 grant from the U.S. Department of Commerce that could reimburse some construction costs. "We have never made a grant to Five Rivers Community Development Corp.," said Philip Trader, a spokesman for the federal commerce department. "We wouldn't give a grant for a community center. Our grants are more regional and are designed to help businesses create jobs." In addition, the Federal Home Loan Bank of Atlanta is wavering on its commitment to give a $600,000 loan to Five Rivers for the project, according to minutes of the Five Rivers' board meetings. Five Rivers has spent $974,660 - or 72.1 percent - of the $1.35 million it received in federal budget appropriations in 2003 and 2004. That money was supposed to help pay for the training and retail center and for some of Five Rivers' programs. A third appropriation, for $145,500, was approved in 2005, but that money can only be used to buy land for the training and retail center. Five Rivers has not spent that money. Documents from HUD, the pass-through agency for the federal money, show Five Rivers spent its entire 2003 appropriation of $357,660 over 12 months. Five Rivers has spent $617,000 of its 2004 appropriation of $994,100. Five Rivers started withdrawing money from the 2004 appropriation on Feb. 23, 2005, when it took $200,000 from the account. That is about the same time the state Commerce Department started raising questions about how Five Rivers wanted to use a proposed $200,000 grant that ultimately was denied. HUD records show Five Rivers withdrew between $30,000 and $55,000 about every month between December and June. The agency's monthly expenses average about $30,000, according to financial statements presented at last week's board meeting. Other than the $160,000 Five Rivers has withdrawn from its federal appropriation this year, the agency had $5,818 in grants and contributions during the first six months of 2006, according to the agency's financial statements. "I haven't looked at their balance sheet, but before we can move forward, we're going to need some assurances," Charlton said. "I don't think we're going to have all the answers we need by Tuesday." In another matter, the S.C. Secretary of State's office said it has told Five Rivers to revise its financial statements to disclose potential conflicts of interest that exist within the agency. Those conflicts include the fact that White's daughter, Dayo Smith, is the chief financial officer and that White directly supervises her daughter. Hammond, the secretary of state, said Five Rivers also must disclose a potential conflict of interest involving board member Hamilton, who is a vice president of BB&T bank. Five Rivers' mortgage for the Nine Mile Curve land is with BB&T. A.C. McGraw, a spokeswoman for BB&T, said the bank does not consider Hamilton to have a conflict of interest in this case because he was not involved in the approval process for the mortgage. Hammond said his agency forwards information to the Internal Revenue Service in some investigations but said it is too early to tell if it will do so this time. Nonprofit agencies such as Five Rivers are required by state law to file financial reports each year with the secretary of state's office. "We're in the very early stages right now," Hammond said. "Until you get in there and start looking around, you don't know where the process is going to lead you."

Contact DAVID WREN at 626-0281 or dwren@thesunnews.com.