Construction started two weeks ago on the Choppee Head Start center even though the Waccamaw Economic Opportunity Council has yet to get a bank loan to pay for it.
The EOC has tried unsuccessfully since at least August 2009 to get a loan, according to agency records. Minutes of meetings show that the agency has contacted Horry County State Bank, BB&T and Conway National Bank about the loan. In addition, the Georgetown County Council extended the lease on the land for the center to 40 years to meet the requirements for a loan from the U.S. Department of Agriculture, said Jerry Oakley, the council's vice chairman.
The agency has gotten a pledge from the federal government for up to $487,000 for the center. But the money it will receive in the end is to be limited to 25 percent of the final construction cost, according to a letter to the agency from the regional Head Start office in Atlanta.
The full funding figure, the letter said, was based on an appraisal submitted with the application for the federal money.
The building now under construction will cost $859,000, according to a building permit issued by Georgetown County to SouthCon Building Group LLC of Mount Pleasant, which was awarded the contract.
That figure does not includeextension of water and sewer lines to the center from Choppee Road nor refurbishing an old parking lot between the site and the road. The county will not extend the lines or repair the parking lot, Oakley said, contrary to what was reported in one set of board minutes.
The building permit, which cost the company $16,280.04, allows for the construction of an 8,917-square-foot facility, at least 3,000 square feet smaller than the center the agency's directors were talking about in August 2009, according to minutes of a meeting that month.
A 12,000-square-foot facility would not have been large enough to accommodate all the Head Start students in the rent-free classrooms the agency had in Georgetown County schools in 2009 and which it was planning to relocate to the new center, then-board member Richard Smith pointed out at one meeting.
Wilhelmina Whitfield, the Head Start program director and the agency's interim executive director, told Smith that the program would give up pre-approved funding for a specified number of students if more showed up than could be accommodated, the minutes read.
The relocation of students from existing classrooms means, according to minutes of past board meetings, the agency will face additional, ongoing costs to transport the 4-year-olds from their neighborhoods to the new center. Smith said the agency had no plans for how the additional cost would be funded.
Whitfield said Wednesday she did not want to comment on a story about the Choppee Head Start center. Zacharius Grate, the board's chairman throughout the process, did not return phone calls seeking comment.
Moving forward with risk
The Administration for Families and Children, the part of the federal Department of Health and Human Services that oversees local Head Start programs, have contacted the EOC and unnamed state agencies about the situation and are researching "the recently approved facilities' application to determine the legitimacy of the stated problems regarding distance and transportation," Ken Wolfe, deputy director of public affairs for ACF, wrote in an e-mail response to questions from The Sun News.
"Our first priority is the education and services provided to the children and families," he wrote.
Board member Willie Sparkman asked at the last EOC board meeting about the status of the loan to pay for the center's construction, and was told by Grate that it was being processed.
The answer didn't satisfy Sparkman and other board members who unsuccessfully sought a special meeting to discuss the center and other issues.
Getting a loan at this point could be tough for the agency; it was placed on at-risk status by the state more than a year ago. Bill Benson, a loan officer at Conway National Bank, said that a bank would view the designation as "problematic" in considering a loan application from any nonprofit.
Board minutes dating as far back as March 21, 2009, show that financing for the building was uncertain from the beginning, but that the majority of board members doggedly pushed ahead on the project despite assertions by Smith that the facility wasn't needed and the agency couldn't afford it.
Smith said at an Aug. 25, 2009, meeting that the drive to build the new facility came after Georgetown County offered the program a building at $1 a year lease. When that building proved too expensive to renovate and Georgetown County offered the long-term, $1-a-year land lease instead, according to Smith's account in the minutes, the agency - without a full board discussion - adopted the idea to build a $1 million facility.
He said at the meeting that there was no factual basis for an at-the-time $1.2 million cost estimate and asked how the agency could talk with banks about loans without knowing how much money it actually would need.
Smith and former board member Ulysses Dewitt, also a former Horry County councilman, further questioned why the agency would consider building the new center on land it planned to lease, rather than buying its own property, the minutes said.
Smith also wondered why board members were talking with banks individually rather than soliciting bids for the loan, as is most often done by government bodies seeking construction money.
Board member Isabelle McKnight upbraided Smith at the meeting for his frequent questions about the center. Addressing him, the minutes related her exchange: "It seems as though you keep beating down this thing over and over. She said every time we make a gain you want to pull us back ... she gets the feeling that he just doesn't even want to understand this concept that we are trying to move."
Trying to find the money
According to minutes of the March 2009 meeting, the board's finance committee instructed former agency executive director Beth Fryar to talk with banks about borrowing $1.2 million to build a 12,000-square-foot building that was to house eight classrooms, offices, a kitchen and other rooms and accommodate 100 to 120 students.
But the committee was basing its request on "guesses" about cost and square footages, Fryar told the board when questioned about it.
By the August meeting, the minutes show, agency officials had focused on Conway National Bank and a $1 million loan at 4 percent interest.
At the time, the agency was paying off a $760,000 mortgage for its Conway office building with an annual total of $74,814 in payments and needed an additional $70,000 to $125,000 for a roof on the building, which Fryar said would require payments of $13,067 a year for seven years, according to the minutes.
The agency was getting about $150,000 a year by renting excess office space at the building, Fryar said, according to the minutes. The money was the only undesignated funds the agency had to use for expenses outside the bounds of its federal funding. Using rent money left over after paying for the mortgage and roof, Fryar figured the agency could afford the $1 million loan.
Smith objected that the plan left the agency with just over $1,600 a month in undesignated funding, a thin margin should it unexpectedly need money for building maintenance, the minutes said. Additionally, he noted, basing a long-term payment on short-term rental income was not financially sound.
He asked Fryar, who calculated the figures based on directions from some board members, if she thought the plan was realistic. She said no, the minutes said.
Minutes of further meetings show that the center continued to be a frequent item for discussion. In one meeting, a plan was approved to try to raise $100,000 for the center by having agency staff members sell discount coupon booklets for businesses along the Grand Strand.
School district input
Whitfield and some board members, according to the minutes, felt it would be better for the Head Start program long-term if it had its own facilities. What would happen to the Head Start classes, they asked at one meeting, if Georgetown schools decided it needed the classroom space and tossed the pre-kindergarten children out?
The agreement to use the school district's classrooms is renewed annually, Georgetown schools Superintendent Randy Dozier said Wednesday. The district supports the concept of the Head Start education and wants to accommodate the program as much as possible.
The only reason the district would want the space back, he said, is because a growth in enrollment meant the district needed the classrooms for K-12 education. Based on current projections, he did not see that happening for 10 years to 15 years, at least.