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Loans given away by El Paso County remain unpaid five years later

By Matthew Smith, Good Morning El Paso Weekend Anchor / Reporter
Published On: Jan 14 2014 07:44:56 PM CST
EL PASO, Texas -

A rush to lend money led to a series of bad loans handed out by El Paso County.

Whether it's Horizon City, or far west El Paso, you won't find any of the 17 businesses that El Paso County gave a total of more than $600,000 to in 2007. Instead, you'll find empty storefronts.

"There was some urgency," said Rosemary Neill, explaining how the loans came to be. "The state notified us in the waning days of a prior administration, so the information was taken to the prior administration, but they recognized a change was coming, so they deferred it to a new court."

Neill, the director of the Family and Community Services department, is in charge of the loans. Her department was put in charge after a shuffle in county government left the program forgotten, and dormant, for several years. During El Paso County's budget crunch, jobs were cut, and departments were shuffled. Forgotten was a Texas Capital grant worth hundreds of thousands of dollars that was tagged for use on economic-boosting programs.

By the time it was discovered, a decision had to be made: give back the money, or find a use for it. With no guarantee the money would be used in El Paso County, a past administration made the move to use the money.

El Paso County turned to the local Hispanic Chamber of Commerce to recruit businesses in need to help. Information on how many businesses applied for loans was not available, however, 17 were eventually given loans. Only one business, Sage View Homes, paid that money back, but it has since failed as well.

Another failed business was a pest control business. Yet another, a shipping company.

"Gas prices sky rocketed, diesel went up," said Neill. "Trucking, a small trucking firm, we had loans like that."

While the failure was bad, the collections were worse. It's been five years since the loans were handed out, and more than $450,000 remains unpaid.

In August, Neill went before the County Commissioners Court and asked the loans be written off so they could try another round of loans. The previous debts were deemed uncollectable by Neill and her staff. The county's legal department is looking for more information on whether legally they can obtain anything in return for the capital they handed out.

Apparently, in the rush to hand out loans, the county didn't have a chance to write loans with liens. That made it difficult to collect as businesses failed one by one.

"In hindsight, certainly we can look at the track record we've built and it certainly doesn't look good, but the court looking at it was looking at a different set of variables," said Neill. "It looked better to them than it did two years, three years or four years later."

Neill points out the county wasn't trying to compete with banks. In fact, they sought unbankable businesses to take a risk on and help create more small businesses in El Paso. Unfortunately, it didn't succeed, but the county hasn't given up. Neill said they are still looking at giving our more loans in the near future.

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