ALLENDALE – The U.S. Department of Agriculture/Rural Development could take action regarding the decade-old Allendale County ALIVE Enterprise Community group in the coming weeks.

The bone of contention is whether or not it was legal for USDA Rural Development funds to be used by ALIVE to invest in a for-profit business or to solicit additional private investment for that business.

 

Tee Miller, director for the South Carolina USDA Rural Development office, says he began corresponding with ALIVE in early May when he learned USDA funds were used to help create the Save-A-Lot LLC, a partnership involving Allendale County ALIVE and private investors responsible for opening the Save-A-Lot grocery store in Allendale in October 2007.

 

“There are some problems with the grocery store,” Miller said. “We were contacted by a congressional staffer concerning a disgruntled Save-A-Lot investor whose complaint came through the state attorney general’s office. The appearance is that Allendale County ALIVE used government funds to involve its staff and board of directors with individual investors in a commercial concern.”

 

Miller said both the USDA Offices of Inspector General and General Counsel have been made aware of the situation, “and I believe the GC is in the process of making a draft of its opinion on the issue now.”

 

Miller provided The Times & Democrat with copies of correspondence between his office and Allendale County ALIVE from May 6 to June 12. The first letter from Miller to Wilbur Cave, ALIVE executive director, dated May 6, indicated Miller was holding the release of ALIVE’s periodic USDA draw-down in the amount of $50,000 pending a review of the Save-A-Lot LLC’s state sales and payroll withholding tax records, plus its bank statements, for this year.

 

The $50,000 disputed draw-down was released as of June 30, according to Miller and Allendale County Council Chairman Bill Robinson.

 

“The only thing we do is we pay the salary, benefits and payroll taxes for ALIVE staff every two weeks,” Robinson said, “and USDA reimburses the county. USDA is caught up and has reimbursed Allendale County through that date. Some locals had the misperception that we were augmenting Allendale County ALIVE financially, and that has never been the case. We’ve had this arrangement for several years now.”

 

A letter on June 12 from Miller to Mark Lott, interim ALIVE board chairman, stated he had also “been informed that a not-for-profit group may participate in a for-profit entity ... ” but there were limits as to how much activity that could be. Miller said ALIVE’s participation in a for-profit business may be allowed as an exception to provide needed jobs and services to a depressed area, although that may require an advance ruling from the IRS.

 

Cave said USDA Rural Development is being disingenuous in its contention it knew nothing about the funds being used for the Save-A-Lot project.

 

“(Allendale County ALIVE) must submit a request for any draw-down of funds from USDA,” Cave said. “Each request is reviewed by that agency. We can’t spend a dime if they don’t approve it. There is a process in place to follow, and we do.”

 

Cave also said the reason it took so long to bring the Save-A-Lot project to fruition is because a CPA and an attorney were consulted on how to involve ALIVE without jeopardizing its federal 501(c)(3) nonprofit status.

 

“We made every attempt to garner the best advice we could get,” Cave said. “Other nonprofit groups around the country were also consulted, and this took time. The board and staff realized this would be a unique project to create jobs, provide sustainability income for ALIVE and hopefully force competitive grocery prices in Allendale County.”

 

“If South Carolina groups like us are going to have an impact and make a difference, it will take projects like Save-A-Lot and other local initiatives to get new industry and businesses to Allendale County,” he said.

 

According to documents provided to Miller by ALIVE, the Save-A-Lot LLC is made up of seven voting members. ALIVE’s share of ownership is 71 percent, but it can only exercise one vote. ALIVE’s investment was $150,000, $50,000 which came from the USDA and $100,000 from the S.C. Department of Commerce Community Economic Development Fund.

 

Although ALIVE has provided sales and employment tax information and shown an extension of the store’s 2007 tax return, Miller says he has not yet seen a balance sheet for the entity.

 

“Our concern is the board is not in control,” Miller said. “If it is determined that USDA funds were used illegally in this instance, the consequences could potentially involve funding suspension and the board could be held liable for any misuse of government money.”

 

Allendale County ALIVE is the last remaining USDA Rural Development enterprise community in South Carolina. The other EC, begun in 1995 and covering Williamsburg County plus a portion of Florence County, was suspended from the program due to violations. Although that entity was later able to return from suspension after several conditions set down by USDA were met, the opportunity to continue participation in the EC program had lapsed.

 

Cave said Allendale County ALIVE’s participation in the program is also set to expire on Dec. 31 – a fact confirmed by Miller, who noted USDA staff in his office assigned to the program is being reassigned by the agency.

 

“We have applied for an extension through December 2009, although nothing is guaranteed,” Cave said. “The funds are already there for us to operate for another year even if we don’t receive the extension, but this is new ground for us.”

 

Another issue Miller says the ALIVE board must come to grips with is making certain its members mirror the community’s makeup from an economic, racial, geographical, census tract and gender standpoint. Currently, there are seven members on the ALIVE board, down from the originally mandated 16. Miller also said he was not notified of recent resignations from the board and did not even have a correct copy of the members’ mailing addresses.

 

“The situation has gotten to the point that three different people have been named as ALIVE board chairpersons or interim board chairmen and women,” Miller said.

 

Valerie Whatley, the most recent chairwoman to resign on July 24, said she would have no official comment on the USDA investigation until a final decision is made.

 

“The issue of declining board membership started last year even before the Save-A-Lot project came about,” Cave said. “According to ALIVE’s original bylaws, board members who failed to attend two consecutive meetings were out. Because of that and the resignation of several other board members in 2006 and recently, we proposed to USDA that board membership be set at 12 people. Although first reading of a bylaws change to that effect has already been given approval, a second and final reading hasn’t yet taken place.”

 

A civil lawsuit brought by Save-A-Lot LLC investor Amos Williams against Allendale County ALIVE was dismissed by Circuit Court Judge Carmen T. Mullen this past spring. Cave said he has not been notified of any other legal action against ALIVE in connection with the Save-A-Lot.

 

In August, a rally was held at the Save-A-Lot to gather support from community residents to reopen the store. Between 200-300 petitions have been gathered and will be used to pursue more funding.

 

Cave also says the Save A Lot is just one of the projects under the Allendale County ALIVE umbrella.

 

“This situation is not going to do anyone any good,” he said. “Rome is burning, and we don’t have time to be fiddling around. I feel that a lot of people have only gotten bits and pieces of information without knowing the whole story. We need to be rehabbing houses and finding other ways to improve the economic picture for people in our county. Allendale County ALIVE wants to work with the USDA and try to move forward.”

 

T&D Staff Writer Phil Sarata can be reached by e-mail at psarata@timesanddemocrat.com or by phone at 803-533-5540.

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