A Charleston City Councilman proposed using money set aside for affordable housing to instead help small businesses feeling the effects of the coronavirus pandemic — including possibly one of his restaurants.
Councilman Jason Sakran, who owns a restaurant in Charleston and one in Mount Pleasant, said he may seek money from the program that would be funded by the Local Development Corporation if it is approved.
He put together last week a brainstorming session with a handful of other City Council members behind closed doors. The idea was first discussed publicly at Tuesday night's City Council meeting. Sakran said he doesn't consider what he's done a breach of public trust or the state's open government laws and said "the process is not as important as the outcome."
A South Carolina Press Association attorney said what transpired over the past week shows attempts to circumvent public input.
City Council on Tuesday night punted on a vote to use lawsuit settlement money — earmarked for affordable housing assistance last year in agreements with the LDC — to go to small businesses that have had to shut their doors due to the novel coronavirus. Sakran is co-owner of two Bon Banh Mi Southeast Asian Kitchen restaurants and a recipient of funding from the LDC.
Sakran told The Post and Courier he received a $200,000 loan from the LDC two years ago to open a Bon Banh Mi location in Mount Pleasant. He said he makes regular payments, hasn't missed one and now owes about $175,000. While acknowledging his proposal could have a perception issue, Sakran said, if things continue the way they are going, his business may be among those requesting a loan like those he is looking to set up.
"I think the issue is — and small business owners can attest to — is we have a crisis on our hands. It is likely going to get worse and the most we can do is provide resources they need in a timely fashion," Sakran said. "For anyone to think this is about me certainly doesn't understand the struggle small businesses are currently facing and will continue to face. ... My business that receives funding is in Mount Pleasant and is not even germane to this argument."
At least three City Council members took issue with the proposal at Tuesday night's Council meeting. One pointed out that none of the African American Council members were included in last week's brainstorming session.
A meeting of the City Council's Community Development Committee is scheduled for Thursday at 3 p.m. and City Council could vote to amend the settlement agreement and authorize the new program as early as Friday. The LDC's board met on Monday and approved a partnership already.
Sakran said he called Steve Saltzman, the LDC's CEO, last week and suggested it create a bridge loan program. Up to $4 million could be set aside and loans would max out at $25,000, Saltzman said. Saltzman said if the impacts of the coronavirus are as bad as the 2008 recession, it would hurt small businesses most, especially those operated by people of color and women.
If the program is approved, Saltzman said, small businesses should make sure they have their business license, tax code, business address, historical financial records and a plan for how they would spend the loan money.
On March 17, four members of City Council, including Sakran, met with Saltzman, the city attorney, mayor's chief adviser and two senior members of the Finance Department to "brainstorm" the program idea. The meeting was not publicized and did not meet public notice requirements because it did not reach a full quorum of City Council members, or include council members who serve on the same committees. Sakran said he was deliberate in choosing who was invited — Council members Mike Seekings, Ross Appel and Carol Jackson — so it wouldn't violate open meeting laws. They were "folks who I knew would be receptive to entertaining the idea."
Sakran said he emailed the full council the following day with the proposal and asked them to reach out to him with any comments, concerns or complaints. He said he met with Councilman Keith Waring in person in his office that Wednesday night and received feedback from six other Council members individually. A former spokesman for the Charleston County School District, Sakran said he is aware of public information laws and did not feel he violated them.
"I'm very familiar with Freedom of Information and how that works, but I don't know the number of council members required to have a formal meeting," Sakran said. "I'm not an attorney but, no, it was as far as I know, it was not a formal council meeting."
Jay Bender, an attorney with the South Carolina Press Association, called Sakran's approach "divide and hide" and said if Sakran plans to apply to the program he shouldn't be involved in any discussions about it. Better yet, he said, his business should be exempt from applying.
"If his business is eligible to receive a loan and he created the program it would look like he was feathering his own nest," Bender said.
Bender said there's an apparent problem when city procedures aren't followed.
"The whole process seems to circumvent ordinary policies and procedures," Bender said. "If it isn't a violation of the Freedom of Information Act it is (expletive) close to it."
Seekings said Wednesday he didn't think Sakran violated open meeting laws, but said he was unaware at the time that Sakran had a loan with the LDC.
"I can see where the optics of it might not be great," Seekings said, adding small business owners need to explore every option they have. "From 50,000 feet, as we're looking around for available resources to help people, if the government is in a position to do so it seems at least in theory like a good idea."
Jackson, too, did not feel Sakran violated open meeting laws. She said she was aware Sakran had a loan with the LDC. She said she didn't want to comment on Sakran possibly going for a loan but did say he seems like a "fine man with a lot of integrity."
Appel did not respond to a request for comment.
Rick Jerue, Mayor John Tecklenburg's chief adviser, defended Sakran's actions on Wednesday, saying these aren't normal circumstances.
Tecklenburg said he didn’t feel Sakran breached FOI and said anything brought to Council usually takes “a little working up to get there, just to brainstorm and figure things out.” Tecklenburg said he didn’t have a quorum and was trying to move a good idea along.
Tecklenburg said Sakran told him about his loan with the LDC either before the meeting or on Monday, and that Sakran intended to recuse himself from the vote. Tecklenburg also pointed out that Sakran got the loan before he was elected to City Council.
“I guess it’s clear now that Councilmember Sakran, he had a personal experience to know the LDC did this kind of small business lending and they were an appropriate organization to be helpful,” Tecklenburg said. “I think he had the best of intentions and it’s a good idea.”
Tecklenburg said if Sakran is considering applying for a loan that he would ask him to reconsider.
As far as his commitment to affordable housing, Tecklenburg said he spent a good chunk of the day Wednesday thinking of ways to fund a small business loan program without compromising needed money for affordable housing.
"One side of the argument is that it's a loan and will be paid back and ultimately will be used for affordable housing," Tecklenburg said. "But the other side is we have pressing needs now sooner than the terms of the loans would be paid back and we would need funds for affordable housing sooner than that."
Tecklenburg said he is working with state and federal leaders to ensure any funding packages discussed now help Charlestonians.
Councilman William Dudley Gregorie said proper procedure wasn't taken into consideration.
On Wednesday, Waring echoed concerns for following public procedures. "We have a process of committees that should funnel up to Council," Waring said. "This bypassed that and went straight to Council. One of the reasons we use the committee process is because it is more diverse and more involved."
He also was concerned with the lack of diversity in the brainstorming meeting and wasn't sure if it was wise to use money earmarked for affordable housing to be put into a loan program in which upward of 35 percent might not be repaid.