WARREN - Sunshine Inc., which operates a program providing low- to moderate-income housing to area residents, may have 59 of 87 homes it owns foreclosed on because it has not kept current on property taxes for at least two years.
Trumbull County Treasurer Sam Lamancusa said the nonprofit organization owes an estimated $166,000 in property taxes, plus an additional $22,600 in delinquent special assessments for a total of $188,600.
Lamancusa met on March 21 with Sunshine executive director Anthony Iannucci Jr., Warren Community Development Director Michael Keys, and members of the Trumbull County Planning Commission, warning them that Sunshine must come up with a plan by next week to pay the tax bill or foreclosure procedures will begin.
Tribune Chronicle / R. Michael Semple
Penny and Bacil Rogers are shown outside the Highland Avenue house they are buying under a land contract from Sunshine Inc. Despite paying $400 a month to Sunshine for the mortgage, taxes and insurance, the property is behind $2,764.39 on its taxes and could be foreclosed on next week.
"In my time here, I've never seen an organization get into a situation like this," Lamancusa said.
Of the 87 Sunshine properties, 33 are vacant, 23 have been vandalized and cannot be easily rehabilitated. Several of these properties are in such poor condition that they need to be demolished. Ten are for sale. While most of the houses are in Warren, others are in Warren Township, Hubbard Township and city, Girard, Brookfield, Weathersfield, Niles and Howland.
The organization can either pay the entire bill or develop a repayment plan that will eliminate the debt within five years.
Under the repayment plan, debtors can pay 10 percent of the debt plus the current bill. Once that is paid, they are considered current, but they must continue making scheduled payments on the debt and current bills.
Lamancusa has already delivered Sunshine's tax delinquent information to the prosecutor's office to start the title search process in preparation for the foreclosure procedures. During the foreclosure process, the prosecutor's office does title searches of the properties so those institutions that may have mortgages or other liens are notified.
"In many instances, if there is a mortgage lien on the property the lender will pay the delinquent taxes before the house is foreclosed on," Lamancusa said.
The treasurer said he is concerned about those people living in the 59 homes, stating that if the foreclosures go through there will be more empty houses in the city.
"Those people living in these homes usually don't need another problem like getting removed from their homes because there is a tax delinquency," he said. "We don't know why the taxes are behind. The occupants may have been the cause of the delinquency because they are not paying their rent."
Once the foreclosure process begins it is expected to take about 12 months.
Iannucci said the agency is looking at a number of options that will both allow it to begin a repayment plan in the short term and to solve the longer-term financing problem.
"Clearly, we owe quite a bit of taxes on these properties," Iannucci said. "What happens is we don't have the cash flow to pay the taxes on a current basis."
The City of Warren and Trumbull County created Sunshine in 1993 using federal HOME grants to provide housing for low-income residents. Sunshine obtained money from the city and U.S. Department of Housing and Urban Development (HUD) to purchase, rehab and construct homes, mostly in Warren.
In previous years, Sunshine received HUD funding through its HOME program, including about $50,000 a year for administrative fees. Some of that money was used to pay property taxes.
Since 2005, the amount of money declined every year until 2008 and 2009 when the organization did not receive any funds for its administrative fees. It received small amounts in 2010 and 2011 and no money in 2012.
From 2009 to 2012, Iannucci that said Sunshine used some of the money that could have been used to pay on its property taxes to pay down two older debt obligations.
"We paid over $73,000 on these two obligations," he said. "We still have about $4,000 to pay on these obligations."
Sunshine has been paying on its property taxes any time it either refinances or sells some of its properties.
"Last year, we paid over $19,000 in taxes because we refinanced a home and a sold a few of the properties," Iannucci said.
Sunshine has $800,000 in mortgages on 61 properties financed through Huntington Bank and $125,000 in mortgage debt through Farmer's National Bank. The Huntington loans are original mortgage loans. The Farmer's loans are homes that were refinanced.
Iannucci said the agency is working to get the Huntington mortgages refinanced to lower rates than the 8 percent it is currently paying.
"We are paying about $6,800 a month or $81,600 a year on these mortgages," he said. "If we can get the rates down, that would free up some cash flow that will help us pay on property taxes."
It is also hoping to combine all of the mortgage loans into one so it can be more creative when it is trying to sell properties.
"We've been approached by residents to buy properties, but because we owe more on the properties than they are currently valued we could not make the sales," Iannucci said. "By having them under one mortgage, we could have more options in the financing."
Iannucci said the program has 10 properties that were purchased to be rehabilitated and sold. They were not rental properties.
"When we sell those properties, we will use the profits to pay down on the property tax bills," he said. "We want to reduce our inventory."
Being delinquent on property taxes is not a new problem for Sunshine. Lamancusa said the organization had a problem shortly after he became the county treasurer in 2001.
"At that time, we got them into a contract plan and the problem was resolved," he said.
Lamancusa says it costs people and organizations a lot of money to allow their property tax bills to go delinquent.
"There is a 10-percent penalty on the first half unpaid bill," he said. "There is an additional 10-percent penalty on the second half bill and 4 percent interest per year. The bill can skyrocket on you."
Warren Councilwoman Helen Rucker, D-at large, says she plans to have a committee meeting in the next several weeks to discuss Sunshine finances and to find out why the agency is so far behind in its property taxes.
"We have Warren residents at risk of losing their homes," she said. "These people, presumably, have been paying their rent,s and now they have to worry about having to move because the operators of Sunshine have not done what they were supposed to do."