WARREN - The embattled nonprofit Sunshine of Warren Trumbull Area Inc. owes the City of Warren and Trumbull County almost $2 million for money obtained and subsequently provided to six for-profit limited partnerships.
Sunshine owes the city $1.6 million and the county $304,000, according to a 2011 accounting report done by Anderson, Metzger and Co. and presented to City Council earlier this year.
The $1,979,030 debt is in addition to the $737,000 still owed on the Housing and Urban Development HOME loan provided to Sunshine through a consortium formed by the city and county.
Those funds were used to purchase some of the initial houses in Sunshine's inventory. Even though Sunshine has not made a payment on the HOME loan in 10 years, officials in the city's Community Development and county's Planning Commission are in ''early'' discussions about how to handle the HOME debt, including possibly forgiving it.
In the case of the for-profit developments, they were primarily funded through private investors receiving federal tax credits through their partnership with Sunshine, according to the nonprofit agency's director, Anthony Iannucci Jr.
The for-profit limited partnerships include Warren First Homes, which has 48 single-family new and rehabilitated homes in Warren; Warren Homes II, which has 40 new homes in the city; Warren Homes III, which has 35 new and five rehabilitated properties in the city; Warren Neighborhood Redevelopment LLC, which has 21 rehabilitated homes in the city; and Villas of Cortland Creek LLC, a 40-unit senior housing development in Cortland.
The for-profit general partnership is with Highland Place Associates I Ltd., a rehabilitated 120-unit multi-family complex in Conneaut.
Sunshine has acted as the nonprofit limited partner of five developments in Trumbull so the private for-profit investors could receive available tax credits that are used to entice them to build in urban areas. Sunshine is the general partner with the Conneaut project.
"The private investors need the help of the nonprofit to maximize their application scores with funding agencies, so they can receive their tax credits," Iannucci said.
One of the for-profits, Warren Neighborhood Redevelopment, is now tax delinquent on all of its properties and the Trumbull County treasurer foreclosed on three of them. The company and treasurer have since agreed to a delinquency payment plan.
Although identified in the accounting as ''notes payable'' to the city and county, Iannucci described the debts as Housing and Urban Development HOME money that has been used as the local share of the tax credit housing projects. Iannucci said the HOME money must be identified as loans so the investors will be able to maximize their tax credits, but that they are not really debts.
The projects attracted $22.8 million in private investment for local contributions of under $2 million in HOME funds, Iannucci said.
"We own about .0051 percent of Warren First Homes," Iannucci said. "The company that invested the money for the project so it could be completed owns about 99.99 percent of the project. They earn their money back through the tax credits. That is how they get their investments back."
Iannucci said that is how the federal government provides incentives for private companies to invest in low- to moderate-income urban neighborhoods. He added that Sunshine and its subsidiaries are operating in the same way as other tax credit programs.
Sunshine has been caught up in controversy since last year when it was revealed that many of its properties were condemned and demolished at taxpayer expense, others were rehabbed twice, most were vacant, some were in tax delinquency, and several being sold through land contracts did not have their taxes paid even though that was part of the contract.
Iannucci and Sunshine's board of directors - Mel Milliron, Gary Shaffer, Gary Mayers and Kathy Zapka - have refused to allow public inspection of the agency records, even though county commissioners have cited an Ohio Revised Code section that appears to make shielding the records illegal.
Milliron said his term on the board expired, but the group's refusal to provide records including meeting minutes makes that impossible to verify. Without the records, it's also impossible to determine who received the money that was supposed to be used for property taxes.
It appears Milliron and a previous board member have not been replaced.
The Ohio Attorney General's Office has been asked to investigate. The office's Charitable Law Division said it would be interested and that board members hold a fiduciary responsibility.
One of the for-profit companies, Highland Place Associates I Ltd. in Conneaut, was formed by a partnership with Sunshine-Highland in 2008. The 120-unit Section 8 housing project is managed by Millennia Housing Management Ltd., headquartered in Cleveland.
Through its work with Sunshine, the $9.3 million project was able to obtain approximately $5.1 million worth of loans and grants.
"Sunshine is a general partner in this project," James Wells, a senior development manager with Millennia Housing Management said. "It has an interest in making sure Highland Place is a success."
Sunshine received about $60,000 when the corporation was formed and another $60,000 when the Ohio Finance Agency inspected the completed properties in 2009.
Christine Robertson, vice president of development for Millennia, said the general partnership agreement it has with Sunshine is similar to agreements it has with nonprofits in other parts of Ohio.
Villas of Cortland Creek was a $6.1 million project, which included $4.1 in tax credits from Ohio Housing Finance Agency, $350,000 from the Warren-Trumbull Consortium and $250,000 from the Housing Development Assistance Program, according to a 2005 USDA Rural Development release. It also received a $900,000 Rural Development Rural Rental Housing Guarantee Loan.