LORAIN — St. Joseph Community Center is on the verge of closing.
A lawyer for South Shore Community Development Corp., which owns the facility, wrote in a letter to Ohio Department of Development Director Christiane Schmenk on Friday that given the current financial situation, “it can no longer operate the property.”
“South Shore will not be able to meet its obligations to the various tenants at St. Joseph Community Center for much longer, which may result in the tenants leaving the premises, resulting in further decline in revenues for the project,” attorney Patrick Keating wrote later in the letter, obtained through a public records request.
Keating also wrote that the South Shore board hopes to work with the state to “preserve the value” of the center.
“Time, however, is of the essence,” he wrote. “Unless the state takes over the operations of the center through the appointment of a receiver, or there is some other infusion of capital, the center will close within a short period of time.”
Lorain Mayor Chase Ritenauer said the beleaguered former hospital will have to shut down in the next 30 to 60 days unless something is done to stem the financial bleeding. At best, he said, the center has 90 days of life left in it if nothing changes.
“I think we’re that close here,” Ritenauer said. “Something needs to happen.”
He said the timeframe for a possible shutdown was discussed during a conference call between officials from the city, Lorain County and the Ohio Department of Development on Friday.
City and county officials want the state to take another look at a proposal to save the ailing community center that would have seen the city and county pump a combined $600,000 into operating St. Joe’s over the next three years. The city and county also would have spent another $300,000 paying down a $1.3 million state loan to South Shore, under the terms of the proposal.
In return, local officials asked the state to forgive the remainder of the loan, of which the city and county each have guaranteed to pay half if the center closes.
The state, which forgave half of the original $2.6 million loan in 2010, rejected the proposal and offered to defer payments on the loan’s interest and principal until 2015, something local officials said didn’t go far enough.
In the meantime, St. Joe’s continues to rack up debt at a rate of between $20,000 and $25,000 per month, Ritenauer said.
“You cannot continue to take on debt without having a way to pay it off,” he said.
Commissioner Tom Williams, who has long questioned whether St. Joe’s is sustainable in the long term, said he believed the city would come back with a counteroffer for the state to consider, but that didn’t happen.
“Today’s meeting was pretty much, ‘Pretty please, give us this money,’ ” Williams said. “There’s no substance to it.”
He said if the center does close, the county and the city will each have to come up with a way to pay off the loans. Williams said the county, which has grappled with its own financial problems in recent years, potentially could restructure the loan to spread out payments over a 10- or 20-year period. That might be incentive enough, he said, to get the state to cut a repayment deal.
“We may be able to pay the loan off for pennies on the dollar,” he said. “I think the state would rather have their money than stretch it out over 20 years.”
Commissioners Ted Kalo and Lori Kokoski, who have pushed to keep the center operating, both said they plan to keep looking for a solution. Kalo gave the center 50-50 odds.
“It means Monday morning we’ve got to pull our bootstraps up and get to work,” Kalo said.
Kokoski said she’s hopeful that state officials will reconsider and offer up a new counterproposal.
“I’m hoping we’re not so far apart that we can’t come up with a solution,” she said.
Gregory Hipp, an executive with Ohio Realty Advisors, which manages St. Joe’s for South Shore, said Friday’s letter, which notified the state that South Shore was preparing to default on the loan, is the first step in the process that would lead to closing the center.
But he also said that South Shore and the company are still looking for a way to keep St. Joe’s operating.
“We’re continuing to work as hard as we can,” Hipp said.
Friday’s letter wasn’t the first time those running St. Joe’s have expressed concern over the future of the facility. In January, Hipp sent a letter to Ritenauer detailing the center’s financial and physical problems and warned that if something wasn’t done, Ohio Realty might pull out of the project.
That letter became public in February around the same time St. Joe’s tenants wrote a letter detailing their frustrations with physical, security and other problems at the center.
Kokoski said the uncertainty surrounding the future of St. Joe’s has held up potential deals that could have cut down on the center’s financial woes.
“Nobody’s going to want to spend the money only to find out it’s going to close,” she said.
Concern over the viability of the center put the brakes on a plan to convert the fifth floor of St. Joe’s into transitional housing for veterans in need. The Valor Home Lorain County Committee had planned to spend $300,000 to buy space at the center and another $400,000 renovating it.
Dan Gillotti, the committee’s vice chairman, said Friday he hadn’t seen the letter, but if the city, county or state don’t do something, the veterans will have to find another location for the Valor Home.
Veterans have been vocal in their desire to keep operating St. Joe’s, which houses a U.S. Department of Veterans Affairs clinic, along with a Lorain County Community College satellite campus, government offices and other groups.
Williams said the focus now needs to shift from saving St. Joe’s to making certain the VA clinic remains in Lorain County.
Gillotti said veterans who sent letters to Gov. John Kasich urging him to intervene and save St. Joe’s received replies this week that detailed what the state has done so far to help St. Joe’s.
He said it didn’t contain any further offers of help.
Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.
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