LORAIN — With the St. Joseph Community Center awash in a sea of red ink and the state rejecting a bailout for the aging and mostly empty center, Ohio Realty Advisors is quitting as property manager for the Lorain facility.
“We can’t continue to run the property at a deficit because there’s no one to pay that deficit,” said Gregory Hipp, the company’s vice president and property management director, on Wednesday. “We can’t continue to operate on hope.”
On Tuesday, Hipp sent a letter to the South Shore Community Development Corp., the nonprofit group that owns the center at 205 W. 20th St., saying the termination will occur within 90 days. The company may not be the only one leaving.
If the Ohio Department of Development does not come up with a bailout plan by Friday, South Shore plans to close the building.
“Time is of the essence, and further delay will only result in a worsening situation,” attorney Patrick Keating, who represents South Shore, wrote in an Aug. 24 letter to Diane Lease, the department’s chief legal counsel. “In the absence of a definitive plan to move forward, (the) South Shore Community Development Corporation will proceed to negotiate with the tenants to either terminate, relocate, or otherwise minimize the disruption caused by the closing of the building.”
The former St. Joseph’s Hospital has been plagued by cooling and heating problems, leaks and a lack of tenants. Only the first of the building’s five floors, parts of which date back to when the hospital opened in 1892, is occupied. Among the tenants are a satellite branch of Lorain County Community College, the Lorain Sports Hall of Fame, local offices of U.S. Sen. Sherrod Brown, D-Avon, and U.S. Rep. Betty Sutton, D-Copley Township, and a Veterans Affairs clinic.
Donations for a shelter for homeless veterans to be built at the center have dried up since news of the financial hemorrhaging surfaced.
The 300,000-square-foot building was in danger of closing because of a lack of tenants before a public-private deal in 2010. Under an agreement approved last August by City Council members, the Ohio Department of Development agreed to take 25 percent of future leasing profits.
However, Christine Schmenk, the department’s director, balked in May at a proposed bailout in which city and county taxpayers would pay a combined $600,000 into the center’s operating expenses and pay the department an additional $300,000 through 2015 to pay down a $1.3 million state loan. In exchange, the state would have forgiven the remaining $1 million. The department forgave half of the original $2.6 million loan in 2010.
Without the bailout, Lorain and county taxpayers are on the hook for $650,000 each for the loan, which must paid off in 10 to 15 years. The center lost about $300,000 last year and $125,000 this year through July, according to Hipp.
Nonetheless, Hipp, whose company is paid about $4,000 per month to manage the center, said department officials were being shortsighted.
“They’re going to take lump-sum payments over time and watch an already-blighted area deteriorate further and watch the veterans of Lorain County lose their facility,” he said. “It’s unfortunate that the groups couldn’t figure out a solution that would work for everyone.”
While county Commissioner Ted Kalo said he is hopeful of keeping the center open, fellow Commissioner Tom Williams said closure is inevitable. Williams said state officials, whom he wouldn’t name, told him they’d be open to debt forgiveness in exchange for a one-time payment from the county.
“It’s a common practice that businesses do,” Williams said. “While they couldn’t guarantee that the state could do it, they felt that it would be something that the state would definitely consider.”
Mayor Chase Ritenauer, the lead negotiator for the city and county, said he still hopes a deal can be reached to keep the newer portions of the center open, with the rest being demolished. But he wants to get Lorain taxpayers off the hook soon.
“It’s a matter of getting out with the best outcome,” he said.
Contact Evan Goodenow at 329-7129 or firstname.lastname@example.org.