CDC Viva South faces uncertain futureWritten by Lisa Renee Ward | | email@example.com
Viva South notified the City of Toledo on Dec. 21 that its board had voted Dec. 20 to suspend operations. It stated that a default judgment sought by Adam Martinez for services to A2 Lawn Care was “the last nail in Viva’s coffin.”
Martinez, a Toledo city councilman, said he is no longer the owner of the company that filed the lawsuit. Hernan Vasquez, Viva South board president, told Toledo Free Press on Feb. 1 “Viva continues.”
Vasquez said three board members had resigned, but he and four others were committed to remaining with Viva with one employee staying on as a volunteer, with the hope her position could become a paid one once the organization merged with another Community Development Corporation (CDC).
“We are in negotiations with Neighborhood Housing Services (NHS). We met with Bill Farnsel and Matt Sutter; we want to keep our independence for the South Side, keeping Viva semi-autonomous,” Vasquez said.
Vasquez said the City of Toledo was not notified of the change since the Dec. 21 letter, but would be.
Viva South owns more than a dozen pieces of property. Two projects, a rehabilitated home at 565 Orchard St. and a new home at 306 Crittenden Ave., began in 2005. NHS was the co-signer for part of the funding that was obtained. The Orchard Street home is being rented; the Crittenden Avenue home is vacant and for sale.
Executive Director of NHS Bill Farnsel confirmed to Toledo Free Press on Feb. 1 that discussions had taken place with Viva South’s Executive Director Celso Rodriguez and Vasquez. Farnsel said the discussions were at the “very preliminary stages” and that due diligence would be required before anything was decided.
“[NHS Board President] Matt Sutter and I got a small peek. We don’t have any financial records as of yet. We have to look internally to see if we have the cash flow,” Farnsel said.
Farnsel said there are debt service payments owed on the Orchard Street and Crittenden Avenue homes. NHS anticipates having those properties transferred to them since it appeared NHS was going to have to make the payments.
The credit union crunch
In 2003, when Viva South was Heritage South Commercial Revitalization Association, discussion began on finding a credit union to locate in South Toledo.
Heritage South obtained the former South Toledo Library building in 2005. In September 2010, it was announced Nueva Esperanza Community Credit Union was given its charter after being in the planning stages since 2006.
Viva South planned for Nueva Esperanza to lease the first floor of the library building.
“We are still excited about the credit union, our desire is that we pass the title to NHS so they can get credit for the construction,” Vasquez said.
He said NHS had recently participated in discussions with Viva South and some of the board members of Nueva Esperanza, related to a leasing price.
“Nueva Esperanza is going to sign the lease. They said they could not afford the preliminary budget, then NHS stepped in. NHS said if they take ownership of the building it becomes a project not for profit,” Vasquez said.
Farnsel described the credit union conversation as “hypothetical.”
“The lease price was $1,200. The federal regulator said $1,000 was on the high side, so I asked ‘Would that mean $1,000 is too high?’ It was kind of a reverse bidding situation,” Farnsel said.
He said the credit union is under pressure to move into a location and has other places it could lease, but it had been waiting for Viva South.
“The library building is very nice. There has been extensive remodeling to the first floor, the utilities are on, but it’s not handicap accessible. Total completion of the lower level is lacking about $100,000, but that would not stop the building from opening. If they had the money it could be solved in a week or two,” Farnsel said.
NHS could opt to become involved with the library building since that would be considered an economic development project separate from a proposed merger with Viva South.
Consilium Investments LLC dba (doing business as) A2 Lawn Care filed a suit in Lucas County Common Pleas Court on Nov. 1 against Viva South for $19,309.75 for services owed from 2007 to 2009. Martinez had a contract with Viva South to provide services.
Martinez was the executive director of Viva South from 2004 to 2006. Ohio Secretary of State business filings show that Consilium Investments LLC filed a transfer on Dec. 28, 2009 from Martinez to Alexis DeAnda as the primary agent.
Vasquez said Roman Arce, the attorney for Viva South, and Joe McNamara, the attorney for Consilium, were working on a settlement.
“Celso Rodriguez is looking at drawing down on money from the city to be able to pay it in a lump sum to settle,” Vasquez said.
He said he met with Martinez and his partner, Alexis DeAnda, along with Rodriguez, last year for lunch and that they had made an offer to settle the lawsuit and were waiting for an answer on their settlement offer.
“Then we found out about the lawsuit, they deserve payment, the problem was the accuracy of the charges.”
Martinez told Toledo Free Press on Feb. 1 that while small adjustments were made on some of the billings, the adjusted amount was the amount being sought in the lawsuit. He said he was not aware of any recent settlement offer. On Feb. 2, he said he was not actively involved in the lawsuit, that his partner was the one responsible for the business dealings of A2 and Consilium. He said he sold the business to his partner in October 2009.
The lawsuit was scheduled for a pre-trial hearing on Feb. 3 before Judge Gary Cook. McNamara, who is also a Toledo city councilman, confirmed on Feb. 2 that his client in the case was Consilium but he would not further comment on the case.
While Martinez said he is not involved in the business operations of Consilium, he and Vasquez are both on the Nueva Esperanza board and Rodriguez is on NHS’s board. Martinez said on Feb. 1 that he would abstain on any vote involving a Viva South lease.
Farnsel said the financials were more complicated than just the suit.
“Viva South has a contract to provide services in the neighborhood,” he said. “As a block grant contractor, you have a certain amount allocated and ito spend that money down, you have to submit a set of reimbursables to the City monthly, you have to have the money upfront, then you wait for the City to pay you and if they don’t pay you, then you have to find funding to create the next set of reimbursables.”
Farnsel said it generally takes Toledo 45 to 60 days to remit payment, but one time last year it took five months.
“We had to have private funds, the city caught us up in one lump sum, but if you don’t have the money to continue to create reimbursables, you don’t provide services and whatever you didn’t draw down, you don’t get,” Farnsel said.
The city requires all property taxes and taxes related to employees are paid. “You have to provide paid invoices, this puts a big burden on organizations, unless they have a source of backup funding,” he added.
“NHS would have to find the cash to pay Viva’s expenses, then create a new set of reimbursables,” Farnsel said. He said there were also property taxes due on the library building and the contractor was still owed money.
Vasquez said he dreams of purchasing land to create a “grassy parking lot in front of the church on South Broadway Street to open the architecture of the church. I see an empty lot as an opportunity,” Vasquez said.
“Hernan has a lot of optimism, he’s very dedicated, but I’m not sure he understands the whole process,” Farnsel said.
“Viva focused all of their energies on the credit union aspect. NHS may decide to save the jewel of what Viva has put its energies into, buy the building for a dollar — find sources to finish the building.
“This is about cash and the management of cash — we don’t even know the full picture,” Farnsel said.