“Game of Loans” Clear as Mud- CDBG funds Lorain

March 1, 2018 at 11:03 am 4 comments

The Lorain Development Corp – an ongoing ripple effect – standing alone – questions and accounting tools  all  as clear as mud to  me and I  have been writing about this for yonks!

There is a plethora of information starting with  a series of articles on Lorain Community  Development in 2008 ( 10 years ago  ) by  Mark Teleha

https://locophotogblog.wordpress.com/category/community-development/ and his interviews with  Sandy  Prudoff and Doug Rangel

“the opportunity to meet Doug Rangel. Doug is the Executive Director of the Lorain Development Corporation. Flashing back briefly, this is what Sandy Prudoff explained to me during the interview:

The other division, which is not really a city department, is our contract with the Lorain Development Corporation. The reason why we have a contract with them, we don’t have city staff doing that, is that he (Doug Rangel) has a ward of accountants, bankers, attorneys and business people. They, for no fee, and volunteer time, meet with Doug, and any small business request for financing, all the way up to $1.3 million on the Duane Building, all the way up to a $6 million undertaking of the Industrial Park, he and his Board, but primarily him, will structure the financing, monitor the financing. The Industrial Park had $2+ million for the loan, a loan from the State. A $2+ million loan from the Federal Government, a $2 million grant from the State, and a $2 million grant from the EDA (Economic Development Association)……

D. Romancak 2008

Doug doesn’t work for us, he works under contract with us. His agency is independent. He takes care of all the financing and business loans. So, first perception that we’re these rogue agents just doing whatever we want is definitely misplaced in a statutory city where we are the City of Lorain; we’re not separate and apart, we’re not different. We find it, sometimes amusing, as people say ‘There goes Community Development again, doing whatever it is that they do.” So said Don Romancak,


Note the above link make interesting reading as to  how the system was supposed to  work https://thatwoman.wordpress.com/2009/03/22/community-development-city-of-lorain/

FAST FORWARD to  2015 https://thatwoman.wordpress.com/2015/04/15/money-for-old-rope-a-taxpayers-question/


and then  2016



Robert Ellis, a local attorney and president of the LDC board, said the corporation, a nonprofit, has two options — it can find another foundation that is willing to loan money to businesses in Lorain, or it can dissolve.

AND then the FBI enters the picture: http://www.chroniclet.com/news/2016/07/08/FBI-probes-loan-program-by-Lorain-Development-Corp-ran-for-city.html

and THEN!!!  August 30th  2017

http://www.chroniclet.com/Local-News/2017/08/30/Lorain-acts-on-defaulted-loans-before-HUD-comes-calling.html Glenn also noted the FBI investigation regarding the program, which began last summer, is still going on and now the situation  as it stands today February  28th 2018

as the ripple effect of decisions  made  by  Lorain and the spending of money  and write offs  is still causing  ripples

http://www.cityoflorain.org/announcements?view=1683  February 26, 2018 Public Hearing – CDBG PY2017 Substantial Amendment


Ritenauer {Mayor} said one of the biggest hurdles to lowering that ratio, though, is the revolving loan program, which was frozen several years ago due to over $600,000 in loans being written off and thousands of others were delinquent. “The problem is HUD counts that credit against us so that’s inflating our ratio,” he said. “It’s just north of a million dollars and when we get payments that makes it go up. Well, we can’t spend it to make it go back down because they’ve frozen it. We’d be in good shape if they would unfreeze that money and we could put it where it needs to be.”

Also  the Morning Journal : ” Lorain puts local projects on hold to repay  federal money http://www.morningjournal.com/general-news/20180226/lorain-puts-local-projects-on-hold-to-repay-federal-money

Lorain’s problem comes in part because the city and HUD have frozen Lorain’s revolving loan program to help businesses. That was due to questions about loans raised by Glenn’s predecessor, Leon Mason, who led the Department of Building, Housing and Planning. That frozen account inflates Lorain’s ratio of CDBG money allocated to money spent, the mayor said.

10  years of documents papers and pointing up  the issue on this blog  with  Money  for Old Rope three years ago.. and that pesky  $600,000.00 I  couldn’t figure out and apparently I  wasn’t far off the mark. was I ( even if I  can’t understand  government accounting 101) 😉

In the middle of all this moneying…. and accounting is a loan of $250.000.01 to  South  Shore CDC

“As Mr. Mason stated, the issues with the revolving Loan fund came to him from the State Auditor

“I got an email from the state auditor who wanted to know why the city of Lorain had over $600,000 in loan write-offs,” department director Leon Mason said. “My response was that I didn’t know what he was talking about, and when he sent me the information, I was able to pinpoint some of the loans, but I did find some that were troubling, to say the least.” Mason said one that stood out to him was a $250,000.01 loan to the South Shore Community Development Corporation.

UPDATED- Minutes of the committee meeting April 11th 2016 where the report was given to  Lorain City  Council members


Oh well – 2018 and we are still trying to  find our way  clear of this one. BUT I am troubled – I  am like the majority  of tax payers,  I  can’t even figure out my  own taxes let alone understand “accounting tools” of government .

I looked through spread sheets – I looked through “loans” and to  whom they  were made- BUT I looked at them as a citizen  with  a fair to  middling  IQ. I looked at was down as a “loan”  to  the City  of Lorain (Building Housing and Planning)

NOTE: Yes! I  know I  have issues with  the way  “that” department is and has been  run https://thatwoman.wordpress.com/2016/08/09/municipal-manipulation-lorain-e-again/ and the archaic means at their disposal when it comes to  checking Point of Sale and the “paperwork”-

Little did I  know I was in for  a plethora of emails and answers  and more  confusion. I looked at a sheet of  what were termed “loans”  and one in particular caught my  eye- no  interest and  under the category  “closed not paid”- since the 501C3 mentioned was still an ongoing organization HOW COULD THAT BE? Well what was to  be a simple question turned out to  be a confusing answer You  see this “Loan” wasn’t a loan – No!  No!  I  have it all wrong  apparently  BHP  needs an accounting tool  to  track payments for RENT etc.

The said organization paid out IN LEASE/RENT  $ 19,050 from  April 2013- March 2017 BUT  in the accounting for BHP this was down on the books as a LOAN

Why??  according to  the City  of Lorain : their  (BHP)  system is a LOAN system.  The way they keep track of any building lease/rent is to enter it in this system as it tracks the “due “ payments and categorizes them if they are late/past due etc.

Art Work Scott Bakalar

So confusing as it is  –  when is a loan  not a loan when it is an accounting  tool  with  BHP. Note: Excuse me  just  would make life easier it seems if it was classified under something say  :  Incoming rents from city  owned properties   I think there might be software somewhere to  handle that………. Just my  2 cents (  or is it?)  😉

Now let us get back to  South  Shore  Development Corp  and that $250,000.01 loan that was written off by  the Board of Lorain Development Corporation  on  February  3rd 2014


The Board  was  supposedly  independent of City  Administration and Council etc. BUT there were in place safety  measures – from Mark’s 2008 interview :

All of these loans are subject to review and approval by the loan board of Lorain Development Corporation as well as Board of Control, if they fall within the guidelines and would additionally require City Council approval if the loan request goes outside of guidelines. Doug Rangel “

In the case of the loan to  South  Shore Development Corp   there were issues with  conflict of interest. http://www.chroniclet.com/news/2016/07/08/FBI-probes-loan-program-by-Lorain-Development-Corp-ran-for-city.html

One of the loans that HUD officials flagged is a $250,000 loan made to South Shore Development Corp. in 2011 to help keep the struggling St. Joseph Community Center afloat. That loan was never repaid and eventually written off by Lorain Development Corp. State auditors have said that more than $600,000 worth of loans distributed by Lorain Development Corp. were written off over the years, but Mason said that his research indicates that figure might be slightly lower because of how some of the loans were structured.

The HUD review said that the money lent to South Shore was troubling because at the time of the loan, Robert Gilchrist was serving as both the city’s service director and president of the South Shore board. HUD called Gilchrist’s dual role “an apparent Conflict of Interest.”

Mr Gilchrist – he of the diversionary  program –  voting illegally , pleading guilty  to drug charges


and alleged domestic abuse  which  cost him his job at as President of the Lorain County  Community  Action Agency  was also  in his Service Director position on the BOARD of CONTROL for the City  of Lorain.

You  know that BOC that  is one of the checks and balances  the taxpayers have. But hey  we are OK because this Lorain Development Corporation is a separate entity – although  contracted by  the  then Community  Development Dept. ( see 2008 interview)   and the money  to  fund it came from where ?  Too many  of the same names and  relationships for my  liking .


Early in 2009, South Shore announced its intention to close the St. Joe’s center because its income was outstripped by operating expenses, notably high utility costs. Lorain City Council in 2010 approved money to operate St. Joe’s while Krasienko’s administration looked for ways to keep it open. Lorain Service Director Robert Gilchrist was a key in brokering the deals needed to keep the center open and yesterday he made the city’s presentation to the Clean Ohio Council in Columbus.

Such plans in 2011- ……….

You  can find the Board of Control minutes here – through various administrations http://www.cityoflorain.org/mayor/documents You  can also  access the Journal Entry  on the discussion with  the County  Commissioners  et al  APRIL 2012 with  charts and discussions in depth here JOURNAL ENTRY Commissioners Meeting St. Joes

2012 (no leasing) 2013 (15k ft) 2014 (15k ft) 2015 (15k ft)
Revenue 913 1,063 1,213 1,363
Expenses 1,046 1,077 1,109 1,142
Net Income (132) (14) 104 221
Capital/Other 212 200 200 200
Grants/Loans 0 0 0 0
Other Receipts 2 2 2 2
Profit/Loss (342) (212) (94) 23


  • $1,350,000 Loan on Property from the State
    • Guaranteed $675,000 each to the City and County
    • Payback of the State Loan does not begin until profitable OR when SSCDC property is sold.
  • As a part of the development agreement a $250,000 Loan was provided to South Shore Community Development Corporation to cover operating shortfall.
    • Beginning on April 1, 2012 the first monthly payment of $1,488 is due.
    • The Loan is unsecured.


  • HUD EDI Grant – $166,500. Grant funds were used to fund the LCCC expansion/extension and Little Lighthouse tenant improvement work.
  • HHS – $253,000. Grant funds were used to fund mechanical deferred maintenance to the then occupied areas and common systems.
  • Energy Efficiency and Conservation Block Grant – $480,000
    • City application for funds allowed for both a grant component and loan component for use at St. Joe’s totaling $480,000.
    • In 2011, when EECBG project scopes for St. Joe’s were being developed, use of funds for maintenance of existing systems was disallowed.
    • The Dep. Of Energy also determined that the combination of both a grant and loan could not be used at St. Joe’s; thus the funding became capped at approximately $200,000.
    • City and SSCDC now developing a revised scope to utilize the available EECBG funds for non-maintenance energy efficiency projects.


  • $1,600,000 Grant Awarded to the City of Lorain for SSCDC project.
  • Mercy match over 3 years- $120k per year for 3 years = $360k
  • Demolition includes Building D, Reidy Scanlon Bldg., Thrift Shop.
  • The City of Lorain is currently advertising for a certified professional.
  • Demolition anticipated to begin summer of 2012

and the rest of the story????????????????????????????? Who  knows but I  agree with  Mayor Ritenauer .. to  me this is all as clear as mud………… and just to  help  with  information :


loraincdbg 2017

BDRLF written off_notpaid_


Copy of Public Service Streets and 108 spreadsheet(2)

Economic Development Final http://destinyhosted.com/loraidocs/2016/CCREG/20160404_68/628_Economic%20Development%20Review%20FINAL%20PDF.pdf

LDC Conflict of Interest Policy http://destinyhosted.com/loraidocs/2016/CCREG/20160404_68/628_Lorain%20Development%20Corp%20Conflict%20of%20Interest%20Policy.pdf

LDC Subrecipient Agreement http://destinyhosted.com/loraidocs/2016/CCREG/20160404_68/628_LDC%20Subrecipient%20Agreement%20PDF.pdf

Portfolio Quality Report http://destinyhosted.com/loraidocs/2016/CCREG/20160404_68/628_Portfolio%20Quality%20Report.pdf

EDA Title IX Plan http://destinyhosted.com/loraidocs/2016/CCREG/20160404_68/628_EDA%20Title%20IX%20Revolving%20Loan%20Fund%20Plan.pdf



Entry filed under: a Cow -elle opinion, city of lorain, Corporate responsibility, Legal. Tags: , , , , , , , , , , , .

The Gatekeepers- Keeping us out!!!! Part One March 3rd -It’s OK- Chris Ritchey

4 Comments Add your own

  • 1. Robert J. Gargasz  |  March 1, 2018 at 12:47 pm

    This is an excellent article on the expenditure of public dollars through local channels to politically allocated projects. The half you see is all of the money being funded and spent upon specific projects.

    What you are not shown and are expected to assume is that there is a dollar for dollar transfer of value to the project’s public interest as supported. But this can only be guessed as to its measure. Taking money out of public projects on the backside by a variety of artifices has long been a game that has corrupted local politicians.

    It would be interesting to follow the money out of the checkbook accounts of the funding recipients to see how the money was spent and who got how much. My guess is that you will find many were paid amounts far in excess of what one might expect to pay for similar services on a similar project. This is really an inflated cost or payoff. Identify those who got the payoffs and you will have identified your criminal actors. Squeeze them and maybe they will tell you how the scheme worked. There really are no new schemes only variations of the same old same old.

    The questions may be solved by the FBI, but it should not be trusted to be the only one capable of following the money. Lorain City Council should consider hiring a special prosecutor to investigate such public corruption as the existing channels have proven themselves ineffective and disinterested, perhaps even compromised. Local law enforcement needs help as it is a job above and beyond their forensic skills. Perhaps they could be given a professional task force to methodically follow the money.

    Robert J. Gargasz, Esq.

  • 2. thatwoman  |  March 1, 2018 at 12:52 pm

    totally out of my realm of comprehension but at least it is time lined and documented …. it is amazing even in the past few years how links have disappeared .. nothing nefarious just a media outlet changing its server and that link is gone ..so I had to research what the headline should have been took ages….. and this post was edited up to 28 times…. one issue I had was changing a typo and the html decided to go nuts……..
    I need a drink!!!

  • 3. Robert J. Gargasz  |  March 1, 2018 at 12:58 pm

    Put some Bailey’s in your coffee, you deserve it. Great article.

  • 4. thatwoman  |  March 1, 2018 at 1:03 pm

    might be an idea or I could just drink it straight – thanks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed

Recent Comments


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 189 other followers

March 2018
« Feb