Leaders of the neighborhood economic development group University Park Alliance say they are still hoping to move forward as they face funding issues and legal trouble.
The nonprofit, working on redevelopment of 50 city blocks around the University of Akron, is facing two lawsuits for breach of contract.
And on Tuesday, it filed suit against Cuyahoga Falls-based Valley Savings Bank, challenging the bank’s right to place an “administrative hold” on about $390,000 in UPA money in accounts there.
UPA earlier this summer lost funding from its major source, the John S. and James L. Knight Foundation. However, the foundation did give UPA $500,000 this summer for operational expenses that could allow the group to work through the end of 2013.
No official action was taken at a short board of directors retreat on Tuesday, said UPA board chair David James, who is also Akron Public Schools superintendent.
Asked whether folding the organization was an option given the legal and financial woes, James said, “That is one of the options, but that’s not the preferable option.
“We would rather try to figure out a way out of this,” said James.
James said a small group of board members has been tasked with working on some action plans and more research needs to be done.
“Really, folding is the last thing that anyone I think around the table wants to do,” said James.
Asked about the Valley Savings lawsuit, James declined comment. Valley President Ann H. Durr also declined comment.
The UPA’s board of directors includes CEOs and heads of major companies, government entities and institutions such as the University of Akron, Summit County, the Greater Akron Chamber, the Akron Beacon Journal and the city’s three hospitals.
UPA is trying to reorganize after former executive director Eric Anthony Johnson resigned in April. Since Johnson’s departure, board members have said they believe Johnson had overpromised or was overconfident in planning and execution of UPA projects related to the Knight Foundation grant.
Last May, Johnson said he assumed he had capable partners and that the work of UPA would continue to get support from Knight.
In August, UPA lost $7.8 million in funding. The foundation had previously given UPA $500,000 of its original $6 million loan, so with the new $500,000, it will receive about $1 million, said James. In all, Knight’s total investment in UPA since 2002 has been $13.75 million, the organization said. The organization has also levied one-time membership fees of $10,000 from many of its members, or received in-kind donations of staff work time.
The Knight Foundation has invited UPA to reapply for a new grant. James has said he did not anticipate the organization to be ready to reapply for a new grant until the end of the first quarter of next year.
The organization has had staff cuts and resignations and now employs one person — a secretary.
Last week, UPA was named as a defendant in a second lawsuit. A Bath Township couple who had a purchase agreement to sell six student rental houses near the university says UPA did not pay the remaining $465,000 owed. A lawsuit was also filed this summer by Cleveland-based firm LNE Group, which said UPA did not pay $18,000 for its fund-raising services.
James said UPA will “try to make an attempt to settle outstanding claims. That may take some working with outstanding creditors and just trying to see if that can work.”
James acknowledged that the lawsuits may bring more suits from other creditors.
The organization will try to settle all outstanding debts it has, he said.
In the Valley Savings suit, UPA disputed the bank’s placing a hold on its accounts. UPA said the decision was made “because the cash flow had declined from the various rental properties held as collateral.”
In 2012, UPA purchased 12 homes for rehabilitation on Excelsior Avenue in Akron for $180,000. It borrowed $140,000 from Valley for the purchase.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her on Twitter at www.twitter.com/blinfisher and see all her stories at www.ohio.com/betty.