The city of Akron is throwing a lifeline to the financially strapped University Park Alliance with a $600,000 loan guarantee.
Akron City Council at its last meeting of the year Monday approved the guarantee to Valley Savings Bank to cover the amount UPA, an economic development group focused on the area around the University of Akron, owes the bank.
Akron Mayor Don Plusquellic, who is a member of the UPA board, called this a “first step” to getting the agency “back on solid ground.” He said the city and other government agencies have invested $131 million in this area and want to protect and continue these improvements.
This is “a risk to protect all the things we’ve done here,” he said.
The guarantee will infuse cash into UPA, which has faced an uncertain future after the resignation of its executive director and cancellation of $7.8 million in a grant and loan from its sole backer, the John S. and James L. Knight Foundation. UPA was formed more than a dozen years ago to improve the struggling neighborhood 50 blocks around UA.
UPA sued Valley Savings in September, challenging the bank’s right to place an “administrative hold” on about $390,000 in UPA money in cash and certificate of deposit.
The bank has said in legal documents that the hold was placed because UPA had not made payments on mortgages and notes. According to court documents, although UPA had $391,000 in its account, the group had liabilities in a credit line, 30-year mortgage and five-year note on 33 properties in town. Additionally, UPA at the time was delinquent on property taxes on several properties, which put the loans into default, the bank said.
Councilwoman Linda Omobien asked Plusquellic several questions about the guarantee but ultimately said, “It’s risky, but I’m on board.”
Councilman Ken Jones, the outgoing Ward 5 councilman whose ward includes the UPA area, thanked Plusquellic for taking a leadership role to help UPA.
“We are stepping up to the plate,” he said, adding that he was glad approving this legislation was among his final acts on the council.
Both David James, chairman of the UPA board and the Akron school superintendent, and Ann Durr, president of Valley Savings Bank, declined comment Monday afternoon on the loan guarantee, citing pending litigation.
Three lawsuits
UPA is mired in three lawsuits over breach of contract, including the lawsuit with Valley Savings. City Council’s guarantee does not affect the other two pending lawsuits, Plusquellic said.
James said leaders are not ready to throw in the towel and are focused on settling the lawsuits.
“The work is really important and I think we need to find a way to move forward,” he said.
“A whole lot of things have to take place before that can happen. One is getting these lawsuits settled and getting out of those issues and picking up where we left off.”
James said Monday before news of the guarantee became public that UPA was uncertain about its financial future as assessments from the UPA partners to keep the organization – which currently has one employee, a secretary — running through the end of the year were about to end.
James said leaders have not decided how or when to return to the Knight Foundation, which has invited it to reapply for a grant, because UPA was focused on the lawsuits.
“Look, it’s like this: If the suits that have been filed go the wrong way, there is no UPA,” he said. “Why even think about what’s going to come later? Let’s work through that now.”
Plusquellic said he talked to Knight Foundation leaders, including on a recent trip to Miami to attend an event urging them to “not give up on us.”
In the worst case
Plusquellic said the value of the properties involved in the dispute between UPA and Valley Savings is about $785,000. In the worst-case scenario, he said, Akron would end up land banking these properties and redeveloping them, just as it has already done with numerous other properties in this neighborhood.
In other business, council members:
• Approved the sale of about 9 acres of property to Rubber City McDonald’s that Akron eventually will own and that will border a new exit from Interstate 76/77 at South Main Street and South Broadway. The property will become the city’s after it is acquired by the Ohio Department of Transportation, which is embarking on a $96.4 million project to reshape the Interstate 76/77 interchange in this area.
John Blickle, the owner-operator of Rubber City McDonald’s, said the company will shop the site and figure out the best use for the prime spot, which may or may not include plans for a new McDonald’s and a new spot for Rubber City McDonald’s headquarters.
• Bid farewell to Jones, who was defeated in the September primary after serving on the council for more than 5 years. Jones thanked and complimented each council member, many who also had kind words for him.
• Took the oath of office for the new term that begins Jan. 1. This included new council members Rick Swirsky, who is representing the new Ward 1 centered in Highland Square, and Tara Mosley-Samples, who defeated Jones in the primary.
Mosley-Samples was forced to give up her job as an Akron Municipal Court bailiff to take her council seat. The Akron law director and a Columbus election attorney said the two positions were in conflict.
Stephanie Warsmith can be reached at 330-996-3705, swarsmith@thebeaconjournal.com or on Twitter: @swarsmith. Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com.