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Housing agency is out of business


Published: Fri, March 24, 2006 @ 12:00 a.m.


Some are calling for a criminal probe into the group's activities.
By LAURE CIOFFI
VINDICATOR PENNSYLVANIA BUREAU
NEW CASTLE, Pa. -- With just over $75 in its bank account and outstanding loans totaling more than $400,000, Affordable Housing of Lawrence County says it's essentially out of business.
Accountant Deno DeLorenzo sent letters to First Commonwealth Bank and the Lawrence County Housing Authority this week telling both that the embattled nonprofit is insolvent and expects to default on loans owed to both.
DeLorenzo, who only recently joined Affordable Housing's board of directors, noted in his letter that Affordable Housing has offered the U.S. Department of Housing and Urban Development the option to assume ownership of eight New Castle duplexes, triplexes and four-plexes bought by Affordable Housing last year.
DeLorenzo and First Commonwealth bank official Bill Bonner are the only remaining board members for the nonprofit.
However, DeLorenzo said in his own assessment of the homes, he has "little expectation of substantial financial liquidation proceeds."
Rental properties
DeLorenzo said he's troubled by the condition of the rental properties, for which the previous board members paid a total of $327,500. A $250,000 mortgage was given to the group by First Commonwealth Bank in New Castle last December for seven of the homes and the group paid the excess cost with federal money lent to it by the Lawrence County Housing Authority. An eighth home was bought earlier in the year at a county sheriff's sale.
Richard DeHaas, executive vice president of First Commonwealth, said he could not comment on the group's intention to default on the loan.
DeLorenzo said he spent $2,000 of Affordable Housing's money to hire 10 dump trucks to remove rubbish from the homes.
"The trash had been there for years," he said.
And there is only one tenant paying rent out of 18 rental units, according to DeLorenzo. He said two other apartments are occupied but no rent is being paid.
DeLorenzo said within the last few months he authorized $2,800 worth of repairs in the unit with the rent-paying tenant.
"She had safety concerns. Her front door could have been broken into and walking across the kitchen floor nearly made me sick," he said.
Robert Evanick, executive director of the Lawrence County Housing Authority who served as the chairman of Affordable Housing until last December, said the purchase of the New Castle homes made him uneasy.
Evanick resigned from Affordable Housing's board about a week after signing the loan documents, saying the group was going in a direction different from the one he advocated. Four additional board members subsequently resigned.
"I went along with it, but I didn't think we should have gone that way. I wanted to build the one building in Union Township," Evanick said.
Its beginnings
Affordable Housing was created in 2003 after the Housing Authority gave it a $200,500 loan from its Section 8 surplus funds. At that time, board members said they wanted to build new housing for the disabled in Union Township. That project failed over zoning issues.
Evanick said he had no part in the purchase of the New Castle rental properties.
"That was Rob [Ratkovich's] call. He negotiated the prices for them. I was uneasy, but the board voted to buy them," he said.
Ratkovich, who was working as a consultant for Affordable Housing until last February, said the houses were more valuable when they were bought because they had tenants.
Ratkovich, who is also maintenance director for the housing authority and New Castle City Council president, said disorganization by Affordable Housing caused many tenants to skip out on their leases or not pay rent in January and February.
"I collected the rent in December. But in the month of January I was told, 'Don't do it,' and then I was told, 'Collect it' and then not to collect it," he said. Ratkovich said the instructions were given by DeLorenzo.
Criminal probe
State Rep. Frank LaGrotta of Ellwood City, D-10th, has called for a criminal investigation into the matter prompted by DeLorenzo's release of the financial information this week.
"If they purchased these houses in worse condition than they are now and they are not worth what they paid for them, I think that's evidence of a criminal conspiracy on the part of the buyers and sellers," LaGrotta said.
He sent letters to Pennsylvania Attorney General Tom Corbett, Pennsylvania State Police and Lawrence County District Attorney John Bongivengo asking for an immediate investigation.
LaGrotta states that the investigation is warranted because HUD funds from the initial loan were used to buy the homes.
HUD sent a letter to the Housing Authority earlier this month demanding it take immediate action to recover the $200,500, as well as laundry machines it improperly sold to Affordable Housing.
Second position
DeLorenzo, in a press release, stated that Affordable Housing has agreed to the Housing Authority's request to give it second position on the real estate assets of the organization, after the bank.
He said they intend to start liquidating assets after April 15. He notes it's unlikely they will get new rental tenants because Affordable Housing does not have adequate money to solicit new tenants. The group's bank account now has $75.14.
"I have become emotionally exhausted on this matter, and troubled by the fact that monies of this magnitude could have supported, in my estimation, well over 100 families of housing needs for one year," DeLorenzo stated.
cioffi@vindy.com


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