YOUNGSTOWN — Downtown Youngstown buildings that depend on SOBE Thermal Energy Systems LLC for steam heat have gone without it since Tuesday with city and building officials out of patience with the struggling utility’s inability to function during the coldest stretch of the winter.

But Kenneth R. Goldberg, the lawyer for court-appointed SOBE receiver Reg Martin, wrote in a Thursday report to the Mahoning County Common Pleas Court that the lack of heat is “caused by the failure of the customers to maintain the pressure relief valves and / or the customer use of bypass lines that due to their smaller size provide decreased pressure and flow.”

Downtown business officials strongly dispute Goldberg’s assertions.

Barb Ewing, CEO of the Youngstown Business Incubator, said SOBE officials told its customers at a Dec. 17 meeting that the current system — a 650-horsepower boiler combined with a 200-horsepower steam plant — “would not be adequate to meet the demands when the temperature dropped below 15 degrees, and it’s dropped well below that. We were told it wasn’t a long-term solution without a backup. It took (Martin) six weeks to get a backup unit, and he acts like it’s everyone else’s fault. The system is not providing sufficient pressure and / or temperature the buildings need. It’s not about us. It’s about a system that wasn’t going to be able to withstand this kind of weather.”

The thermostat at the rear of YBI showed it was 44 degrees inside while it was 61 degrees in the lobby, Ewing said.

Ryan Kelly, a co-owner of the Ohio One building, said SOBE’s 28 buildings downtown, including his, have had “little to no heat” since Tuesday.

SOBE’s customers, who make up a majority of downtown properties, met Friday to discuss what could be done to resolve the issue with the utility.

Ewing said the customers may file a complaint with Judge Anthony Donofrio, the common pleas court judge overseeing Martin’s receivership, or may go to the Public Utilities Commission of Ohio seeking his removal — which the city unsuccessfully sought a few months ago.

Martin “is not the person to effectively operate the system,” Ewing said.

Kelly said: “This was preventable. This is why we were making noise in November because we didn’t want to wait for this to happen.”

Kelly said he “strongly disagrees” with Goldberg’s assessment that the problems are the fault of SOBE’s customers.

“It’s definitely not a customer issue,” Kelly said. “To put it mildly, it’s frustrating. It was preventable, and we have tenants in the building without heat. SOBE hasn’t been responsive in a timely manner. They have an obligation to provide heat to their customers. It’s a basic obligation and they’re failing.”

City hall and the attached police department are two of SOBE’s biggest customers, and city officials have repeatedly questioned Martin’s ability to run the company.

In a Friday letter to Goldberg and Monica Waller, the PUCO’s general counsel, Youngstown Law Director Adam Buente wrote city hall “is going on its fourth consecutive day without any meaningful steam heat from SOBE Thermal plant,” and “city hall has not had even 10% of the necessary steam pressure since” Tuesday.

Buente wrote that his office on the fourth floor was 44 degrees while offices on the third floor had a temperature reading of 38 degrees.

Buente wrote: “It goes without saying how dangerous and calamitous this situation could become for all 28 buildings in downtown Youngstown given the extreme cold forecast for the next seven days. The city of Youngstown has borderline begged and pleaded with the receiver and attorney general’s office to do more in this urgent situation, including asking your respective offices to do whatever it takes to ensure redundancy in the system. This has not happened. The predictable consequence has occurred.”

Most city employees have worked the past few days from home, and the temperature forced the cancellation of Friday’s board of control meeting. It is rescheduled for Monday.

A flange connected to the water supply line at SOBE broke and was replaced Wednesday. It caused SOBE’s system to shut down. SOBE said it is currently operating even though customers aren’t getting steam heat.

‘FAILURE OF THE CUSTOMERS’

Martin was appointed SOBE receiver Sept. 26 as the company was about to go out of business.

Despite the two-boiler system, Goldberg wrote: “Several customers continue to experience low steam pressure. Each of these situations have been investigated by SOBE and determined to be caused by the failure of the customers to maintain the pressure relief valves and / or the customer use of bypass lines that due to their smaller size provide decreased pressure and flow. As indicated above, SOBE employees react quickly when contacted directly by customers, even though the lack of steam heat problems are due to customer equipment deficiencies and are the responsibility of customers to maintain. Nonetheless, efforts are being made by SOBE to identify and assist in corrective actions to the customer’s equipment.”

Goldberg wrote in his court filing that SOBE’s two-boiler operation is above the 800-horsepower boiler repossessed Sept. 30 because the company owes $383,214 in back payments to the steam plant’s owner, Wabash Power Equipment Co. of Wheeling, Illinois.

Martin was able to rent the 200-horsepower boiler thanks to a $750,000 payment from Enbridge Gas Ohio’s settlement of the 2024 Realty Tower explosion investigation by the PUCO.

Goldberg wrote that a second 800-horsepower boiler has been rented and is being delivered.

In an email, John Rambo, SOBE’s general manager, wrote Friday that the new boiler “is enroute, delayed by a flat tire, which is now being replaced to allow him to continue the trip.”

Rambo didn’t respond to a request to respond to customer complaints about SOBE.

“The monetary gift put SOBE in a much stronger position to provide the Youngstown community uninterrupted steam heat and water service, once installation is completed, during the remaining winter months and beyond,” Goldberg wrote.

Ewing said SOBE officials mentioned the backup 800-horsepower boiler at the Dec. 17 meeting, and it took Martin six weeks to get it.

Goldberg also wrote that Martin will use a portion of the $750,000 Enbridge payment to buy meters to replace nonworking ones at customer locations.

“The meters are necessary to provide SOBE with a measurement tool for steam usage,” Goldberg wrote. “This is critical to the billing process as the current basis for billing is the leveraged billing that was set in 2018.”

Goldberg wrote: “However, a permanent answer to the economic and operational circumstances of SOBE will require significant additional capital, and the receiver continues to seek additional funding operations to find a permanent solution. The billings for SOBE’s monthly gas usage continue to grow, especially during the current weather conditions being experienced. Current gas providers are being contacted to provide product at a non-default rate. Due to SOBE’s poor payment history, gas providers are reluctant to do so without a substantial deposit.”

FINANCIAL WOES

When SOBE walked away from Youngstown and Martin took over, the company was insolvent.

Goldberg wrote the company owes more than $4.5 million to creditors. That includes Wabash and Alcon Mechanical Piping Inc., which won a $424,458 default judgement Dec. 5.

“The receiver is unsure whether monies collected from the sale of the receivership estate will yield a return to secured or unsecured creditors,” Goldberg wrote. “It is expected there are tax claims and delinquencies, the extent to which is unknown at this time.”

Goldberg wrote when Martin took over as SOBE’s receiver, it had about $65,000 in a bank account.

SOBE has about $116,000 in gross monthly billings and about $237,170 in total accounts receivable, he wrote.

Goldberg added: “Several customers claim a set-off due to alleged breaches by SOBE prior to the receivership. The receiver believes that after the new meters are installed and PUCO reviews the ongoing billing structure / process, the monthly billings will increase. The receiver, through counsel, has sent initial collection letters relative to the past due accounts. Certain businesses have had their billings discounted by prior management; this process is being reviewed.”

Goldberg wrote that Martin believes the receivership administration will not be finished for at least one to two years because it will take that much time to find a viable candidate to take over operations.

Martin served as receiver from 2017 to 2019 when the downtown utility, then operated by Youngstown Thermal LLC, financially failed.

Martin was named to run Youngstown Thermal after the PUCO was informed by the company’s CEO that the business was financially failing, which could have caused an energy crisis downtown.

Martin worked out a deal with SOBE, based in Dublin, Ohio, to manage the facility in 2019. SOBE purchased the assets for $250,000 in November 2021.

Goldberg wrote: “The company is currently not profitable and owns few assets to make it an appealing purchase. The best possible outcome for this receivership would come about if the receiver can raise funds to purchase permanent boilers to be installed at the facility and then locate a public or private entity to be qualified by PUCO to take over the operations.”

Goldberg listed potential solutions as the city taking over operations or SOBE customers doing so.

The city rejected Martin’s requests to take over Youngstown Thermal years ago and have dismissed his inquiries into running it now.

Kelly led a preliminary discussion among SOBE customers in October to consider buying the utility. But no plan is in place.