YOUNGSTOWN — SOBE Thermal Energy Systems LLC, which is responsible for providing steam heat for a majority of downtown Youngstown, sent a disconnection notice to tenants at Wick Tower over a disputed utility bill.

SOBE sent the 10-day “service disconnection notice” Monday to tenants at Wick Tower, 34 W. Federal St., stating the building’s owner has not paid $25,913.52. “As a result, steam service to the building will be disconnected 10 business days from this notice,” it reads.

Dominic Marchionda, whose company owns the 13-story, 49-apartment building, said the amount is in dispute because SOBE failed to adequately provide heat and hot water to his tenants in January and February, when temperatures were below zero.

Those failures cost over $100,000 in damage to the building as well as the expenses of putting tenants in hotels during SOBE’s failures, credit to renters and lost leases, Marchionda said.

“The list goes on,” Marchionda said. “We withheld three months of payments because of a lack of service. We resumed payment in late April. We made the current payment. We feel our claim far exceeds the amount they claim we owe them.”

Marchionda said: “It’s a business matter, and we expect it to be resolved through SOBE or the insurance carrier. We are withholding the payments. I certainly hope they don’t shut (the heat and hot water) down. I expect it to be resolved amicably.”

In a May 27 court filing, John C. Collins, SOBE’s receiver since Feb. 17 wrote there were 11 delinquent accounts – almost half of its customers – with those late bills totaling $307,815.62.

Collins wrote: “For those customers that are severely delinquent, letters of possible pending disconnection for nonpayment of services have been sent.”

That court filing included a document showing Wick Tower owed $25,913.52 with $14,767.92 being at least 91 days late and $5,572.80 61 to 90 days late and $5,572.80 31 to 60 days late as of May 26.

Collins didn’t respond Tuesday to requests for comment.

It isn’t known if SOBE sent service disconnection notices to any other customers.

Erie Terminal Place, a 40-apartment building owned by a Marchionda company, owes the most money to SOBE on the list at $128,143.52 with $108,439.84 at least 91 days delinquent as of May 26.

Marchionda said that issue stems from $250,000 his company spent for a project SOBE was supposed to do at Erie that was never completed.

“That has nothing to do with steam,” Marchionda said. “They were supposed to do an equipment project, and they’re not able to do that. The contract was not completed.”

But Marchionda said Collins “is trying to do the right thing for the betterment of the city and to get this company back on track.”

Among other major delinquent customers is 22 Market Street Ohio LLC, which is redeveloping the former Mahoning National Bank Building, which owed $71,450 to SOBE as of May 26, according to Collins’ filing.

SOBE FINANCES

Collins painted a bleak picture of SOBE’s finances in the court filing, writing that SOBE’s monthly income is about $130,000 while its monthly expenses are about $220,000 and is “in the midst of a financial crisis,” unable to pay for three rented boilers it uses to operate by September or October.

SOBE’s regular expenses for payroll and materials is about $80,000; rent for three boilers to provide heat to its customers paid to Power Mechanical Inc. of Newport News, Virginia, is $58,200; and “anticipated monthly payments” to Enbridge Gas Co. for gas is $80,000, Collins wrote.

The Enbridge monthly bills haven’t been paid in months — Collins didn’t give a specific date except that it was prior to the court case filed in September by the Public Utilities Commission of Ohio against SOBE — and could be as much as $1,999,656.95 and growing.

Collins wrote he filed a complaint with the PUCO against Enbridge questioning the accuracy of “an unprecedented spike in service charges for the month of January compared to previous months,” and asked the PUCO to prohibit Enbridge from terminating its natural gas service prior to the resolution of the dispute.

City Law Director Adam Buente said on June 1 that because the gas bill wasn’t paid, Enbridge increased the rate “tenfold” when David Ferro, SOBE’s CEO, was running the company. Ferro walked away from the failing business in September.

In the report, Collins wrote that at a May 20 status hearing in front of a PUCO administrative law judge, an agreement was reached with “Enbridge significantly reducing the amount it is claiming as an arrearage and also would include the possibility of (SOBE) paying the arrearage, which will still be in excess of $500,000, over an 18-month period.”

Collins wrote that Ferro decided in 2022 to scrap three coal-fired and one gas-fired boiler at the Youngstown location, 205 North Ave., and raze the boiler house “leaving in its place a massive hole in the ground, and he took no steps to remediate this potential nuisance.”

In 2019, Ferro entered into a lease agreement with Wabash Power Equipment Co. of Wheeling, Illinois, for an 800-horsepower boiler to provide heat to customers. After months of SOBE not paying for the boiler — and owing $383,214 in back payments — Wabash repossessed the boiler on Sept. 30, leaving SOBE without any way to provide steam heat to most of downtown.

With the company owing about $4 million to creditors, Ferro abandoned the company’s Youngstown facility.

Reg Martin was appointed SOBE receiver Sept. 26 at the request of the PUCO as the company was insolvent and unable to provide heat to its customers.

Martin rented three boilers from Power Mechanical at a monthly cost of $58,200. But numerous problems with the boilers caused them to not provide heat during periods in January and February.

Martin used $750,000 he received from Enbridge as part of that company’s settlement of the 2024 Realty Tower explosion to rent two of the boilers.

Collins, who replaced Martin on Feb. 17, wrote in his report that there is only enough money left in that fund to pay the rental fees to Power Mechanical until September or October.

Collins wrote: “Unless the receiver is provided funds earmarked for operating expenses by the early fall, the company will not be able to continue to provide services to the customers of downtown Youngstown.”