Business Leaves Nonprofit In Lurch

It was a partnership with the best of intentions.

A well-respected nonprofit housing and employment organization wanted to create jobs for workers from some of East Tampa's most economically depressed neighborhoods.

They found what they thought would be a good partner in an Ybor City-based light steel manufacturing company owned by former Tampa developer William Bishop and Don Wallace, founder of Lazydays RV Center, along with several other local investors.

So the nonprofit Corporation to Develop Communities of Tampa Inc., known as the CDC, and the for-profit Renaissance Steel LLC formed a joint venture. The CDC agreed to lend Renaissance Steel $500,000 to expand its business operations in exchange for providing good-paying jobs for unskilled workers.

The money came from a $700,000 federal grant that the CDC applied for and received through the U.S. Department of Health and Human Service's Office of Community Services. HHS officials signed off on the loan agreement as part of the grant.

Three years later, Renaissance has gone out of business, leaving behind a long list of creditors and the CDC on the hook for federal funds that it might not be able to repay.

What's more, the jobs that money created have evaporated.

"We were trying to provide livable wage jobs for the community," said Albert Lee Jr., chairman of the CDC's board of directors. "Nobody expected this to happen."

Partnership 'Was A Good Fit'

Even in the best of economic times, good jobs are hard to come by in East Tampa.

So when the CDC found a business willing to accept their employment referrals, some of whom were ex-felons, they were willing to do whatever it took to help them succeed.

"It was a good fit," said Chloe Coney, who founded CDC in 1992 and served as the group's chief executive officer until stepping down in 2006. "We had already established a working relationship with the company and they were willing to hire the people we sent there."

In June 2005, the nonprofit organization applied for the federal grant after outlining a project that was intended to create 20 management positions and 85 jobs averaging $9 to $15 an hour.

The jobs included plant supervisors, welders, equipment operators and general laborers.

The total project cost was estimated at $3.1 million, including the $700,000 grant, about $280,000 in CDC money, and $2.1 million in equity and loans from investors.

Under the terms of the loan, included in the CDC's application for the federal grant, Renaissance was to repay it over 13 years at 6 percent interest. The interest was to be paid annually with the loan principal due at the end of the 13-year period.

If the funds weren't used, they were expected to be returned to the federal government.

The grant application included glowing letters of support from then-U.S. Rep. Jim Davis, then-Hillsborough County Commissioner Tom Scott and Tampa Mayor Pam Iorio.

Shortly after the grant was approved in early 2006, a check was cut to Renaissance for $500,000. The money went toward buying new equipment and operating expenses.

Earlier this year, CDC received a letter saying Renaissance had gone out of business.

The letter said nothing about repaying the loan.

All told, the CDC is out more than $1 million from the failed public-private partnership, which adds up to about one-third of the organization's average annual budget.

Toni Watts, CDC's chief executive officer, declined to discuss the issue in detail but said the board of directors is discussing possible litigation to recover the funds.

"It's a board issue," she said. "We're handling it internally, but we will recover the money."

Board chairman Lee said the loan was approved under the terms of the grant agreement.

"We wouldn't have done this if the federal government had said we couldn't," he said.

A spokesman for the Department of Health and Human Services did not return a call seeking comment.

Nonprofit groups and the private sector often enter into partnerships with the goal of going after public funding, said Leroy Moore, vice president of the Tampa Housing Authority.

"It's very common," he said. "Especially when it involves creating inner-city jobs."

Renaissance Had Delinquent Tax Bill

Born out of the failed Civitas redevelopment project in east Ybor City, Renaissance Steel opened its doors in 2005, promising to provide dozens of jobs.

Iorio christened the facility by cutting a piece of steel. Civitas, a plan that called for redeveloping about 150 acres between downtown and Ybor City, fell apart in January 2004 when the county refused to commit tax money to help.

Renaissance started with an 85,000-square-foot facility at the former Anthony Distribution plant, 2900 E. Seventh Ave., planned to produce low-cost and light-gauge steel wall panels that could be installed quickly and used in residential and commercial construction.

Key investors included Bishop, who served as the Chief Executive Officer, and Wallace, co-founder of Lazydays RV SuperCenter. Don Ball was listed on Renaissance's financial records as chief operating officer. His wife, Cecelia, was listed as vice president and senior finance and sales executive.

Four years after breaking ground Renaissance closed its doors, leaving behind a litany of unanswered questions about what happened and where the money went.

Several claims have been made against the now-insolvent company by former investors alleging more than $82,000 in unpaid invoices. In July, the Hillsborough County Tax Collector's Office filed notice that Renaissance was late paying about $40,000 on taxes for equipment. That delinquent bill was paid on Thursday, according to county records, a day after The Tampa Tribune began making calls to the company's owners.

The company still owes about $39,000 for the current tax year, records indicate.

Renaissance was last managed by former Tampa mayoral candidate Frank Sanchez, who served on the CDC's board of directors when the loan agreement was approved. Sanchez, Bishop and Wallace declined to comment for this story. The Balls did not return a message left at their Tampa home.

Bishop has since left Florida for North Carolina, where he is attending business classes at the University of North Carolina's campus in Chapel Hill, his former colleagues said.

Ed Turanchik, who worked with Bishop on the Civitas project, said he doesn't know what happened to Renaissance, but he suspects that increases in steel prices, coupled with the real estate market downturn, had something to do with it.

"It's a tough market right now," he said. "And when a business fails, people lose money."

Renaissance's assets were supposed to be bought out by Innovative Steel Technologies in a deal for about $2 million, including Renaissance's manufacturing site in Ybor City. Innovative Steel CEO Doug Biddle said he had planned to employ 30 at the plant, and later planned to expand the jobs to about 70 for manufacturing and 50 for field work.

That deal is now dead, and Biddle said he lost more than $1 million in the process.

He wouldn't explain what happened, but said he was preparing to file litigation.

"They took a million bucks of my money and walked away," Biddle said.

Agency 'Started With Nothing'

The loss of the money is likely to weigh heavily on the CDC's shoestring budget.

The group's last financial statement from 2006 showed net assets of about $3.8 million, most of which was derived from state and federal grants and private sector donations. CDC provides counseling, job training and placement, business planning, youth services and home ownership programs. It also builds affordable housing in East Tampa.

The agency has helped several start-up businesses such as the Nehemiah Coin Laundry at East Lake Avenue and 29th Street. It also built the Audrey L. Spotford Youth & Family Center on the site of a notorious bar on East Lake; the Osborne Landing Apartments at Osborne Avenue, east of 34th Street; and an open-air market on East Lake. They are also partnered with the city of Tampa on several affordable housing projects.

"They do the kind of work that nobody else is willing or able to do," Turanchik said.

The nonprofit organization is also building a new 10,000-square-foot headquarters on Hillsborough Avenue. The $2.4 million project will be funded mostly with federal grants and loans and will become home for the corporation's staff of about 25 full- and part-time employees.

CDC was founded in 1992 by Coney and a group of activists, including Audrey Spotford, to bring jobs and affordable housing to East Tampa. They started in a tiny rented office on Dr. Martin Luther King Jr. Boulevard with a modest grant from the Children's Board.

"We started with absolutely nothing," Coney said. "Since then, we've gotten a lot of people employed and built houses for people who couldn't otherwise afford them."

Coney walked away from the CDC in 2006 with a compensation package of about $100,000, bringing her pay for that year to $218,000 including employee benefit contributions.

"That was my severance package," she said. "It was approved by the board."

Lee, the CDC board's chairman, said he worries the failed project and loss of money will damage the organization's credibility.

"It's tough enough for nonprofits these days without something like this happening," he said. "But hindsight is 20-20. We went into this with the best of intentions."