The following is a presentation by Stephen J. Gewirtz, who made this presentation at the CVCBD Board Meeting on November 12, 2013. Mr. Gewirtz is a community member, surtax-payer and is the Head of the Court Watch Program. At the end is a shortened version of this issue but it is important to read Mr. Gewirtz's presentation which more fully explains the situation about the building on the corner of 23rd and North Charles St., the second location of the CVCBD offices.
On March 29, 1996, officers of CVCBD formed the Charles
Village Community Foundation (CVCF). On
March 27, 1997, the building was sold to the Construction Industry Educational
Foundation, Inc. for $32,500. On November 25, 1997, the building was sold
to CVCF for $130,000, and the purchase by CVCF was financed with a seller
provided mortgage for $115,000. Thus,
there was a down payment of $15,000, and I do not know the source of the down
payment. The president of CVCBD and CVCF
had an architectural firm, but I do not know whether he had an association with
the Construction Industry Education Foundation (later renamed as the Building
Congress and Exchange Foundation, Inc.).
At the same time, I should note that I have been told that some people
raised questions at the time about whether CVCF might have paid way too much for
the building. I should note too that
before acquiring the building, CVCBD had operated out of a storefront which was
accessible to people who are physically challenged, but that the first floor of
the new building was accessible only to someone who could climb very steep steps
(and I was in fairly good shape then and had difficulty ascending to the first
floor). In fact, CVCBD had to hold its
board meetings at Future Care to make them accessible.
Nonetheless, CVCBD and CVCF signed a lease under which CVCBD
would make the mortgage payments (principal and interest), while CVCF would own
the increase in equity as the mortgage was paid down plus any capital gains on
the building. CVCBD was also responsible
for maintenance of the building, and I have been told that CVCBD spent quite a
bit making the building usable. After
that, maintenance was minimal. The same
owner of an architectural firm signed the lease on behalf of both parties to the
lease (CVCBD and CVCF), and he was also the one who had signed the agreement to
purchase the building.
Let me note too that when the building was acquired by CVCF
and leased to CVCBD, all CVCBD committees operated in secret, and times and
locations of committee meetings were not revealed to the public. In addition, CVCF has always operated in
secret except for some past joint audits with CVCBD and except for the annual
filing of form 990 with the IRS. By law,
the 990 is public information. Thus, it
is difficult to gather information about what occurred at that
time.
On December 9, 2008, about a year after the building had been
vacated by CVCBD when it had moved to its present location, CVCF sold the
building at auction for $210,000, and CVCF received $200,000 (the other $10,000
presumably being the commission on the sale collected by the
auctioneer).
As of June 30, 2008, according to the 990 filed by CVCF, the
amount of the mortgage on the building was $54,489. Thus, the profit on the sale by CVCF can be
calculated as the purchase price ($130,000) minus the down payment whose source
I do not know ($15,000) minus the balance of the mortgage (less than $55,000, to
use a round number), i.e. the profit is approximately $130,000.
It is my belief that some members of an earlier board set up
CVCF so that they and those they would appoint as their successors controlling
CVCF would control any eventual profit on the sale of the building. It is also my belief that the conflict of
interest on the part of those board members is such that CVCBD would be able to
convince a court of law that it should be able to recover that money. It is clear that the people controlling CVCBD
and CVCF did not look out for the interests of the taxpayers who pay for
CVCBD. We can certainly use more money
for public safety, and public safety is what we were told at the time of the
1994 referendum would be the primary purpose of CVCBD.
Therefore, I am urging the board of CVCBD to sue CVCF to
recover whatever is left of the $130,000 profit on the sale of the
building. Unfortunately, I have doubts
that the money given away when the building was acquired at an excessive price
can be recovered.
Thus,
my recommendation to the board of CVCBD is that you request that the CVCF provide the $130,000 to the CVCBD.
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Condensed version of the actions explained above:
Construction Industry Educational Foundation, Inc. (CIEF) purchased the bldg. on 3/27/97 for $32,500.
8 months later
the CVCF purchased the bldg. from the CIEF for $130,000. with a $115,000. mortgage
+ 15,000. down paym. from.?
CVCBD agreed to pay for the mortgage, including principal and interest
CVCBD spent a large sum of money to make necessary repairs to the building to make it habitable
CVCBD paid for all maintenance on the building (possibly including a new roof)
In 2008 the CVCF sold the building for $210,000. - $200,000 less $10,000. sales commission
The balance left on the mortgage was $- 55,000.
Repayment of down payment was - 15,000.
CVCF makes a profit of $130,000.
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