East Ohio Street culinary deals included many ingredients, former development leader says

The transactions that spurred dramatic change on East Ohio Street involved a large loan taken out by the nonprofit Northside Leadership Conference, and later transferred to a for-profit developer, the conference’s former leader said in an interview following PublicSource’s reporting on changes along East Allegheny’s main business thoroughfare.

The conference — an umbrella group of North Side organizations — paid $1.8 million for eight properties on the 400 block of East Ohio, and sold them to East Ohio Capital LLC for $50,000. But former conference Executive Director Mark Fatla said a loan was key to the transfer, and pushed back against any suggestion that it was a “sweetheart deal.”

County records show that the conference borrowed $1.45 million in a mortgage of the properties, and Fatla said that mortgage was paid by East Ohio Capital.

Fatla, who couldn’t be reached for comment before PublicSource profiled the street’s changes this month, served as executive director of the Northside Leadership Conference from 2006 until September 2021.

PublicSource reported that part of long-dowdy East Ohio Street has seen a revitalization, driven by the conference-to-LLC transactions, but that some in the neighborhood wonder whether the new businesses serve North Side residents. After publication of the story, Fatla reached out to describe the business arrangement he forged underpinning the sales.

In 2017, Fatla said, the conference borrowed from a bank to purchase 400-410 and 422-426 East Ohio St. because developer East Ohio Capital could not borrow the money on its own.

Fatla said that East Ohio Capital had already borrowed extensively for other projects. So the conference borrowed the money, bought the properties and arranged to lease them to the company, which agreed to cover the conference’s mortgage payments.

“We financed the whole thing,” Fatla said. “So instead of paying the bank they’re paying [the conference].”

According to county records, the conference took out a loan on Sept. 1, 2017, for $1,450,000 from SSB Bank, formerly known as the Slovak Savings Bank.

“We signed a master lease in which East Ohio Capital would pay rent to the conference in an amount to cover monthly debt service to the bank,” Fatla said, plus a little extra for the risks and costs incurred by the conference.

East Ohio Capital also borrowed $400,000 from the Neighborhood Community Development Fund and in turn lent that money to the conference to help purchase the properties, according to Matt Hicks, an investor based out of the Bahamas and owner of East Ohio Capital.

East Ohio Capital was also responsible for property-related expenses, repairs, upgrades, taxes and utilities, he said.

In exchange, East Ohio Capital could collect whatever revenue came in from the properties, he said.

By 2022, East Ohio Capital was able to secure a conventional bank loan, and the conference sold the properties to the developer in April of that year.

“That sales agreement was for $50,000 plus East Ohio Capital would assume all remaining debt [that hadn’t been paid off],” Fatla said.

Fatla stepped down from his position before the conference sold the properties to the private company. Current leaders of the conference have not been responsive to interview requests.

When East Ohio Capital bought the properties from the conference, the LLC entered into an assignment of rents agreement with SSB Bank. That agreement allows the bank to receive rents if the company can’t pay the mortgage.

Fatla said the conference was more than just a temporary bank.

“We’re working with the developer, not just sitting there as a passive pass through for real estate,” he said. “We’re working with them to bring the project to fruition. This was a much longer story than this one block,” he said, describing yearslong efforts to beautify buildings with murals and shutter problematic businesses he said brought crime and drugs to the area.

He said the conference’s efforts helped shift the momentum of the area.

“People want things turned around yesterday but the reality of a development of a street like that is it’s a relay race, not a sprint,” Fatla said.

The commercial strip there now has “opportunities for everybody and that’s what you want in your district.”

Eric Jankiewicz is PublicSource’s economic development reporter, and can be reached at ericj@publicsource.org or on Twitter @ericjankiewicz .

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