John Joyce said he first met Steve Pumper around 2004, when the two worked together remodeling Educator Apartments, a senior citizens' high-rise in Parma Heights.
Two years later, Joyce, Pumper and a real estate lender went into business together. They bought Parkview Apartments, a dilapidated high-rise of HUD-funded apartments on East 13th Street downtown.
The developers pledged a $16 million renovation and sought federal, state and local funding.
In October 2006, county commissioners voted to provide $2 million in loans - $1 million for construction costs and another $1 million in brownfield funds - to clean up asbestos and lead paint at the 199-unit complex.
Terms of the agreement said that the construction loan had to be repaid in full but that the county would forgive 45 percent of the brownfield loan - or $450,000 - if the Parkview cleanup was completed as planned.
The developers asked the county to make the loan to a nonprofit company called Educator Affordable Housing. Many developers use a nonprofit in such a way in deals involving government-financed affordable housing, according to people familiar with similar projects.
Paul Singerman, Joyce's real estate attorney, explained how it works:
When a county lends money to a nonprofit, the nonprofit turns around and lends the full amount to a developer. The developer uses rental income from the project to pay back the nonprofit.
And when the brownfield cleanup is finished and part of the loan is forgiven, there's no tax on the forgiven money since it was lent to a nonprofit.
"It's the only way to make money developing low-income properties," Singerman said.
But there was a complication in the Parkview Apartments project.
After the county approved the loans, the Internal Revenue Service denied nonprofit status to Educator Affordable Housing.
It's unclear why. The IRS does not publicly disclose why it turns down requests for nonprofit status. And Singerman said he didn't know, adding that the IRS has recently started tightening rules and that it no longer accepts as nonprofits some agencies it once would have accepted.
Regardless, the rejection didn't stop the project. At the developers' request, county commissioners in September 2007 unanimously amended the funding resolution and agreed to make the loans to a different nonprofit: Teamster Retiree Apartments - Youngstown.
State records show that John Joyce is president of the nonprofit, which was formed in 1977 by four men, including then-Teamster boss Jackie Presser.
At the time, the Teamsters and other unions were developing apartments, Joyce said, and Presser hired him as the national housing director.
It was a tumultuous time for the Teamsters and for Presser, both under investigation for working with the mob.
In 1982, the Labor Department accused Presser - who was working as an informant for the FBI - of running a ghost-employee scheme. Joyce said last week that at the time, he believed Presser was being set up.
Joyce said that when the FBI, working with attorneys in the case, asked him to wear a wire and secretly tape-record a witness in the case against Presser, he agreed. Joyce said he recorded the witness saying that he was willing to accept money to change his testimony against Presser.
That hurt the witness's credibility.
Presser died in 1988 before his trial on labor racketeering charges, and a couple of weeks later, federal prosecutors called a news conference, saying that the Teamsters were controlled by organized crime and that the government was taking charge of the union.
"I think politically, [Presser] will be remembered as one of the most powerful labor leaders in the country," Joyce said last week. "He did a lot of good for a lot of people."
Joyce kept his job as housing director for the Teamsters until the union leadership decided to get out of the development business in the early 1990s. He still runs more than a half-dozen charities with the word "Teamster" in the name, but none of the nonprofits have any Teamster involvement, he said.
Over the years, Joyce has used the nonprofits, like Teamster Retiree Apartments - Youngstown, to build a thriving business.
Joyce's for-profit business, Retiree Housing Management of Beachwood, manages many of the properties developed by the Teamster nonprofits. Retiree Housing Management manages about 2,400 apartments in seven states, said Joyce, who serves as president of the company.
When asked why he never removed the Teamster name from the nonprofits, he said it was a good question and that maybe he should have.
But he said that his nonprofits have nothing to do with the county probe and that his work with the Teamsters was over long ago.
Meanwhile, the renovation of Parkview Apartments continues.
Joyce declined to comment on Pumper, who he said owns about 25 percent of the development. But Joyce said he's certain his own name was dragged into the county probe because of his business with Pumper and the brownfield loan to clean up Parkview.
Court records show federal investigators are also probing the county's brownfield funding.
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