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As council approves funding for non-profit's programs, questions surround its management of local market

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Posted at 6:11 PM, Dec 07, 2021
and last updated 2021-12-07 20:00:17-05

CLEVELAND — Questions continue to surround a Cleveland-area non-profit that is set to receive $2 million in American Rescue Plan Act money after the City Council passed legislation Monday night. While the $2 million allocations in ARPA funding is intended to help the non-profit Northeast Ohio Neighborhood Health Services (NEON) bolster its healthcare-related and social service programs, some council members said NEON’s management of the East Side Market continues to give them pause.

According to the legislation, which was supported by Mayor Frank Jackson’s administration, NEON’s plan for utilizing the $2 million in funding included some of the non-profit’s existing programs, including lead testing and prevention, food distribution, and other health and wellness initiatives. Additionally, $360,000 would be spent on a clinic to help residents have their criminal records expunged as well as an additional $200,000 to cover expenses related to the damage caused by a fire at NEON’s primary facility, the Hough Healthcare Center, earlier this year. The legislation passed Monday night with Councilmembers Mike Polensek, Jenny Spencer, Kerry McCormack and Charles Slife voted against the proposal.

“There are all these questions about the operation but as time as gone on, I’ve become greatly concerned. That’s why I was hoping [Monday] that we would have at least held off until the new administration came in and had an opportunity to look at it,” Polensek said Tuesday afternoon. “The question of whether we would need to put in more city money into a program, into an operation that we all had major concerns about, that’s why I voted like I did.”

Although it was not within the scope of the legislation, NEON’s operation of the East Side Market was at the core of Polensek’s concerns.

Located in the heart of Glenville, the new East Side Market opened in 2019 after a lengthy and expensive development process. Although the property is owned by the city, NEON is in charge of the operations of the market and was supposed to develop an adjacent community kitchen, clinic, and community center. Although signage related to the kitchen and community center has been erected, programming has not come online yet. A NEON representative testified at the Committee of the Whole meeting on Monday that NEON was anticipating securing an occupancy permit next year.

The new East Side Market’s development took five years to complete and nearly $7 million. Upon opening, the market had difficulties in obtaining a liquor license, ATMs, and Ohio lottery services. Additionally, the operator of the market pulled out shortly after it opened.

However, since it opened, residents living in Glenville have been supportive of the market’s offerings, which include fresh produce and other groceries. The market has otherwise filled a need by offering fresh, affordable groceries in what is otherwise a food desert.

“I come to the East Side Market every day. I love their food. I love their prices. It’s the closest grocery store to me,” said Lewis Hood. “When the market opened up, I could just come across the street to get my groceries and whatever I needed.”

Polensek said he has no regrets supporting the development of the East Side Market but recent revelations, including the federal indictment of one of the contractors that worked on the project, have given Polensek pause.

“I’m disappointed with how it’s been run, the management of the operation. As I’ve learned more operation I become more alarmed and more concerned,” Polensek said. “That’s another reason why I casted my vote the way that I did.”

Last year, a federal grand jury indicted Arthur Fayne, a board member for an unnamed for-profit subsidiary of NEON. Fayne’s company, Business Development Concepts, was also heavily involved in the development of the East Side Market. According to the indictment, Fayne, who has pleaded not guilty and awaits trial, allegedly embezzled nearly $900,000 while serving as an intermediary between the non-profit and subcontractors working on the market. The indictment states Fayne used the money, which was supposed to cover labor and supplies for the market’s construction, to gamble at the casino.

It is unclear what impact the alleged embezzlement had on the development and operations of the market. NEON did not return calls for comment. Monday’s discussions at the Committee of the Whole meeting also centered around the compensation of NEON’s top executive.

According to tax filings, NEON’s chief executive officer and president, Willie Austin, earned a salary exceeding $500,000 as of the 2019 fiscal year, the most recent filings available. Furthermore, NEON operated at a nearly million dollar deficit that year and has continued to experience drops in total patients over the past few years.

Polensek said the continued questions surrounding NEON have been especially troublesome, considering the non-profit’s storied history and the goodwill that the organization has generated over that time.

“As I was talking [on Monday], I was looking at my left hand and the five stitches. Where did I get those five stitches as a kid? At that clinic, the Collinwood clinic, which [NEON] operates,” Polensek said. “We just cannot continue to throw city dollars or these ARPA funds, which are really really important, at an operation that has managerial issues and possible improprieties as well.”