The Social Development Commission’s property corporation faces a foreclosure lawsuit for owing nearly $3 million in mortgage payments on its North Avenue buildings in Milwaukee, according to court records.

SD Properties Inc. is the tax-exempt corporation that owns the buildings of the Social Development Commission, or SDC.

Forward Community Investments Inc., a community development financial institution with Madison and Milwaukee offices, filed a complaint March 27 against SD Properties and SDC with the Milwaukee County Circuit Court.

SD Properties owes Forward Community Investments approximately $2.3 million in principal and interest for a 2020 construction mortgage and about $679,000 for a 2023 mortgage, for a total of just under $2.98 million, according to the complaint.

“FCI would be thrilled to see the critical services provided by CR-SDC return to the community,” said Ryan Zerwer, president & CEO of Forward Community Investments, in a statement. “However, the past 12 months, communication from SD Properties, Inc. has failed to provide sufficient information on actionable plans to fully resume operations and start meeting their financial obligations.”

SDC has been in turmoil since last April after it abruptly stopped operations and laid off staff. The agency reopened in December and is now preparing for a public hearing on its community action agency status.

William Sulton, SDC’s attorney, confirmed that SD Properties is in default on its mortgage payments.

“SDC has been in discussions with FCI about what kind of remedies they intend to pursue, so I guess it’s not a complete surprise,” Sulton said.

“I think the impact of the foreclosure case is it puts the North Avenue building at risk, and if there is no North Avenue building, then that is the majority of programs that SDC had in ’23.”

SDC also is listed on the lawsuit as a defendant as a guarantor for SD Properties.

Background and timeline

Forward Community Investments has been a lender to SD Properties since 2015 through its Community Development Loan Fund, which provides “financing to nonprofit organizations and community organizations for mission-focused projects that will work to reduce racial and socioeconomic disparities across the state of Wisconsin,” according to the complaint.

SD Properties entered into a construction mortgage on Jan. 22, 2020, of approximately $1.98 million plus interest, and then modified the agreement on July 22, 2020, to increase the total amount to $2.36 million.

In March 2023, SD Properties entered into a separate agreement in which it would owe about $665,000 and interest for a mortgage of five property parcels, which include the main office at 1730 North Ave., a warehouse at 1810 North Ave. and parking lots, according to court documents.

SD Properties defaulted on a “significant loan” in April 2024, according to Zerwer.

SD Properties also defaulted because it did not pay the entire amount of debt and interest owed for 2020 mortgage by the end date, or maturity date, of Dec. 22, 2024, according to the complaint.

Forbearance action stalled

Before the legal filing, Forward Community Investments presented SD Properties in the fall with a forbearance agreement, in which it would refrain from immediately collecting the obligations due from SD Properties, and revised it several times. 

However, Zerwer said revisions on the agreement reached an impasse in March.

SDC board members discussed a “time-sensitive” resolution related to SD Properties at an emergency meeting on March 24 and decided to postpone taking action.

“We’ve been doing many strategic moves to prevent the foreclosure of this building and possibly a deficiency judgment against our Teutonia (location),” said Vincent Bobot, an SDC commissioner and chair of the SD Properties board, at the meeting.

“If there’s not a foreclosure, it means it’s still going to be drawn out and still take quite some time, but nevertheless, we want that time,” he said.

Board members planned to return to the item at a later meeting so they could discuss it directly with Sulton, who was not at the meeting.

The forbearance agreement would allow SD Properties to keep the North Avenue main office and the 18th Street warehouse, Sulton said, but SDC’s main issue now is having no funding.

“Even if we win the lawsuit, without any funding, we’ll just end up with another lawsuit down the road,” Sulton said.

Legal proceedings

SD Properties has retained attorneys from Kerkman & Dunn to represent it in the foreclosure case, Sulton said.

SDC and SD Properties have 20 days to respond to the summons and complaint before the case proceeds in court.

“We feel we have been patient and extended every opportunity to the leadership of SD Properties, Inc. to work in partnership with us to resolve the loan default,” Zerwer said. “In fact, we call upon SD Properties, Inc. to once again work with us on a forbearance plan.”

Public hearing Friday on SDC

The Wisconsin Department of Children and Families is hosting a public hearing on SDC’s designation as a community action agency from 11:30 a.m. to 1 p.m. on Friday, April 4.

The hearing will be held in the Milwaukee State Office Building, 819 N. 6th St., in Conference Rooms 40 and 45 on the first floor.

Milwaukee Social Development Commission buildings face foreclosure risk is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

The reopening of the Social Development Commission, after months of disruption, has sparked mixed reactions from elected officials.

While some welcome its return, others anticipate challenges ahead, with Milwaukee Mayor Cavalier Johnson calling for greater transparency from the agency.  

The Social Development Commission, or SDC, reopened its main office at 1730 W. North Ave. earlier this month. It’s now focusing on resuming its Volunteer Income Tax Assistance, career services, child care and housing programs.

The agency provided programs and services that helped Milwaukee County residents living in poverty before it stopped services and laid off employees in late April because of its inability to meet payroll and other financial concerns. 

Mayor calls for more transparency 

At the SDC board’s meeting where leadership announced plans to reopen, Jackie Q. Carter, the board’s commissioner appointed by the mayor, voted against executive board nominations and asked for more community involvement, a formalized process and public transparency in the board’s decisions.

“The vote accurately reflected the mayor’s concerns about the lack of transparency in the latest moves,” said Jeff Fleming, a spokesperson for Johnson.

The mayor would like SDC to follow requirements of Wisconsin open meetings law, which includes publicly posting notice of its board meetings and providing agendas with information regarding the matters of discussion, Fleming said.

Since SDC suspended operations, the board has only been meeting part of the law’s notice requirements. SDC has notified individuals and members of the press of upcoming meetings, but it has not been posting meeting notices in public places or online. 

“The mayor is hopeful SDC will, once again, be a leading provider of help to low-income residents of the region,” Fleming said. “It is essential that SDC regain trust before it can resume the important work it previously undertook. The services are needed, and well-run organizations are key to serving those who deserve assistance.”

Other officials weigh in

Before the reopening announcement in November, Milwaukee County Executive David Crowley said in an interview that the county wants to continue working with the Social Development Commission.

He said many of the services SDC provided have been picked up by other agencies, and his office has not received any constituent calls related to service issues. 

“But we also know that as a CAP (community action program) agency, there are dollars that are probably on the table at the state and federal level that we haven’t been able to take advantage of because they aren’t open,” Crowley said. 

Following the reopening announcement, Jonathan Fera, the communications director for the county executive’s office, said the state and the federal Office of Community Services are working with SDC to determine how to move forward, and Crowley is ready to collaborate with them when needed. 

“It’s encouraging that people are back at the table working on a solution to the challenges that have impacted public services provided by SDC,” Fera said. 

The county administration is encouraging residents who can no longer access services through the SDC to reach out to the Milwaukee County Department of Health and Human Services. 

Another official interested in SDC restarting services is U.S. Rep. Gwen Moore.

When SDC abruptly shuttered in April, Moore wrote letters to SDC’s board and the U.S. Department of Health and Human Services, calling for a federal investigation. 

“The Social Development Commission’s closure was a loss that was deeply felt in the community,” Moore said. “While I am grateful that the Social Development Commission is resuming some of its services, I know it still faces many challenges ahead.”

County Supervisor Priscilla E. Coggs-Jones, who represents the 13th District on Milwaukee’s Near North Side and is the Milwaukee County Board of Supervisors’ second vice chair, called the reopening a “critical step toward restoring vital services for Milwaukee County residents.” 

“The SDC has been a cornerstone of community support for years, and its relaunch reaffirms our commitment to uplifting people in need,” she said. 

State Sen. LaTonya Johnson, who represents the 6th Senate District, said the reopening is great news for Milwaukee County. 

“The commission’s ability to provide housing assistance and child care food services has been a lifeline for families who need a little support,” Johnson said. “I’m glad to have them back in our community, and I encourage those who need help to take advantage of their services.”

Devin Blake, PrincessSafiya Byers and Edgar Mendez contributed reporting to this story.

News414 is a service journalism collaboration between Wisconsin Watch and Milwaukee Neighborhood News Service that addresses the specific issues, interests, perspectives and information needs identified by residents of central city Milwaukee neighborhoods. Learn more at our website or sign up for our texting service here.

Milwaukee leaders weigh in on reopening of Social Development Commission is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

While some are celebrating the reopening of the Social Development Commission in Milwaukee, not everyone is joining in. 

“SDC stands for ‘Still Didn’t Compensate,’” said Sarah Woods, a former youth and family services supervisor for SDC. 

Last week, the Social Development Commission resumed providing tax assistance, career services, housing-related services and child care food services after being closed for seven months.

But Woods thinks SDC should not be paying staff for new work if former employees, including her, have not been paid for work done before SDC suspended operations and laid off its entire staff.

However, William Sulton, SDC’s attorney, said that staff doing new work is precisely how former employees are going to get paid. 

“I would say … the way that those folks are going to get paid is by the organization reopening and submitting the required reporting documentation to get paid on grants,” Sulton said. 

Who does SDC owe?

As of last week, 45 people have unresolved claims concerning pay from SDC, according to a spokesperson for the Wisconsin Department of Workforce Development, the state agency that handles employment and labor-related disputes. 

Sulton also said that among these 45 employees are highly paid employees like George Hinton, SDC’s former CEO who resigned at the request of SDC’s Board of Commissioners. 

The Department of Workforce Development did not provide a clear timeline for when it will make a decision about people’s claims, but the investigator assigned to these claims is actively working on them, the department’s spokesperson said. 

Sulton said he believes there is a path for how former employees will be paid: new, or rehired, employees providing services. 

If SDC hadn’t brought in employees to do new work, grant money couldn’t be accessed to resolve Department of Workforce Development claims, Sulton said. 

The quasi-governmental community action agency provides a variety of programs and services to meet the needs of low-income residents in Milwaukee County.

Case-by-case basis

But making a claim with the Department of Workforce Development does not guarantee that person will get the full amount they say they’re owed. 

Each claim is being evaluated individually, and there are some disputes, Sulton said. 

“For example, there’s one employee whose time we’re unable to confirm. There’s one employee who claims that she had a conversation with their supervisor and the former supervisor promised her an increase in pay,” Sulton said. 

A common theme among claims is about getting paid out for unused paid time off, Sulton said. 

Department of Workforce Development staff are assisting former employees with supplying the right documentation, which can include pay stubs, records they kept or other communications, according to the spokesperson. 

Woods thought ahead in this regard. 

“On the last day, I just was taking screenshots and printing whatever I needed and emailing to myself,” she said. 

Some progress

Since the April layoffs, SDC has paid $51,000 toward what it owes people, Sulton said. 

Most of this money came from a contribution from Unite WI.  

The SDC was quite deliberate in the way it used that money, said Sulton. 

“We started with employees that earned the least amount and we paid from the bottom up. So that’s what happened,” he said.

‘Scared to go back’

Sulton said new employees have been hired and some former employees have been rehired as part of SDC’s reopening. 

Woods said someone from SDC asked her to come back to work, but she didn’t take the person up on the offer.  

She is not confident in SDC’s financial stability.  

“I loved SDC when I worked there, don’t get me wrong. But I would be scared to go back,” Woods said. 

News414 is a service journalism collaboration between Wisconsin Watch and Milwaukee Neighborhood News Service that addresses the specific issues, interests, perspectives and information needs identified by residents of central city Milwaukee neighborhoods. Learn more at our website or sign up for our texting service here.

Former Social Development Commission employees still waiting to be paid is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

After months of disruption, the Social Development Commission will restart some key programs on Dec. 2 in what is considered a major step toward restoring vital services to Milwaukee’s neediest residents. 

The agency plans to focus on offering the Volunteer Income Tax Assistance, or VITA, program; career services; child care; and housing programs at its main office at 1730 W. North Ave. and its location at 6850 N. Teutonia Ave., which operated SDC’s child and adult care food program.  

SDC’s Board of Commissioners discussed the programs on Thursday during a meeting at SDC’s main office.

It was the first public meeting in the building since the anti-poverty agency suspended operations and laid off employees in April. 

The closing of the quasi-governmental community action agency, which managed approximately 30 programs and employed 85 people, has left a major gap in services for many low-income Milwaukee residents. 

“In my opinion, it must be opened immediately,” said Jorge Franco, an SDC commissioner and newly named interim CEO. “There’s things that can be done today that increase the likelihood of getting service back in, back to the people who are of lowest income in our community.” 

The Social Development Commission will use its existing funding to support the programs and hire staff and is also seeking private donations, according to William Sulton, SDC’s attorney.

“We know we have the ability to run these programs, and we are betting on ourselves that we will be able to secure state and federal funding in the future,” Sulton said. 

A few of SDC’s former program managers were present at the meeting, including Diane Robinson, who was the manager of SDC’s VITA program and senior services. 

In the months since SDC stopped its VITA services, Robinson said she has had numerous customers reach out to ask if SDC will reopen. 

“They’re wanting to know when is SDC coming back online because they don’t trust anyone else outside of SDC to do their taxes and do them right,” she said. 

Franco named board chair and interim CEO

The board voted to appoint Franco as chair and interim CEO, replacing Vincent Bobot, who was named interim CEO in September. 

“The thing is I want to stay on as a commissioner, but I think everybody here is aware that I have a full-time law practice, and I have a couple other things going on,” said Bobot, an attorney who owns a general practice, Bobot Law Office.

Bobot is also on the board of SD Properties Inc., the tax-exempt corporation that owns SDC’s buildings. He will remain on the SDC’s board and was appointed to serve as its secretary. 

Franco, who is also the CEO of the Hispanic Chamber of Commerce of Wisconsin, will not be compensated as interim CEO, according to Sulton.

Jackie Q. Carter was nominated to serve as board treasurer. She was appointed to the board by Mayor Cavalier Johnson in June. 

Carter did not accept the nomination to be treasurer and voted against the executive nominations of Bobot and Franco, urging the board to wait until it gets more members.

New board member appointed

The board voted 2-1 to appoint Lucero Ayala, a licensed practical nurse and vice chair of the Hispanic Chamber of Commerce of Wisconsin, to serve District 5 on the South Side. She has experience working with an assisted living facility and day care centers. 

“I’ve been helping the community and I’ve seen the impact firsthand, being in child care, how a lot of the kids count on those meals that SDC was providing,” Ayala said. 

Carter voted against Ayala’s appointment, saying that the board needs to go through a more thorough vetting process before voting. 

“I think it’s important for the commissioners that are here to ensure that we are not doing things in a way that is same old business and doing the things that got us here in the first place,” Carter said. 

“Nothing personal, but we’ve got to do the process in a way that makes sense, that’s transparent, that’s collaborative, and the community needs to be engaged,” she said. 

In the meantime, Commissioner Matthew Boswell’s term expired on Nov. 18.  Boswell was appointed by Milwaukee Public Schools.

A Milwaukee Public Schools representative said earlier this week that Boswell would remain on the board until the district finds a new appointment. 

Sulton disagreed and said Boswell is no longer serving on the board. 

“I will reach out to former Commissioner Boswell, but that’s not my understanding at all,” Sulton said. 

Boswell did not attend Thursday’s meeting.

News414 is a service journalism collaboration between Wisconsin Watch and Milwaukee Neighborhood News Service that addresses the specific issues, interests, perspectives and information needs identified by residents of central city Milwaukee neighborhoods. Learn more at our website or sign up for our texting service here.

Milwaukee’s SDC plans to reopen key programs in December is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.