1982 Documents Raise Questions
What’s the purpose, and what’s going on here?
by Deirdre Purdy, Rare Old Bird
The deeds and business records that Two-Lane Renaissance posted relating to the 1982 Foundation raise many questions.
1982 may have good reasons for the subsidiary for-profit corporations they’ve created and the $7.275 million line of credit one of the for-profits has taken, secured by all the 1982 property – building, land, and improvements.
So far, however, Crystal Mersh, Director, has only said publicly that about $4 million of the project is financed by tax credits for which for-profits are needed. This may be correct. It would be interesting to see why that’s true and how it works.
But that has nothing to do with the questions these documents raise about the for-profit corporations and the $7.275 million line of credit secured by all of 1982’s property.
1982 foundation is a 501(c)(3) non-profit corporation. Non-profits pay no taxes. In exchange for the tax benefit, their finances are open to public view. For example, their tax returns (IRS 990) are public documents, online at IRS.gov.
Non-profits like 1982 are allowed to create subsidiary for-profit corporations. Hospitals, for example, often do this. But the subsidiary corporations must be separate corporations from the non-profit. They must have their own board, their own articles of organization, hold their own board meetings, and so forth.
The three for-profit subsidiary corporations that 1982 has created are Calhoun Community Center Landlord, LLC; Calhoun Community Center Manager, LLC; and Calhoun Investment Fund, LLC.
According to WV Secretary of State records, CCC Landlord and CCC Manager have one officer – Crystal Mersh. CIF, the investment fund, has two officers – Crystal and Robin Mersh. This raises the question whether these subsidiary for-profit corporations are actually separate corporations from the non-profit 1982 Foundation, as they are required to be.
On July 27, 2023, 1982 Foundation leased all its real property (buildings and land) to CCC Landlord. On the same day, CCC Landlord leased all the property back to the 1982 Foundation.
This raises the commonsense questions of what’s the purpose and what’s going on here.
On the same day, the 1982 Foundation, CCC Landlord, and CIF entered an agreement with CV Appalachian Investments 12, LLC, a Kentucky corporation. CV Appalachian Investments agreed to loan for-profit CCC Landlord the aggregate amount of $7,275,000, as a line of credit, secured by a Deed of Trust.
The Deed of Trust recites that the for-profit CCC Landlord “intends to rehabilitate and develop the historic building.” But that is the sole purpose of the 1982 Foundation, as stated on its IRS 990.
That raises the question of why a for-profit has been set up to do the sole purpose of the non-profit 1982 Foundation.
The Credit Line Deed of Trust between CV Appalachian (lender) and CCC Landlord is secured by all the real property of the CCC Landlord, which is, in effect, all the real property of the non-profit 1982 Foundation – buildings, land, and any and all improvements.
This raises the question - if the $7.275 million or whatever part is borrowed cannot be paid back, will the community lose the whole project, the old school, the land, and all improvements to a Kentucky investment corporation?
Because this deal is done by for-profit corporations, the community may not be aware of this financing deal and the risks involved.
Further, what is the CIF, the Mershes’ private for-profit corporation and what part does it play in this deal? Since records of for-profit corporations are not open to the public, there is no way of knowing what agreements may have been made among these entities.
Still further, if the for-profit companies are doing the business of the non-profit 1982, the 1982 financial records supposed to be public are now private and cannot be accessed by interested citizens.
The people of Calhoun County, many of whom have supported the 1982 Foundation with time and money, assume that it is a non-profit charitable operation and might have questions about why 1982 needs three Crystal-Mersh-personal for-profit subsidiary corporations to do its business. And most important, what happens if the loans can’t be repaid.
I welcome answers to all of these questions.