Lenawee Now may forfeit $150,000 for refusing audit

The board of directors of Lenawee Now, the nonprofit private/public partnership meant to drive economic opportunity in Lenawee County, will not cooperate with a forensic audit requested by the Lenawee County Commission. After a lengthy debate on May 9, the commission voted unanimously to order an audit of Lenawee Now before voting on whether to reinstate payments of $150,000 per year to the nonprofit, and at that meeting Lenawee Now’s executive director, Pat Farver, said he would cooperate with an audit.

A letter from Farver to County Administrator Kim Murphy and the Board of Commissioners dated June 21 stated, “At the direction of our board of directors I have been instructed to respectfully decline participation in the forensic audit you requested. We have already provided you with an independent 3rd party audit with our request as we have done for the past 10 years. You have always accepted our 3rd party audits without question. Our latest audit is available for anyone to view on the Lenawee Now website. We remain committed to our mission of promoting economic development in Lenawee County and will continue to operate with the highest standards of integrity.”

The Lenawee Now board consists of Chair Mindy Bradish-Orta, Vice Chair Jim Kapnick, Treasurer Jason Hess, Secretary Kathryn Mohr, and trustees Arell Chapman, Rick Gurdjian, Mark Haag, Jim Williams, Dr. Julie Yaroch, and Jed Engle.

In early June 2022 the board of commissioners suspended payments to Lenawee Now after the nonprofit widely distributed a position statement on Project Phoenix, the county’s plan to develop the former Tecumseh Products property into a recreational and business complex. Following a feasibility study on Project Phoenix, the county had purchased the Tecumseh Products site in November 2021 after two years of planning, meetings, and studies regarding the plan.

The resolution sent in May 2022 by Jim Van Doren, then Lenawee Now’s executive director, now chair of the county commission, said that Lenawee Now was reserving its position on Project Phoenix. It said the nonprofit “has not been engaged by the county to participate in the potential study and development of Project Phoenix,” and “Lenawee Now believes that Lenawee County must engage in a fully transparent decision-making process in determining whether Project Phoenix should be funded, if at all, by county resources.”

Despite those claims, a timeline of Project Phoenix information showed that Lenawee Now had been in communication with Bill Leisenring, owner of Sisu Sports, about a possible sports complex in the county and had contacted Tecumseh city staff about the plan in late 2019. In November 2020 Tecumseh city staff reintroduced Leisenring to Lenawee Now to discuss the project after he chose Tecumseh for his location for what would become Project Phoenix.

With Lenawee Now as the holder of the county’s interlocal agreement with the Michigan Economic Development Corporation, the nonprofit’s disapproval was expected to put the brakes on funding for Project Phoenix. The project would not have resulted in a tax increase for Lenawee County residents and a bond of no more than $20 million would have supported the project. Other sources to fund the project included the City of Tecumseh and private investors. Murphy said the project would not be realized without state and federal grants.

On June 8, 2022 the board of commissioners voted to suspend payments to Lenawee Now. The City of Tecumseh, which had been paying Lenawee Now $15,000 annually, also stopped its support after the nonprofit’s resolution. City officials believed Lenawee Now had made a deliberate attempt to undermine the project by blocking the city’s attempts to gain $15 million in critical grant funding from the state and federal government.

Recent efforts by Van Doren along with Commissioners Dustin Krasny and Kevon Martis have failed to reinstate Lenawee Now’s contract with Lenawee County. The forensic audit was the commission’s attempt to answer questions raised by the audits Lenawee Now had provided as well as data withheld from a financial review conducted for the county. One issue was information regarding the LION Fund, an angel investment fund. An angel investor provides initial seed money for startup businesses, usually in exchange for ownership equity in the company.

Lenaweenow.org states, “The LION Fund consists of a team of local investors who look to spur growth in Lenawee County. Residents with new business ideas can contact Lenawee Now, who will help with conducting market research, creating financial projections, and developing a business plan.”

Lenawee Economic Development Corporation’s (operating as Lenawee Now) 2021 Federal 990 form, “Return of Organization Exempt From Income Tax,” shows that there was $247,831 invested in the LION Fund that year, and $5,363 invested in LION II. Operations Manager Tim Robinson said that in 2021, the Marks’ Trading Company and the Adrian Development Collaborative received funding from the LION Fund, but he would not disclose dollar amounts.

The nonprofit’s 2022 990 form states that $255,214 was invested in the LION Fund, with $5,602 invested in LION II. No businesses received funding from the LION Fund in 2022.

The 2021 Annual Report states that Lenawee Now invested $4,971,239 in “private investment” in 2021. When asked if that meant funds that Lenawee Now contributed to local businesses, Robinson said that is the amount that Lenawee Now’s 2021 clients invested in their businesses combined with the $436,474 Michigan Small Business “Survival” grant (COVID related) funds that the organization administered to Lenawee businesses. 

Lenawee Now’s most recent audit on the website states, “The former executive director of the LEDC (Van Doren) is also the vice president of a foundation that granted funds to the LEDC through the Lenawee Chamber Foundation for the year ended December 31, 2022. For the years ended December 31, 2022 and 2021, the Lenawee Chamber Foundation received $100,000 and $100,000, respectively, from the related foundation.” That foundation is the Sage Foundation. When asked how funds from the Sage Foundation, which typically funds the arts and human service-focused nonprofits and organizations, are allocated to be used within Lenawee Now’s budget, Robinson said, “The Lenawee Chamber Foundation is a 501 c3 supporting organization for Lenawee Now. Many 501 c6 non-profit organizations such as Lenawee Now have created these c3’s so we can accept funding from charitable foundations.” Lenawee Now’s c3 has no relationship with the Greater Lenawee Chamber of Commerce.

Regarding the quest to receive county funding, Farver said, “We have provided the independent audit, as may be required of some of the service providers, to the county. We have also worked with Kim Murphy to answer many additional questions as well. The commission has chosen not to fund our request based on us providing the same information required of other vendors, so we will not seek any further county funding at this time.”