Shelter may close due to foreclosure
Published 8:13 am Friday, July 24, 2015
A local domestic violence and homeless shelter that has served the community for nearly two decades may close soon due to a bank foreclosure and amid questions on its legal status with the state.
On Thursday, an attorney’s office acting on behalf of Carter County Bank filed a notice of foreclosure sale for the building that is home to The Shepherd’s Inn, Elizabethton’s only domestic violence and temporary homeless shelter. According to the notice, The Shepherd’s Inn defaulted on repayment of a loan taken out in 2006 with the bank.
“We are behind on our house payment and have been for some time,” said Paul Gabinet, executive director of The Shepherd’s Inn. “Absolutely we owe the bank several payments.”
The Shepherd’s Inn, which Gabinet described as a “mom ’n’ pop” operation, was founded in 1997 and is no stranger to funding being tight, he said. The shelter would frequently fall behind on bills, but would make up payments after big fundraising events.
“We always catch up on our bills in August and in the spring,” Gabinet said, adding the shelter brings in a lot of funds as a result of the two NASCAR races held in Bristol.
Gabinet hopes the shelter will be able to pull through the financial crisis and save the house.
“I’m trying to get the word out to the public to ask them to help us,” he said. “I’m hoping the community will come together and help us out with that.”
He hopes if the shelter can raise enough money they can make the back payments on the mortgage and stop the foreclosure. Gabinet did not know how much money the shelter owed on the mortgage or exactly how much behind on payments it is.
According to the public notice of foreclosure, the bank declared the entire sum of the loan due and demanded payment, which was not received. The notice said an auction date has been set on the foreclosure, and at 11 a.m. Aug. 13, the house will be sold “at public outcry” to the highest bidder at the front door of the Carter County Courthouse.
The foreclosure is just one of the financial, and potentially legal, woes the shelter faces.
In addition to the defaulted loan debt, there are two federal tax liens totaling $31,220.48 against the property. According to Gabinet, the tax liens have been paid, but the shelter still owes money to the federal government for the penalties on those liens. The Carter County Register of Deeds Office was showing no release for the liens on file.
This is the second time in recent years that federal tax liens have been filed against The Shepherd’s Inn. In 2010, two federal tax liens totaling $27,657.33 were filed against the agency but were later lifted by the federal government.
A check with the Tennessee Division of Charitable Solicitations and Gaming, a division of the Secretary of State’s Office, revealed the shelter’s state registration to seek charitable contributions has been expired for more than a year.
“The Shepherd’s Inn was registered with the Division of Charitable Solicitations and Gaming through June 2014, but that registration has since expired,” said Adam Ghassemi, director of communications for the Office of Tennessee Secretary of State Tre Hargett.
Charitable organizations are required to register with the DCSG and to renew their registrations on an annual basis, including filing a summary of financial activities. The last financial summary report The Shepherd’s Inn submitted to the state was from 2012, Ghassemi said.
Organizations that solicit contributions while unregistered are in violation of the Tennessee Charitable Solicitations Act and can face a $5,000 penalty, according to the DCSG.
When Gabinet spoke with The Elizabethton Star on Thursday, he said he was unaware the shelter’s permit had expired, but said he would check with the agency’s accountant. A short time later, Gabinet called The Star and said the shelter’s accountant had spoken with the Secretary of State’s Office and learned there was a “clerical error” with their registration and the matter was “being sorted out.”
This is the second time in recent years shelter’s registration with the state for charitable solicitations has expired, with the first time occurring in 2011.
A check with state records revealed The Shepherd’s Inn has failed to maintain registration with the Tennessee Division of Business Services, also under the Office of the Secretary of State’s purview. The shelter first registered with the DBS in 1997 when it was founded, and maintained its registration through 1999, Ghassemi said.
When the shelter did not file its 1999 annual report with the DBS, the office sent a notice, and when the shelter failed to submit the report by October 2000, the state of Tennessee filed an administrative dissolution against The Shepherd’s Inn and declared the shelter inactive, Ghassemi said. The shelter was nearly dissolved by the state for the same reason in 1998, but complied with the state’s request to submit their annual report. The last annual report submitted by The Shepherd’s Inn to DBS was the 1998 report.
“I cannot understand that at all,” Gabinet said in response to questions regarding the DBS registration. “We are a charitable organization, not a business.”
Gabinet said The Shepherd’s Inn does not have to register with the Division of Business Services because they are a nonprofit charitable organization, but Ghassemi said that is not the case.
“Organizations doing business in Tennessee, both for-profit as well as non-profit, are required to register with the Division of Business Services,” Ghassemi said, adding without the registration the agency is not conducting business legally within the state.