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Opportunity House faces questions about its openness and future plans

The Opportunity House is the defendant in a lawsuit that seeks to clarify whether it’s still  serving the seniors and others with social and recreational activities. The Opportunity House is the defendant in a lawsuit that seeks to clarify whether it’s still serving the seniors and others with social and recreational activities.

Community Foundation asks
court to determine whether
former senior center is still
operating as a nonprofit

When Grace Etheredge cofounded the Opportunity House in 1958, she had no way of knowing it would grow into an activity center with a robust buffet of services for seniors.

With the help of Sally Godehn, Etheredge created the Opportunity Group, setting up easels for novice painters in a Sunday
school classroom in the basement of First Methodist Church. They moved the classes about a year later to a house Etheredge bought at the corner of Fleming and Connor streets.
Outgrowing that home after 20 years,
the Opp House next bought and renovated the old A&P supermarket in 1981. The Opportunity House thrived in the roomy Asheville Highway digs, filling the parking lot with folks learning crafts, computers, dance, weaving, photography, calligraphy, stained glass and woodcarving and hosting bridge and other card games, even a senior singles club. Like many good things, it would not last forever.
The decline of social groups in general, a steep drop in dues-paying membership and the loss of nearly all the space-renting clubs have hit the Opportunity House finances hard over the years. Don Hodges a nephew of Etheredge has stopped by the center in recent years, only to be saddened at what’s happened to the once bustling center his Aunt Grace founded. Hodges, a retired attorney, sometimes calls McCray Benson, the president of the Community Foundation of Henderson County, to ask what’s happened to the old, beloved Opportunity House.
“He’ll call me and say, ‘This place looks like it’s going downhill. What’s going on?’” Benson said. “That’s what everyone says.”
More questions than answers
Plenty of people have questions about the Opportunity House — who is running it, what programs it offers and what plans its leaders have for its future. The questions are far more numerous than answers.
Concerned about the center’s future, the Community Foundation has filed a lawsuit asking a judge to help determine whether the Opportunity House continues to function as a tax-exempt nonprofit organization and whether it is carrying out the purposes spelled out in its charter. If the court determines that it is no longer providing “cultural, social, education and recreational endeavors for all,” as its charter requires, the Community Foundation has asked the court to form a trust to preserve the assets. The foundation filed the lawsuit after its futile efforts over eight months’ time last year to get financial documents, IRS forms, bylaws and other documents — information it routinely requires of nonprofit organizations it serves. The foundation administers the Opportunity House Fund and disburses proceeds to the organization. Before it sends a check, the foundation asks for updated financials.
“I don’t want to be distributing money from us to a group that’s not operating properly as a nonprofit,” Benson said. “We have lots of nonprofits that over the years have difficult times and we help to try to figure out the best thing to do but the groups have to be open to do that. We are responsible to the IRS as well as our donors, who hold us responsible to make sure that the funds are being used for charitable purposes and for the purposes that are intended by the donor.”
Zachary S. “Zac” Kester, Opportunity House’s attorney, says his client is adhering to the law and to its mission as spelled out in its charter.
“I was shocked at the complaint and its total lack of merit,” he said. “Why the witch hunt? What’s going on?”
Kester is general counsel of Charitable Allies, an Indianapolis-based public interest law firm that provides nonprofits with legal help and guides them on board governance, fundraising and IRS compliance.
“Opportunity House is still operating as a nonprofit charity,” he said in an email response to questions from the Hendersonville Lightning. “Specifically, it still operates pottery, stained glass as well as clogging/dancing classes, among other programming. It also leases a portion of its physical space to three different tenants, as is permissible” under federal law governing nonprofits. “Opportunity House remains committed to providing senior and community programming that is consistent with its nonprofit and charitable purposes. The responsive filing that I file on or before February 27 with the court will be enlightening to a good many people it seems.”
“I think the narrative here is that the Opportunity House is trying to do its best to continue serving the community and to do it well and over time,” Kester added in a phone interview this week. “Maybe there’s some historic relationship that need to be repaired. Being able to serve the community well is important to Opportunity House and that’s going to require finishing up this litigation and going on from there.”
Repeated attempts by the Lightning to get an interview with the Opportunity House’s president and executive director have been unsuccessful.

‘Mock board meeting’

As membership and room rentals declined, Opportunity House leaders from about 2010 on tried to find ways to shore up the flagging finances.
Retired as head of the School of Materials Engineering at Purdue University, Jerry Liedl first got involved at the Opportunity House when he led a computer club in 1999. He served as president in 2009 and remained on the board for at least six years after that.
The Opportunity House was bleeding cash, had seen dues-paying membership collapse and was having trouble attracting clubs or nonprofits willing to pay enough rent to cover the light bill, support a small staff and make repairs.
Liedl was one of the last stalwarts on the board when Kenneth P. “Ken” Rhoads and Jacqueline M. “Jackie” Roberts appeared on the scene about four years ago.
“There was a ‘in-quotes’ board meeting — it really wasn’t a real board meeting — and I was still on the board,” Liedl said. “I went there and what had been the president (Bob Frank) was there and two ladies (were present) who were participants in Opportunity House and some activities.
“The president said he is nominating Ken as the new president and one of the girls as some other officer and they just voted while I just sat there looking astounded.” Some weeks earlier, “Jackie Roberts appeared on the board at one meeting and she was part of the group that brought Ken in,” Liedl said.
Rhoads, who had formed a North Carolina corporation called the Strategic Business Group in December 2014, landed a job less than a year later as church administrator at First United Methodist Church in Hendersonville. Governing leaders of the Methodist church and the Opportunity House said they had heard before hiring him that Rhoads had a reputation for fixing struggling organizations.
Mary Casey, who chaired the church’s Staff-Parish Relations Committee, was involved in Rhoads’s hiring.
“I think all we’re doing is confirming that for less than a year he was our church administrator,” from fall of 2015 to August of 2016, she said. At the time, Rhoads was already “associated with (Opportunity House) in some capacity.” His work there was not considered a conflict, she added, because the church job was not fulltime.
“The leadership was looking for somebody to take over after the president was gone and nobody seemed to want to take it,” Liedl said. “Then somebody found Ken and mentioned that he had a background for fixing up things. Then they held this mock board meeting” that Liedl said lacked a quorum. “It really wasn’t a meeting. It couldn’t be, because the president and I and one of the others were the only ones who had ever been on the board before. In my view it couldn’t have been a legitimate meeting.”
Rhoads, Liedl said, bears no responsibility for the financial condition he inherited.
“Everything in that place had been going downhill for a number of years,” he said.
Clubs and other nonprofits were unwilling or unable to pay enough in rent to support the cost of the building, which was built in 1957 and contains 20,000 square feet. When Liedl was on the board, directors calculated “what it cost per square foot to open the front door” and presented the number to renters. “Everybody objected to paying their fair share. So the place had been on shaky financial ground for at least 10-15 years.”

Nonprofits rent space

Two people from nonprofit organizations that rented space at the center said they felt whipsawed by decisions that Rhoads and Roberts suddenly announced.
Vickie Robertson, president of the Art League, acknowledged that at first Rhoads and Roberts worked with her when she asked for a lower rate.
“We left in early 2018 because they were telling us that we could have a space and then they were saying you’d have to share it with people that draw blood or whatever,” she said. “Our board just decided it wasn’t worth it because every time we turned around we were being told one thing and something else was being done.”
The Art League could not possibly have been blindsided by that decision, Kester said. To the contrary, he said, Roberts, the executive director, accommodated the artists.
“In fact, Vickie Robertson of the Art League informed Opportunity House that they could no longer afford to pay rent because their organization was in decline and they were looking to suspend operations or dissolve entirely,” he said. “The Opportunity House worked with the Art League to find another solution, which included moving them into a smaller space and storing some of their material at no charge and their usage of the space would be overlapping with St. Gerard House and that was a perfectly fine scenario at the time to Vickie.” Sharing the space was no problem for either, he said, because St. Gerard House’s adult autism art classes met twice a week for two hours when the Art League was not there.
“It is simply not the case that Vickie had no notice and this, that and the other,” he said.
Julia Matthews, who coordinates the autism center’s Connect & Feed the Need program, said everything was fine at the Opportunity House for a while.
“We had a great relationship with them which is why I was surprised when they told me, not only that they needed to rent the space to someone that could pay more money but that we needed to be packed up and out in one week,” Matthews said in an email. “This was very upsetting because we had nowhere to move our class to in such short notice.”
Robertson and others who had encounters with Rhoads and Roberts also say their management style was unusual.
“He and Jackie are a couple,” Robertson said of Rhoads. (Rhoads’ corporate filing and Roberts’s voter registration list the same address in a subdivision off North Main Street.)
“She gets her stuff in an uproar and then he gets in on it, too. It’s just not a professionally run place,” Robertson said. “They do what they want to do when they want to do it. St. Gerard House stayed after we left and then they told them they need to find someplace to go. … They’re always trying to put somebody to get income coming in, which I understand. But they’re also a 501(c)(3). They won’t share any information. They won’t tell you who’s on their board. I’ve tried to find it out, they won’t tell you.”
While Kester acknowledges that 990s are a public record, he insists that a nonprofit is not obligated to share current information about its finances or even identify its board of directors. Asked by the Lightning if he would identify the current board members, he declined to do so. A nonprofit’s IRS Form 990 for 2018, he said, does not have to be made public until Nov. 15 of this year. At the Lightning’s request, Kester did provide the agency’s 990s for 2015, 2016 and 2017.
At one point, Rhoads and Roberts asked Matthews to arrange a meeting with Caroline Long, the executive director of St. Gerard House, to talk about ways they could partner. The four of them met for lunch at Iannucci’s restaurant.
“They were just like all over the place,” Long said. They asked her, “‘Y’all wanna buy? We heard you need more space, we’re trying to sell this building, there may be an opportunity to maybe make it a co-op building.’ It just to me seemed like nothing I wanted to get involved with. It just seemed super unorganized and kind of pie in the sky. … I was just not interested in the chaos that they had going on. I left that lunch, I looked at Julia and I said, ‘We’re not doing anything with them.’”

‘It was really sketchy’

David Jacklin, who had worked at the Henderson County United Way and later as executive director of Homeward Bound, volunteered at the Opportunity House for several weeks and served on the board of directors. Working with Rhoads and Roberts, he had hopes of landing a paid job.
“Long story short, it really got to be, for lack of a better term, smoke and mirrors,” Jacklin said. “I was basically working unpaid, almost like the executive director at some point, for a few weeks still unpaid, slash, I was also on the board, unsigned board member. … It was really sketchy.”
Rhoads “never showed me any financials, which made me really nervous, so I decided to cut my losses at that point. As soon as I did that, he really turned on me. His attitude was really like hateful.”
Kester said the Opportunity House had no obligation to hire Jacklin.
“It’s not that uncommon for individuals to volunteer with nonprofits in the hope of perhaps turning it into a job one day,” Kester said. “It’s also incredibly common for individuals to join boards of directors, thinking, ‘I can turn this into a paying gig if I do X, Y and Z.’”
Rhoads and Roberts told Kester that Jacklin volunteered for about four weeks.
“At no time while he was actively volunteering for Opportunity House in his capacity as a director or in any other capacity did he ever request financials,” Kester said.
Jacklin asked for the records after he and Rhoads had parted ways, “at which time Opportunity House would have no obligation to provide it to him,” the attorney said. “They would be careless if they provided it to him or anyone else.”

Building listed for sale
The potential sale of the Opportunity House was one potential concern the Community Foundation had, Benson said.
In its lawsuit, the foundation says that the Opportunity House “has stated that it intends to sell the real property” and “reinvest the proceeds” and that the building “is being actively marketed.”
The real estate industry’s Multiple Listing Service does not show the property for sale currently. At one point, the organization sought to lease the former event space and kitchen. “Many possibilities from restaurant, retail, office to health care are all options,” the listing said. “Landlord concessions will help in making this highly visible space uniquely your own.”
Benson contacted Andrew Riddle, with Whitney Commercial Real Estate, who had listed the property, to see if he would persuade Rhoads to meet and share the Opportunity House’s financials and its plans.
Riddle “said he’d like to find out all this information, too,” Benson said. “I asked him if he’d help arrange a meeting. He said, Sure, he could do that. And he called me in three days and said, ‘I can’t arrange a meeting because I’ve been fired.’ When he tried to arrange a meeting to meet with us, he was terminated from being the agent related to that. So that certainly sent up some red flags.”
Kester said he was unfamiliar with that supposed episode but said any client has the right to part ways with a real estate agent “for wearing the wrong tie” or any other reason.
“Other than the limited public disclosures of 990s, Opportunity House, as a nonprofit charity, has no obligation to ‘turn over documents and meet to talk about future plans’ with the Community Foundation,” Kester said. “If the Community Foundation is interested in helping support the programming of Opportunity House then such a meeting would be welcomed, but it is fair to say that such has not been the demeanor/approach of the community foundation in this past year.”
Kester challenges nearly every paragraph of the Community Foundation’s lawsuit, including any suggestion that it would be improper for the Opportunity House to sell the building or that the Community Foundation is entitled to the organization’s assets if it dissolves.
“No, that is absolutely incorrect (that the Community Foundation would get the assets) and I think that is a frivolous argument and I plan on heavily hitting back against that ridiculous argument in our court filing,” he said. “The amended charter specifically says that in the event all or substantially all of the assets are sold and dissolved they would have potentially some sort of obligation relating to the distribution of the assets.”
If board members chose not to distribute the assets to the Community Foundation, they could “within their discretion” give those assets to a different charity, the attorney said.
Selling the building “is not the same as dissolving,” Kester said. “It is very common and very normal for nonprofit organizations to buy and sell property. If Opportunity House were to sell the property, that would be entirely and 100 percent within its discretion. So long as it uses those funds to further its charitable purposes, that would be completely appropriate and within its discretion.”
Nor is there anything wrong, the attorney said, with the Opportunity House’s current leases to for-profit businesses, including the WNC Music Academy and Flowers by Larry. That generates passive income — revenue permitted by the IRS, he added.

Foundation is ‘stealing
the assets’ of the Opp House

Kester planned to file a motion to dismiss the Community Foundation’s lawsuit this week. If that is not successful, he said, the firm is prepared to file a separate counterclaim against the Community Foundation, accusing it of improper actions of its own. Among the assertions he said he would make is one that challenges the Community Foundation’s management of the Opportunity House Fund, which earns $300-400 a year for the Opportunity House. He suggested the Community Foundation could be in violation of the Uniform Prudent Management of Institutional Funds Act because, according to his calculations, it had charged 13½ percent, instead of a more common rate of 1-2 percent, to administer the Opportunity House Fund.
“So the Community Foundation is stealing the assets of the Opportunity Foundation,” Kester said. “If you want a story, there’s your story. … I am hopeful that the Community Foundation will see that this lawsuit is a waste of everyone’s time and money, and it will voluntarily dismiss the suit. But if it doesn’t, then we will proceed with these kinds of allegations.”
Benson said Kester’s numbers are incorrect.
“We charge a nonprofit .75 percent,” he said. “If there’s any amount from earnings, that goes back into the fund to keep up with inflation.”
The Community Foundation’s attorneys, Stephen Grabenstein and Robet Haggard of the Van Winkle law firm, have also contacted the North Carolina attorney general about the Opportunity House.
“They were told they would look into that as a consumer complaint,” Benson said. “They said they would take it seriously and they would look into it.”
The foundation, Benson said, is not bringing the action to gain access to the Opportunity House assets.
“We feel like there has been a vital long history of what the Opportunity House has offered to this community and we still think that population,
seniors, is interested in the things the center has done for years,” he said. “Part of our interest is what programming
is really going on when there’s all these groups saying they’re interested in
the programs the Opportunity House has operated in the past.” By asking
the court to intervene, “I hope we hit it early enough to save a nonprofit and nonprofit activity in our community that seems vital to what kind of community we are.”
Kester said there’s nothing improper about the way Rhoads and Roberts are running the organization. Rhoads receives no salary as the voluntary president and chairman, Kester said, and Roberts earns $25,000 a year as executive director.
“I think it’s no secret that the organization developed some financial difficulties but I think the more happy narrative is the board realized we need to take some proactive steps to identify different possible revenue streams and that the organization is really trying to serving its community fully,” he said.
“For a period of time the organization was in the red. They were among the board members who said we’re
going to do the responsible thing and try to increase the overall health of
this organization. I believe that Ken and Jackie are going to be successful along with the other current directors in
sort of rescuing this organization and bringing it back into full health. It might look a little different than it has in
years past but that’s because it has to pay the bills.”