Cash Flow Problem: Southside Virginia Family YMCA asks Prince Edward Co. for Financial Assistance

 The Southside Virginia Family YMCA provides many services to the citizens of Prince Edward and other local counties. According to YMCA officials, there are more than 6,000 YMCA members, with more than 4,000 from Prince Edward County. There are more than 12,000 adult visits in the average month. Membership dues are $55 per month for a Household, $40 per month for an Adult Individual, $40 for an Active Older Adult Household, $30 for an Active Older Adult Individual, and $18 per month for Youth. The YMCA provides financial assistance to a few regular members and free or subsidized membership to employees. The Y also has provided summer day camp, a learn to swim program for second graders, health programs for adults, physical activity classes for middle school students, and many other community activities. The participants in these activities would not necessarily be YMCA members. The Southside Virginia Family YMCA is a non-profit organization with a 501(c3) tax status.

Representatives from the Southside Virginia Family YMCA made a short presentation on Y activities at the December 2013 regular meeting of the Prince Edward County Board of Supervisors. Then at a meeting of the Supervisors’ YMCA Committee on December 18, 2013, Jane Schirmer, Chief Executive Officer of the YMCA, made a long presentation on both Y activities and certain financial difficulties related to monthly cash flow. The YMCA is asking Prince Edward County to “assist the Y with the restructuring of existing debt service for our building.” What this means is that the YMCA wants Prince Edward County to cosign a new note for their debt.

In 2006, Prince Edward County Supervisors offered a series of financial incentives to the Southside Virginia Family YMCA in support of the new facility to be built in the Prince Edward County Industrial Park. The County gave the YMCA 31.86 acres of land for the building, parking lot, athletic fields and park facilities. Property in the Prince Edward County Industrial Park has sold for as much as $100,000 per acre. If the value of the YMCA property were even $50,000 per acre, then the value of County land given to the YMCA would be more than $1,500,000. In addition, the County, through the Prince Edward

County Industrial Development Authority, gave the Y $1,500,000 for the construction of the facility. So, the initial cost to Prince Edward County taxpayers was in the range of $3,000,000. In the 2006 agreement with the YMCA, Supervisors also suggested that they would provide an annual allocation for Y operational needs. Prince Edward Supervisors have been giving the Y an annual allocation of $45,000.

The new YMCA facility was built in 2008 at a cost of $4,268,000. The Y had gifts and contribution pledges toward the construction of the facility of $3.325 million. If all of the pledges had been met, then the amount owed on the facility might have been less than $1,000,000. However, the country was in an economic downturn in 2008, contributing to the failure of some citizens to pay their pledges. In spite of continuing fundraising activities, in September of 2013, the debt amount was more than $2,200,000. The YMCA has also had to pay for large maintenance costs which have arisen in the last few years. A Davenport and Company financial review document of the Y between 2008 and 2012 stated that “available revenues were insufficient in 2010, 2011, and 2012 to cover expenses and debt service.” The shortfall each year was in the $50,000-$100,000 range. The document also states that if the Y had not sold assets (the old Y building on East Third Street), then the cash balance for Fiscal Year 2012 would have been negative.

The $2,200,000 debt on the Y facility is held by Central Virginia Bank at an interest rate of 6.95%. If the present 17- year loan continues, then the total Debt Service (principal plus interest) for the loan will be $3,854,563. The Y would like to refinance the debt with a new loan with an interest rate of about 3%, in order to reduce monthly payments and help with general cash flow problems. A 3% loan would result in a debt service over the 17 years of $3,006,367, or an average annual savings of approximately $50,000. However, Davenport and Company reported to the Y that a loan at this interest rate would not be available to the Y, because of their cash flow limits. Based on this information, the Y decided to ask Prince Edward County to be a cosigner of a new note at a rate of 3% or as close to that level as is available. It is believed that this lower interest rate, at least close to 3%, would then be possible because of the higher credit rating of the County. The YMCA Committee of the Prince Edward Board of Supervisors will meet again on this question on January 28.