Southside YMCA Asks County to Endorse $2.1 Million Loan

The Prince Edward County Board of Supervisors kicked off Tuesday night’s meeting with YMCA representative Kip Lafoon asking the board to co-sign on a 2.1 million dollar loan for the organization.

“We are trying to regroup and restructure financially to be able to pay our bills without having to seek funds from the Board of Supervisors,” Lafoon said.

According to Lafoon, one way the YMCA hopes to do so is by refinancing the current 2.1 million dollar loan to get a lower interest rate, saving the organization $5,300 to $6,400 per month.

The YMCA’s current monthly payments are $19,000 at a 6.95 percent interest rate.

“We have not missed a payment, although we are still struggling from month to month,” he explained.

Lafoon went on to tell supervisors that by refinancing and receiving an endorsement from the board the YMCA could lower their monthly payments to $15,000 a month. “That would go a very long way in the Y sustaining themselves,” said Lafoon. “We are not asking for a dime…just asking for a signature.”

By becoming a co-signer on the YMCA’s loan, if the organization were to default on payments, Prince Edward County would then be responsible for repayment.

This did not sit well with Supervisor Bob Timmons, Jr. “Right now this county puts out $198,362 to the Y this year plus the $50,000. That’s $248,362 to the Y…..It’s just too much money. I will not support that whatsoever,” he said.

The county has no control over the YMCA and cannot make any decisions, changes, etc. Timmons explained, “We have no input or authority.”

Supervisor Jim Wilck asked, “Why is a private organization seeking a co-signer on a loan?” Wilck went on to point out that most YMCA’s in the state get their funds from members and are not funded by the county. “It’s a club that members pay dues to,” he said. “To co-sign that note we could end up making payments on that. We don’t own any part of the Y. We have no collateral.”

“We have the building,” said Supervisor Charles McKay. McKay was quickly corrected by Wilck, who told him, “No, we don’t, the bank has it…then the Y.”

McKay, whose term as a supervisor ends this month, then made the motion that the board co-sign on the YMCA’s loan.

Supervisor Jerry Townsend then spoke up to say he thought the idea needed to be tabled until more information could be obtained. “No, we don’t need to table it,” said McKay.

Townsend said he wanted to know more about the interest rate. “Is it fixed, is it variable? Then the next thing I want to know is what are you going to do with the revenue you get from the decrease…are you (YMCA) planning to pay us that $50,000 back? I think it’s something we need to talk about because we need to get y’all out of our pockets…We need to sit and engage in a deeper conversation because what you (Lafoon) presented tonight is not enough for me. The bottom line is what are you going to do with this money if we co-sign….you say you have not been late on a payment, well, show me that.”

According to Timmons, the YMCA is running in the negative of $60,000.

Timmons stood by his decision saying, “It’s just not fair to those citizens who do not use the Y.”

Supervisor Clavin Gray agreed that the board needed to look at how they wanted to support the Y and needed more details.

Timmons made the motion that the decision be tabled until after they received the 2015 financial statement from the YMCA.

McKay spoke up to say some people are against the Y. Supervisor Timmons quickly said that was not true. “I’m not against the Y; I’m against the continuing outpouring of money,” he said.

After a lengthy discussion, the board voted 7 to 1 to table to the decision. Supervisor McKay cast the only no vote.

In addition to seeking the county to co-sign their refinance loan, the YMCA currently owes the county $50,000.

In February 2014, the YMCA requested the County to assist in the restructuring of the YMCA’s existing debt. That would have required Prince Edward County to either co-sign for a new loan or provide the funds to pay off the existing debt with the YMCA repaying that amount. The

Board of Supervisors was reluctant to agree to either of those options. Instead, on February 11, 2014, the Board of Supervisors agreed to provide a loan of $50,000 per year for three years with repayment to begin five years after the first payment on terms to be determined. The second and third installments of the loan were contingent on a bi-annual review by the YMCA Committee to ascertain if the YMCA had made adequate progress in addressing their cash-flow challenges. The first installment of the loan was paid on February 21, 2014.

On September 8, 2015, the Board of Supervisors voted not to approve the release of additional funds to the YMCA. As of this date, no formal repayment agreement exists concerning the $50,000 loan.

A proposed Promissory Note between the Prince Edward County IDA and the YMCA for the repayment of the $50,000 was presented at Tuesday’s meeting. This, too, was tabled.