Officials with the San Francisco Lesbian, Gay, Bisexual, and Transgender Community Center have come forward to rebut last week's reports that the nonprofit organization faces foreclosure and needs a $1 million bailout from the city to survive.
Last week the San Francisco Chronicle column Matier and Ross reported that the center was "on the verge of foreclosure" and asking the city to establish a $1 million "mortgage relief fund" to save it. The story was picked up by the Associated Press and reported in outlets including The Advocate.
Center spokesman Roberto Ordenana contacted The Advocate to say that while the organization has experienced declining revenues due to the economic downturn, reports of a demise barring unprecedented municipal intervention are false.
"We're not in foreclosure; we're not seeking a bailout," Ordenana said. "We are seeking a loan from the city."
The $157,500 loan would allow the center to proceed with a loan modification negotiated with First Republic Bank. The center still owes the bank $3.2 million for its new building, which cost $13.7 million to construct. The building opened in 2002 at Market and Octavia streets, the gateway to the Castro district.
Ordenana referred to a March 10 letter from center executive director Rebecca Wolfe and board cochairs Debbie Chaw and James Williamson that outlines the circumstances.
"We do have $3.2 million in outstanding debt related to the construction of the building, which has been carried in a loan with First Republic Bank," said the letter. "After almost a year of very difficult bargaining, we have achieved a loan modification that financially benefits the Center. This includes a reduction our interest rate, which will save $200,000 over the next five years, and a modification of principal payments to help cash flow. The bank is requiring that we create a reserve account, with a balance of $157,500 -- reserves which we do not have. The City has been involved in the discussions from the beginning and Supervisors Bevan Dufty and David Campos are sponsoring legislation to provide a loan from the City to the Center. This is a loan and not a grant. It is also $157,500 -- not over $1 million as is reported in some sources."
While the city, which has invested $5.77 million in the Center, would
seem inclined to help the nonprofit, Ordenana said lawmakers have yet to
make a final decision on the loan. The finance committee held its first
meeting on the issue last week.
"They issued a continuance," he
said. "They are going back one week from this Wednesday. They had some
valid questions about our ability to pay the loan back, and more
importantly, what effect this will have on other organizations tat come
to the city to ask for money."
According to Ordenana, the terms
of the $157,500 loan from the city would put interest at 1.35%, arranged
in such a way as to be cost neutral to the city. Repayments would begin
after five years.
As for the initial report that the Center
needed a $1 million bailout, Ordenana said he could only speculate about
the origins. However, he is certain that the news created "an
incredible amount of concern and confusion" among the organization's
visitors and stakeholders.
"I don't know where the word
'foreclose' came from," he said. "We were misquoted as saying we were
bleeding cash. I think it got misreported as something it's not."
added that the Center actually performed quite well last year compared
to other social service organizations, with total revenues of $2.1
million and a small operating loss under $6,000. They expect to break
even in 2010.
"This isn't an emergency," said Ordenana. "It
doesn't mean we are going to close our doors. This is the fiscally
responsible thing to look at right now in terms of cutting our costs