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Archive for Monday, September 16, 2013

Homeless shelter seeks $725,000 loan from city

September 16, 2013

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There may not be a free toaster involved, but Lawrence city commissioners on Tuesday are being asked to play the role of bankers signing up a new client.

Commissioners will consider approving a $725,000 loan to the Lawrence Community Shelter in order for the homeless shelter to stabilize the financing of its new facility and to replace the roof on its building.

"It is a lot of money, but I think we have invested too much in this effort to stop at this point," said City Commissioner Jeremy Farmer.

The concept of the deal is simple. The Lawrence Community Shelter has a loan with a 5 percent interest rate with Lawrence-based Peoples Bank that comes due later this year. Shelter leaders want to replace that loan with a 15-year loan from the city at a 2 percent interest rate.

Loring Henderson, director of the shelter, said he didn't have an estimate Monday afternoon on how much the lower rate would save the shelter in monthly loan payments, but he said it would be significant.

"What this does is puts us on a schedule and a footing that is affordable," Henderson said. "We can budget for this and move forward."

The loan is for work that was done to convert an empty warehouse near the Douglas County Jail in eastern Lawrence into a 125-bed shelter, offices and classroom space for the organization.

Shelter leaders approached city commissioners this summer about the idea of a loan, but at that time the amount was $500,000. But the amount grew to $725,000 when shelter leaders discovered the building's roof needed about $225,000 worth of work.

"The situation with the roof is something that happens with metal buildings like this, I'm told," Henderson said. "It is something that needs to get fixed, so we figure we may as well get it fixed now."

The city is proposing to use money in a pair of fund balances — the equivalent of savings accounts — to pay for the unbudgeted expenditure. The city is proposing to take $425,000 from the city's general fund balance, which will leave the account with about $12.2 million in reserves, according to the city's budget office. The remaining $300,000 would come out of the fund balance for the special alcohol fund, which would draw reserves for that fund down to about $70,000.

City Commissioner Mike Amyx said he thinks the immediate fiscal impact on the city's budget is relatively minor since the money is coming out of reserve funds. But he said he wants to have a discussion about what happens if the shelter is unable to repay the loan. Under the proposed agreement, there isn't the traditional requirement that the real estate be used as collateral for the loan.

"We always have to make sure taxpayer money is protected," Amyx said. "We're being asked to make a loan here, so I want to make sure we understand how the loan is secured."

City Manager David Corliss said he has recommended that the city not require the real estate to be used as collateral for the loan because he said that would decrease the shelter's financial flexibility in the future and may create an expectation that the city would take over the service if the shelter ever failed.

Corliss, though, said he thinks Lawrence Community Shelter is in a good position to repay the loan.

"This request isn't being made out of any weakness on the part of the shelter," Corliss said. "They have strong support in the community. They are just wanting to take advantage of the city's relatively low cost of money."

Farmer, who is the director of the nonprofit food bank Just Food, said he thinks it is appropriate for the city to look for creative ways to help nonprofit agencies. He said this loan request from the shelter may spur a larger discussion of what role the city should play in helping community social service agencies.

"We have to talk about how to facilitate taking care of people in our community better," Farmer said. "I don't know what all that may involve, but I do know that we have a platform to say taking care of people in our community is very important."

Commissioners meet at 6:35 p.m. Tuesday at City Hall.

Comments

Jennifer Harrison 1 year, 3 months ago

I am starting to think Jeremy Farmer walks around City Hall with his hand held out waiting for city taxpayers money to fall from the ceiling.....In no way, shape or form should the city get into the banking business with a non-profit business. The LCS has no collateral except for a tin building. Corliss "thinks" the LCS is in a good position to repay the debt???? Where are the facts Dave?? Have you looked at their balance sheets?? I would like the public to see their annual budget published to see what their perspective DSCR (Debt Service Coverage Ratio) is since moving into their new building. I would bet their operating cash flow can not cover their debt payments. Very bad idea. Mr. Amyx, please talk some sense into your constituents!!!

Cindy Wallace 1 year, 3 months ago

You have got to be kidding!!? They have been in this building for, what, 7 months and now need a new roof. There is no way possible for anyone to convince me that SOMEONE was not aware of the "roof issues" prior to the purchase of that building. Just one more thing we are being blind-sided with and our City Leaders? want us to use our tax dollars, again? For Charity?? NOT GOOD BUSINESS! The City is already running at a deficit with the New Library (Garage) and Rock Chalk Park.....I say to the City "mind your OWN business". Oh by the way, I'm looking for a $75,000 loan to upgrade my home....it seems I will be needing a new roof, furn/ac unit, hot water heater and a new kitchen....you know, those pesky little maintenance items that come around every 15-20 years or so. While you are drawing up those loan papers for me, I want that at...oh, let's say....a .005 Interest Rate. That's right folks, it's "Name Your Own Rate"!

Keith 1 year, 3 months ago

Sorry, we gave all our money to the Rock Chalk Park.

kansasredlegs 1 year, 3 months ago

Unbelievable. Humane Society is a service which the City must have by law. Humane Society has solid financials to support its need for additional funds to meet a city mandated service. No matter, Corliss says the taxpayers can't afford to pay for what is mandated by law. However, Corliss "thinks" LCS is in a good position to repay the debt so as usual the doors to the taxpayers' vault are wide open and unguarded by our tax and spend commission.

waitjustaminute 1 year, 3 months ago

Good loan or not, bad, bad idea. What happened to the rule of checking out a building / infrastructure prior to purchase? I guess you go back to where the deep pockets are to ask for more, again, and again, and again. And no idea what the savings will be for a sweet-heart loan? Unbelievable.

1southernjayhawk 1 year, 3 months ago

Gosh, who could ever have foreseen this. Stay away for this, city leaders!!!!!!!

Currahee 1 year, 3 months ago

They're realizing they can't pay or their finances are going to be real tight. Even 5% interest is generous... but hey, City's got lots of money right? Just raise the taxes!

skinny 1 year, 3 months ago

I do not pay taxes so the City can loan it out for a profit!! So I say NO WAY!! If Jeremy Farmer wants to keep his job he better think twice before approving this loan!

Lathrup 1 year, 3 months ago

Yes, give them the money. I've often read that one of the rule of thumb guidelines to the quality of a society is its treatment of the poor. There but for a paycheck go I.

Thinking_Out_Loud 1 year, 3 months ago

I assume you know how the play ended both for Polonius and Laertes.

justsomewench 1 year, 3 months ago

I think you answered your own question.

"Does this tell where the problem is? 'Loring Henderson, director of the shelter...'"

Matthew Herbert 1 year, 3 months ago

unbelievable. The Director of the shelter hasn't bothered to run the numbers yet to see potential savings. Why? Because when it's not your money you are spending, why bother worrying about where it goes or how much is left.

Steve Jacob 1 year, 3 months ago

"But he (Amex) said he wants to have a discussion about what happens if the shelter is unable to repay the loan." If he does not know that answer he should not be a business owner.

So tell me why did they move in the first place? If the city does this, why wouldn't other organizations ask for the same?

jack22 1 year, 3 months ago

If this is approved it would set a very bad precedent. The city should not be in the business of giving out loans or giving "special" tax districts to developers. I agree srj, what's to stop other organizations from asking for loans from the city or other developers from asking for their own "special" (read private) tax districts?

kansanbygrace 1 year, 3 months ago

This is not a business. It is a necessary service. They can not be operated in the same way. A business owner can fire, lay off, add or subtract a product offering, close shop, take a vacation. The needs for these "safety net" services can not be treated in the same way.

The shelter moved because the need was greater than what the previous location could handle. The City and a lot of local groups had significant influence on the selection of facilities.

This is potentially a good investment. The money saved will provide more services that can get people currently homeless better prepared for independence -- employed and productive.

50YearResident 1 year, 3 months ago

Lets see now, $725,000 x 5% = $37,500 interest for 1 year. $725,000 x 2% = $14,500 for 1 year. Now that is a savings of $23,000. However if you have no intention of ever paying the loan back to the City, it a savings of $762,500. This shelter is a money pit that is going to bleed the City and County dry. Has the shelter officers ever presented a financial sheet and budget to the city or is the shelter just taking money in and spending it without any oversight? With their clients coming from all over the United States, shouldn't they be trying to get Federal money?

50YearResident 1 year, 3 months ago

Couldn't the city be sued for loaning out taxpayers money with no guaranteed collateral? This deal has to be illegal, it sure looks like it is.

John Graham 1 year, 3 months ago

The shelter is not a "necessary" service to the function of the city. It is a luxury for those that for whatever reason are unable or unwilling to take care of themselves. While a nice service it is not "necessary". There are places the shelter can go for money, they are called banks. I am a better loan risk than the shelter. I would like the city to loan me $750,000 at 2% over 15 years without any collateral needed.

John Graham 1 year, 3 months ago

The city would be better off by spending the $725,000 to make Lawrence less attractive to the homeless which would ultimately save tax dollars in the long run.

RandomlyReadingRarelyCommentin 1 year, 3 months ago

You can find all kinds of budget information online, I believe through the city site. Among a quick search - One example:

http://www.guidestar.org/organizations/74-2848203/lawrence-community-shelter.aspx

The shelter does one thing well, it keeps people out of the elements and from starving to death. This $725,000 roof - I would be willing to bet their have not been multiple bids, that it is extravagant, and has cheaper alternatives.

Their management plan has not been in effect as they don't know most of the people on their caseloads. There is no management outside of Loring. He cannot run every aspect himself.

Throw some money at the Salvation Army. Seems like they are the ones placing all the families that are displaced on criteria that is not the same for other guests. i.e. if you step on someone's toes you'll find yourself being harassed out of their.

They do however have very wealthy supporters and do well raising money. Maybe Mrs. Kansas' $10k life goal play ground should be put into perspective. Is she there for publicity? What does she do? Her credentials? Getting a family on a bus to Wichita or elsewhere is not success. $725,000 for a roof? Lets see the bids. Show us the progress being made after moving to a place that was going to foster all these programs. Provide some justification.

kansanbygrace 1 year, 3 months ago

The article stated the roof part of the money was 225,000.

50YearResident 1 year, 3 months ago

Must be a former resident that got kicked out of their.............

kansanbygrace 1 year, 3 months ago

To those who say this is not necessary and that the city should not be involved, I'd suggest that every person who gets shelter there is worth every bit as much as you or I or your banker or our Governor. Their circumstances are different. I think they need shelter and sustenance, just like you or I. And the fact is, they are your neighbor, and my neighbor, and being a crank about it is not helpful.

John Graham 1 year, 3 months ago

What is not helpful is the community making things very comfortable for the career homeless. There are too many of them that simply are living off other's kindness without any intention of bettering themselves. The real issue here is the city has no business using tax dollars to act as a loan provider to organizations of any kind. That fact that you and I disagree on making things easy for the homeless has no bearing. The organization is asking for a loan below prime without providing security. The organization's ability to repay is not based on the profits of any business product such as making widgets, but based on handouts to meet their budget. A recipe for the loan not being paid off.

John Graham 1 year, 3 months ago

If you study the homeless I believe you will find somewhere a pattern of bad decision making. I am tired of taking care of others bad decisions. Time and time again the people who make good decisions, take care of themselves and pay their taxes are made to feel guilty for those poor decision makers. We are told it is not their fault and we should take care of them by giving them places to live, food and drink and even money for personal items. They made their bed, let them deal with it but not on my money and not in my community that I, unlike them, pay to live in.

been_there 1 year, 3 months ago

The question is, did Loring know about the roof or not before buying the building. One wonders how he could not. Did he plan to ask for assistance from the city at a later date while intentionally concealing the problem? The city needs to demand to see the presale inspection. Who was the inspector, they need to be held accountable. If none was done, then definitely refuse because obviously Loring has no business being in charge of taxpayers money. The city commission has no right to lend taxpayers money to an organization/person that will mismanage it and thus default. Loring's frame of mind seems to be "someone will always step forward, so don't worry about it".

been_there 1 year, 3 months ago

I'm on Social Security and a fixed budget. A couple of years ago the city said I had to replace my sidewalk at the cost of $3500. They did not offer me a loan or assistance of any kind, just get it done by a certain date, to city specifications. I also had to get a new roof this summer, I didn't ask the city for help, just managed on my own, trimmed my budget elsewhere and did without. Loring needs to learn to do the same. A few years ago I started helping out a single mother. I soon found out the more I did, the more she expected and the less she did to help herself. I stopped and she managed to get by anyway. Yes we need to help those less fortunate than us but not to the point that they start taking advantage of us.

absolutelyridiculous 1 year, 3 months ago

This is called enabling. $725,000 could be spent elsewhere, like repairing cracked and broken sidewalks and streets where a wheelchair can't get through or a blind person might trip.

Loring needs to manage his budget better. Maybe the homeless shelter can have a baked goods sale. He's got a kitchen right? Let them earn the roof over their heads. They will value it more. The irony of this is amusing.

notwithmytaxdollars

no_thanks 1 year, 3 months ago

This is a dangerous path for the City to be a last resort of financing. How will they deny future not for profit financing requests? The City should not be proving financing to nt for props as they pick winners and losers (why Boys and Girls Club and not Ballard Center or Cottonwood, or Headquarters, etc...). It is a poor uses of scarce tax receipts.

If they head down this ill-advised path, the City should absolutely die a mortgage against the property. They can always agree to subordinate their security position should LCS find alternative financing.

no_thanks 1 year, 3 months ago

Not provide financing to not for profits. Damn autocorrect.

Michelle Reynolds 1 year, 3 months ago

Why doesn't Loring call is college buddy George Stephanopoulos. Grorge donated money to help him before. Call the rich guy!! Leave my tax dollars alone.

kernal 1 year, 3 months ago

They were not college buddies; they met when Loring was working in a NYC homeless shelter.

lunatic 1 year, 3 months ago

NO! What are they smoking at city hall???

leftylucky 1 year, 3 months ago

This stinks. With the amount of remodlng that has gone on at the shelter, one would think that the roof would be fixed first. How much food is Just foods providing the shelter? Farmer should recuse himself from any nonprofit votes. He is not impartial in his views or votes. Send the famer back to the pasture.

nick_s 1 year, 3 months ago

So according to Amyx we're willing to protect $750,000 in taxpayer money in the form of a loan ( "We always have to make sure taxpayer money is protected")? Where was this "always" with Rock-Chalk Park? Oh, nevermind, that one doesnt count. From here on out though, "We always have to make sure taxpayer money is protected."

50YearResident 1 year, 3 months ago

The $225,000 for the roof is just a smoke screen to get the City to loan (ie, give) $725,000 to Hendersons's Folly. It's either call it a loan or it will be a default payment. Either way the shelter will demand the money to be able to continue their "good work". This is a never ending money pit and will only get deeper.

irvan moore 1 year, 3 months ago

I think there is quite a difference in giving a hand up as opposed to a handout, mr. Henderson is not going to go away, he will come back again and again, time to just say no

jimmyjms 1 year, 3 months ago

I'd be willing to bet that the multitudes of seriously mean-spirited people commenting on this thread have spent exactly zero time at the shelter. Talk of "enabling" and "dependence" are examples of cheap talking points being regurgitated.

Are there issues that require strong oversight at the shelter? Yes. Should this decision be made in a vacuum? No.

But there are children at the shelter that, were in not for Loring Henderson, would be homeless. Do you people care at all? The comments are disheartening, and do not represent the Lawrence I know.

absolutelyridiculous 1 year, 3 months ago

I don't have time to visit the shelter. I am too busy working my @ss off to pay my property taxes to pay for it. Geez. No one is questioning the work done there. Just the need to perpetually fund it when we are also paying for Rock Chalk Parks, the LIbrary, the Police station.

I am not heartless, but writing a check, as I have to do in this case, is what I have been forced to do without my consent. If everyone would just take care of your neighbor on an indivual basis like Loring is doing, we wouldn't need that shelter. This town HAS made a business of caring for the poor...because that's what we need to do in Lawrence because we don't want to get our hands dirty.

Deb Engstrom 1 year, 3 months ago

The city should be running a homeless shelter anyway. It's a community service.

50YearResident 1 year, 3 months ago

Most of the residents are not local people, they came here for the free services. Not the City's responsibility.

been_there 1 year, 3 months ago

This brings up something I have always wondered. Where are the friends and family of homeless people and homeless families. No grandchild of mine would live in a homeless shelter if I could help it, there is always room somehow. I have helped out family and friends hundreds of times. Why are their family and friends not helping them. I know there are exceptions and some people have nobody, but I'm sure that is not usually the case. Granted the ones I help always offer to help me with things like yard work, cleaning the garage or basement and painting. I don't think I have ever paid anyone other than family for painting. If you want help, be willing to help.

jimmyjms 1 year, 3 months ago

"I don't have time to visit the shelter. I am too busy working my @ss off to pay my property taxes to pay for it."

Hey pal, I work 50+ hours a week. So cry me a river.

"If everyone would just take care of your neighbor on an indivual basis like Loring is doing, we wouldn't need that shelter."

Wait, so you oppose it because of the property tax, but everyone else should "take care of their neighbor?" How does that work? Folks going to move in with you?

absolutelyridiculous 1 year, 3 months ago

jimmyjms...I work 50+ as well. This is an expensive place to live.

I oppose this because you can throw good money on bad solutions and never solve the problem. Lawrence is a town of enablers. Handouts have never been effective in helping people get back on their feet. And government programs are even less effective.

I resent paying taxes for social programs, experiments, recreational facilites when we need to keep up streets, police, fire. Government's role is to protect and tax and spend, spend, spend. How about a property tax decrease?

But this is Lawrence. We like our social programs...ineffective as they are.

John Graham 1 year, 3 months ago

The homeless do not have a shelter due to Mr Henderson. He is not funding any of this with his own money to any great extent. The homeless have a shelter due to the handouts given by taxpayers. Mr Henderson is the person who keeps showing up with his hand out. If you feel sorry for these people who keep making poor choices in their lives and expect someone else to pay for it that is fine. Write the shelter a check out of your own money but don't do it with public tax dollars.

jimmyjms 1 year, 3 months ago

You don't know what you're talking about. The place doesn't run itself.

John Graham 1 year, 3 months ago

What do I not know about? That Mr Henderson while running the place is not funding it primarily with his own money but rather handouts from other sources? Or that according to the article Mr Henderson doesn't have a firm grasp on the finances of the shelter he runs. Or is it less than 1 year of moving into the shelter he now reports the roof needs repairs which should have been determined at the time of initial renovations? Or is it he wants the city to provide below market loan rates with tax payor dollars, while not providing collateral. Or is it the shelter has no mechanism to generate guaranteed repayment of the loan? Why should the city get into the loan business in such a case? The shelter is working with a bank currently, let that relationship continue so the tax payor dollars are not put at risk.

Ladybug2 1 year, 3 months ago

I think this is a very bad idea. Please say NO! I agree with the commenter above about replacing sidewalks. We, too, are senior citizens and have to replace a sidewalk that we can't afford. We will have to trim our budget and figure out what to do without in order to get this put in. I feel they can do the same thing.

fudgystuff 1 year, 3 months ago

I agree with Ramdom reading, maybe Mrs Kansas should donate her 10K for the roof instead of a playground. Can't believe they hired someone to direct the Shelter that can't manage her own money, if someone would have checked her out they would have known she has poor credit, lots of debt and NSF's all over town. Is this the kind of person we hired at the Shelter Loren??? I own multiple properties and know that roofs do NOT cost $75,000, where are they getting this bid anyhow? We don't need our tax $ going to the Shelter......

beebo 1 year, 3 months ago

Serious questions:

  • Is this even legal? For the City to act as a 'bank'?

  • If the total savings over the life of the loan hasn't yet been calculated (and it isn't difficult), it seems to me that perhaps THAT is not the reason for coming to the City for the loan. Calculating the interest savings should have and would have been the very first step when looking at making a change and how that change would positively impact the budget and then pitching that to the City.

*I wonder if the bank is unwilling to renew the loan and/or loan additional funds for the roof? That would explain Loring not knowing the total savings....didn't matter.

beebo 1 year, 3 months ago

City loans the Shelter money. The Shelter defaults. City gets the building/operations upon default.

Hopefully this was not the plan all along......

bearded_gnome 1 year, 3 months ago

The concept of the deal is simple. The Lawrence Community Shelter has a loan with a 5 percent interest rate with Lawrence-based Peoples Bank that comes due later this year. Shelter leaders want to replace that loan with a 15-year loan from the city at a 2 percent interest rate.

Loring Henderson, director of the shelter, said he didn't have an estimate Monday afternoon on how much the lower rate would save the shelter in monthly loan payments, but he said it would be significant.

---so the lame plan is for the city to in effect compete with private lenders, and undercut them, because of taxpayer financing?

just say no.

is henderson actually making this a truly dry shelter now? has he stopped enabling the drinking and drugs as it was downtown?

does the shelter require some local history or local ties be documented, since we're already using local money? I bet not.

again, just say no. the shelter is likely still attracting homeless to our community.

justsomewench 1 year, 3 months ago

From LCS' application for monies to be allocated from the City's Special Alcohol Fund (https://www.lawrenceks.org/assets/budget/2013/2013_%20alcohol%20_lcs_application.pdf):

" LCS’ program also provides immediate shelter to homeless individuals, and does not require any type of treatment or requirement that guests be sober at the time of arrival."

So, nope. It's a wet shelter still and has no intention of changing that based on the model they cite basing their program off of. For that very reason, I will never back funding the entity. It's called 'enabling'.

jafs 1 year, 3 months ago

Just curious - do you give money to shelters that operate according to a model you prefer?

justsomewench 1 year, 3 months ago

i make a practice of being an informed person, jafs. i have a strong opinion about wet vs. dry shelters.

you expend yourself according to your beliefs and i'll do the same. that's how it works.

would you have preferred the fact that LCS is a wet shelter go unmentioned? if so, you might ask yourself why. surely you want everyone to make informed decisions that honor their own values, no?

IndusRiver 1 year, 3 months ago

This all over again? For the love of Pete, they knew they had a swiss cheese roof ten years ago.

Michelle Reynolds 1 year, 3 months ago

Beebo Schumm doesn't want to file a mortgage against the property. If the shelter defaults there is no repercussions.

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