City commissioners voiced support Tuesday for a $725,000 loan for the Lawrence Community Shelter, after leaders with the homeless shelter expressed concern about the financial bind the organization would find itself in without the money.
"Truthfully, if you turn this down, I'm not sure what we will do," Joe Baker, the treasurer for the shelter's nonprofit board, told commissioners.
The shelter raised a little more than $3 million in pledges to purchase and renovate a vacant warehouse near the Douglas County Jail in eastern Lawrence for use as a homeless shelter. But shelter officials told city commissioners at their weekly meeting that costs to renovate the structure ran about $600,000 higher than was originally estimated.
That left the shelter with an approximately $625,000, short-term loan with a local bank. The loan comes due later this year. The shelter also has about $100,000 worth of roof repairs that, it has discovered, need to be made to the building at 3701 Franklin Park Circle.
The shelter wants to replace the short term loan, which carries an interest rate of 5 percent, with a 15-year loan through the city at a 2 percent interest rate.
Commissioners said they understand the shelter's situation and directed staff members to draw up documents for a loan. But commissioners still have some debating to do at a future meeting regarding how the city should protect itself in the event the shelter defaults on the loan. Mayor Mike Dever and Commissioner Mike Amyx both said they wanted to place a traditional mortgage on the real estate.
"If this was my money, I would expect that level of protection," Dever said. "And I treat taxpayer money like it is my money."
The remaining three commissioners weren't yet ready to commit to placing a mortgage on the property. Commissioner Bob Schumm said that may make it too difficult for the shelter to receive traditional bank financing in the future for any other improvements at the facility that may be needed. He instead proposed an agreement between the shelter and the city that would stipulate the shelter would have to receive the city's permission to place the property under a mortgage with any other party.
He said an outright mortgage with the city may send the wrong message to the shelter's base of donors.
"There seems to be a level of independence and a can-do spirit out at the shelter, and I don't want to diminish that in any way," Schumm said. "If we put a mortgage on the building, it may send a message to donors that the city is in charge, and they'll just let us handle it."
Shelter leaders urged commissioners to see the shelter project through. The group moved from its longtime downtown home to the new facility in late 2012, and shelter director Loring Henderson said the larger space is helping the organization meet its mission. He said the shelter has housed 147 people during the first eight months of the year, with a large spike in the number of families being served. He said currently the shelter has 17 children staying with their families.
Henderson said the shelter has helped place 61 people into full-time jobs during the first eight months, in part because the shelter now has room to offer a 13-week program that better prepares shelter guests to enter the workforce.
He said the shelter also has seen a significant drop in the number of police calls made to the facility. Through the first eight months at the new location, 11 police calls have been made, down from 64 during the same time period a year ago when the shelter was downtown.
Commissioners unanimously directed staff members to further discuss the terms of the loan with the shelter. Those terms will include a sizable balloon payment that would be made by the shelter to the city at the end of the 15-year period, in order to make the loan more affordable to the shelter in the early years. Commissioners expect to have the loan, which would be funded through reserve funds of the city, on the agenda at their Oct. 8 meeting.