In for a penny, in for a pound.
The city of Lawrence has invested too much in the Lawrence Community Shelter to now allow the shelter to fall into a serious financial bind. For that reason, it makes sense for the Lawrence City Commission to look favorably on a plan to finance a $725,000 loan to the shelter. However, it also makes sense for commissioners to make sure that loan is structured in a way that protects taxpayers and maintains the independence of the nonprofit shelter.
Shelter officials approached the commission about their plight last week. Renovations to the structure that serves as the shelter’s new home in eastern Lawrence cost about $600,000 more than expected, forcing the shelter to take out a short-term loan at a local bank. That loan is coming due soon, and the shelter needs another $100,000 to repair the structure’s roof. “Truthfully,” the shelter’s treasurer told commissioners, “if you turn this down, I’m not sure what we will do.”
There may be room to question the financial management that brought the shelter to this point, but the first priority is to try to come up with a short-term solution. To do that, commissioners directed city staff to draw up documents for the loan but also looked for ways to protect the city if the shelter ends up defaulting on that loan. Putting the loan in the form of a traditional mortgage on the real estate, would be one way to do that, and a couple of commissioners favored that strategy. However, other commissioners said having a mortgage with the city might hamper the shelter’s ability to get bank financing for other projects and its ability to attract continued charitable support. Having the city hold a mortgage on the property, one commissioner said, might send the message that “the city is in charge” and willing to take a larger role in managing the shelter — which is not what the city or its taxpayers should want.
To their credit, shelter officials have made significant strides since moving to the new facility late last year. In the first eight months at the new site, 61 shelter residents have moved into full-time jobs thanks to a 13-week program designed to prepare them for the workforce. The number of police calls to the facility also have dropped to just 11 in that time, compared to 64 during the same period a year ago when the shelter was downtown.
The shelter certainly is worthy of city support, but as they move forward on this loan, city commissioners should be careful to protect taxpayers and also send the message to shelter officials that there is a limit to how much public financial assistance they should count on in the future.