2017-12-06

Burdened with debt, the LCLC struggles with fundraising

by Gayle Wilson

  • <p>FILE PHOTO</p><p>The LCLC&#8217;s board chair, Wayne Foster, and general manager, Kevin Benjamin, in budget discussions in March with MODL&#8217;s audit and finance committee.</p>

Struggling with fundraising, the Lunenburg County Lifestyle Centre's (LCLC) board of directors are straining to repay $3.6-million in loans to cover cost overruns as well as funding and grant shortfalls from construction of the centre.

"This is a very sore point with myself. We got snookered back when this started. We should have never broken ground and started anything until all the money that was promised was in the bank," MODL's councillor for District 3, Lee Nauss.

Not only is the board facing difficulty repaying the loan, but the Town of Bridgewater and the Municipality of the District of Lunenburg (MODL), both of which provided the money, do not agree on whether it still must be paid back.

The issue relates to a section in the Memorandum of Understanding (MOU) that governs how the board is to cover the centre's shortfall.

The $1.8 million Bridgewater and MODL each provided to cover the shortfalls would be paid back through fundraising, according to Clause 6 of the MOU.

The LCLC board is now arguing that it's difficult to raise the money and has asked for the MOU to be amended, deeming that the two municipalities will absorb the shortfall.

The Town of Bridgewater indicated as far back as January that it would agree to do this.

MODL's planning and strategy committee voted against this at its November 7 meeting, although the decision was far from unanimous.

MODL's chief administrative officer, Kevin Malloy, who is on the LCLC board, took it upon himself to explain the board's position. He advised the committee members, "It's just my opinion, but I think we're in a position where any further fundraising [by the LCLC] will not yield any dramatic monies from here forward."

Malloy said there were a number of reasons the LCLC board felt it is hampered toward raising additional funds for future capital projects for the centre.

Firstly, now that construction has been completed, residents in the area feel as though they've paid for it, he said.

"So at this point in time to go back and ask them for money, I'm sure you're going to hear some feedback in that regard."

The board is challenged to find volunteers willing to fund raise, Malloy further explained, adding that even if the volunteers could be found the board is skeptical whether any resident or organization would be inspired to contribute to the centre knowing the money would just make its way back to "municipal coffers."

The $1.8 million extra that MODL had provided to the LCLC beyond the $3.8 million it originally committed itself to for the project was drawn from MODL's reserves.

Some repayment has been made, and the current amount outstanding is $1,671,478, according to MODL's director of financial services and municipal treasurer, Elana Wentzell.

Malloy noted that another problem is that the MOU doesn't specifically state who will do the fundraising in order to pay the money back, and therefore the money technically doesn't meet the definition of an account receivable should MODL wish to pursue it.

"We've set up a receivable, but to whom? Who owes the money - residents, businesses, other levels of government?"

Malloy left no doubt as to where he stands on the issue, arguing that MODL could do nothing for the next 20 or 30 years.

"We may or we may not get any money out of it.

"But what we're doing is hindering the operation of the LCLC to proceed with getting other capital requests and other improvements.

The CAO advised the committee members the decision is "pretty straight forward.

"Do we continue to keep the MOU in its current state or do we change it to allow the whole construction phase to be behind us and allow the organizations to move forward?"

Mayor Carolyn Bolivar-Getson agreed.

"All of the cost overruns kind of fell into this catch-all basket at the end of the day. Should it have been there? Probably not. We probably should have increased the amount, right from the start, and make it more transparent to the actual cost of the building. And not make it reflective on the fundraising end of it," Bolivar-Getson said.

Some councillors were in support of the proposed change.

"You wish to get your money back. But personally I don't think it's going to happen," said Reid Whynot.

However, other councillors were adamant that the MOU remain intact, arguing taxpayers' money is involved and not enough is being done by the LCLC to attempt to recover it.

District 10's Errol Knickle wondered, "Are [taxpayers] aware that they've already contributed or are writing off $1.8 million? I don't think they're aware of that."

"Wow, it was hard enough with $3.8 million," said Carver adding that the additional amount is "pretty hard to explain to residents. I mean, you just can't keep putting money into it."

Nauss criticized that council was led to believe MODL's contribution was paid off, and that's the reason the special 2.5 cent tax no longer applies. He says he has told constituents as much.

"Now I'm lying, because it was not paid off."

District 8's Michael Ernst didn't buy the argument that everything has been done that can be done to fundraise. In particular, he wondered what effort has been done in respect of naming rights.

"The lifestyle centre not only has the building which is unnamed, it has four rooms in the building which also are unnamed...

"So I think if the board could get a little bit inventive here, they might be able to reduce some of that amount that is owed."

Meanwhile, the chairman of the audit and finance committee, Eric Hustvedt, who is also on the LCLC board, admitted he was "caught in the middle.

"I certainly feel stuck in many ways in terms of proceeding in a way that can make that facility as effective as possible. So I hope we can consider some ways going forward with suggestions that do make it easy for the LCLC to move forward in ways that can raise money and operate," said Hustvedt.

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