The Friends of Hemming Plaza’s budget was stretched so thin last month that when the city withheld a June payment over a contract dispute, the nonprofit couldn’t make payroll.
Instead, Friends Executive Director Vince Cavin loaned the group $7,000 on July 14 in a transaction shown as “Vince deposit to be reimbursed.”
Six days later, a check written to Cavin was listed to “repay short term loan.”
The revelation was shared Monday during a City Council Finance Committee meeting where members discussed amending the contract again for the fledgling nonprofit.
Finance Chair Bill Gulliford introduced a bill last week that would allow the Friends to include revenue from concessions and others forms of income to meet the group’s fundraising requirements.
Under the terms of an 18-month contract, the city will provide a total of $1 million in installment payments as long as the nonprofit collects $250,000 in private donations within the contract’s first year.
The contract went into effect Sept. 1 and is being funded by $800,000 from the Downtown Investment Authority and $200,000 from the city.
Based on questions raised by the Parks, Recreation and Community Services Department and an opinion from the Office of General Counsel, the city withheld a $150,000 payment due June 1.
The nonprofit has received $600,000 from the city since September.
City attorneys said the amount of private donations reported by the Friends fell short of the $200,000 the group was supposed to raise within nine months of the contract date.
The nonprofit lists $106,000 in donations since September. If concession money had been allowed, the group would have reached the fundraising requirement.
Bill Prescott, a member of the Friends board, told the committee not receiving the June 1 payment led to Cavin loaning the group money so employees could be paid.
Gulliford said while he thinks the group has done “a phenomenal job” with park improvements, he has concerns about the nonprofit’s long-term stability.
Committee member Aaron Bowman echoed those sentiments.
“That does not bode well for the future,” Bowman said. “I see a train wreck ahead of us.”
Prescott told the committee the Friends board is considering approving a 3 percent pay increase for staff in September. That would add about $6,000 to the organization’s $200,000 annual payroll.
Committee member John Crescimbeni said he wants an assurance from the Friends’ board by Aug. 11 — when the full council will discuss the contract amendment — that there will be no increase in staff salaries. He was the only vote against Gulliford’s amendment among the seven committee members.
“We’re fulfilling our obligations under the contract,” Prescott replied to Crescimbeni.
Prescott also said that after the 18-month agreement expires, the board will likely seek an annual contribution from the city of about $500,000.
Gulliford reiterated his position that the $1 million is “seed money” and the nonprofit should be self-sustaining when the 18-month contract ends. He said he wants an itemized accounting of operational expenses and the amount spent directly on park improvements.
The contract amendment is scheduled to be reviewed today by the Rules Committee.
Matt Schellenberg, who chairs the committee, said he wants Prescott to present a detailed accounting of the group’s net revenue and expenses since the management contract was executed.
Prescott made no comment about either financial report request.
If the full council approves the amendment, it would be the second one made to the contract.
The first was enacted April 14 when council approved an amendment allowing $50,000 in grants received before the contract went into effect to count toward fundraising requirements.
At one point in Monday’s meeting, Gulliford said while he’s sure it’s the intent of the city and of the nonprofit to make Hemming Park more successful, another organization might be able to do it more efficiently.
After the meeting, he declined to name specific groups, but wouldn’t rule out the Friends could be replaced as manager of the park.
“You can’t consider that they’re the only show in town,” he said. “There could be competitive pressure.”
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