Borough-Rec accord?

By on April 9, 2015

It looks like Ephrata will adopt a measure to grant up to $100,000 in capital campaign matching funds to the Ephrata Rec Center

But the approval of the unbudgeted expenditure hinges on the Ephrata Rec’s approval of a repayment agreement on money owed to the borough, said Councilman Robert Good.

Good, Community Services Committee chair, explained Monday that the capital funds pledge would be a dollar for dollar match in capital funds for new roof replacement and the HVAC system at the Rec Center.www ephrata rec

Ephrata Borough Council last month unanimously approved a repayment agreement with the Ephrata Rec Center that restructures the Rec’s debt to the borough.

That includes approximately $175,000 in remaining debt service from the 2008 refinancing of debt service from its 1998 major expansion project, unpaid municipal sewer, electrical and trash collection services, along with interest and penalties.

Good reported the Rec Center will agree to the repayment plan only if  borough council approved the resolution to match $100,000 capital campaign matching funds.

With that agreement, Good said his committee will recommend that council adopt both agreements at the April 13 meeting.

Still, council member Susan Rowe, expressed concerns about both upcoming votes.

“I myself am struggling with this,” said Rowe. “I do want to support the Rec Center and see them succeed; however, I also have an obligation to the tax-paying citizens whose funds will be used if the resolution passes.”

Later Rowe explained that her intent in making her comments was not to have the committee chair withdraw the action item for next week, nor was she hoping to convince other council members to vote against the request from the Rec Center. But she did remind council that in order to balance the 2015 Budget, Council voted (7-1) to use money from the Capital Reserve Fund.

“Prior to that vote, I cautioned Council, especially on the committee level, to be cognizant of depleting the fund balance going forward,” added Rowe.

Rowe also reminded council that the Rec Center owes money to the Borough for a missed debt service payment. As a guarantor of the

Bond, the Borough was obligated to appropriate unbudgeted funds to make the payment as well as for unpaid utility bills from the past.

Rowe said she had confirmed this by checking the IRS Form 990 filed by the Rec Center which showed that they do in fact show they have liabilities due to third parties.

“This indicates to me they are aware they incurred the debt and it is owed to the Borough (meaning the tax-paying citizens),” Rowe added. “Since the Rec Center is a non-profit organization, those forms are open to public inspection.”

Last month, Borough Council approved a repayment agreement with the Rec Center to have those funds paid back to the Borough.

At the most recent Community Services committee meeting, the Rec Center stated they would not agree to sign the repayment agreement until the Borough Council passed a resolution matching capital contributions dollar for dollar up to $100,000. That committee will recommend to council on April 13 that borough council adopt that resolution.

If that resolutions passes, the committee will then recommend council approve taking an unbudgeted expenditure to be paid from the Capital Reserve Fund to cover the matching capital contributions.

“My concern is that by depleting the fund balance, the Borough will have to scale back on Capital Projects in the five-year plan or figure a method to grow the Capital Reserve Fund,” explained Rowe.

In her comments to council, Rowe presented demographic data for the area served by the Ephrata Rec Center in questioning the level to which those other municipalities were being asked to match capital contributions dollar for dollar, especially in the amount being requested from Ephrata Borough.

Those stats show that while Ephrata Borough residents bear the brunt of support of the Rec Center through their tax dollars, demographically, they may perhaps be least able to do so. Consider that Ephrata Borough ranks last in Average Median Income per Household: Clay Township, $50,543; Akron Borough, $45,407; Ephrata Township, $45,025; and Ephrata Borough, $41,550. The same holds true with regard to Median Average Income per Family: Clay Township, $55,119; Akron Borough, $53,365; Ephrata Township, $53,295; and Ephrata Borough, $48,213.

“I am concerned that the citizens that can least afford to be being asked to pay up to $100,000 in matching contributions to ensure they receive the $174,000 the Rec Center owes to the taxpayers,” commented Rowe. “I don’t believe anyone wants the Rec Center to fail. I think the majority of our citizens would agree it is a tremendous asset to the community. My struggle is that I don’t know if Borough residents can or want to take on the debt.”

Good also felt it was a terrible way to do business. Like Rowe, he agreed that the Rec Center should be much more aggressive in courting the support of other adjacent communities that are likewise using the Rec Center, saying that the first rule in fund raising is that if you don’t ask, you don’t get.

“I grew up with a Rec Center and it has emotional attachment connected but I will not do business based on emotional connection,” said Good. “I’m very disappointed that the business is being conducted on so much distrust, as part of a collective body like this. When we will not sign off on ‘this’ without you signing off on ‘that’. If we are going to do business with one another and make this is successful, then we cannot play these kinds of games.”

For additional information on Ephrata Borough, please visit their website at www.ephrataboro.org. Gary P. Klinger welcomes your comments and questions via email at klingerglobal@gmail.com or via Twitter at www.twitter.com@gpklinger.

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