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December 2, 2005
DEBT ANALYSIS How did it ever get so bad?OLD BOARD MEMBERS FIDDLED WITH PIE-IN-SKY DREAMS WHILE DAILY OPERATIONS NEGLECTED
PHILLIP GOMEZ
"In hindsight, when Pahrump Senior Center Inc. refused to accept the county's offer of $185,000 in financial support in July 2004, it doomed itself to fiscal insolvency," Kuver writes. "Distracted by its effort to design and locate a new senior center, Pahrump Senior Center Inc. failed to run the existing center properly in terms of realistic budgeting, expense tracking and basic management procedures. "As it operated at a monthly deficit, Pahrump Senior Center Inc. quickly burned through a $135,000 line of credit (extended by) Bank of America, let supplier bills pile up and survived only through the graces of benefactor cash donations each month," Kuver says. "In an attempt at short-term recovery in early 2005, the board of trustees approved the sale and leaseback of the center's building and land to pay off bills and gain operating capital." Kuver listed the source of the debts the center has accumulated. "The most critical debt is the approximately $62,000 of past due invoices from the suppliers that support operation of the center," he writes. "These threaten to shut down operations if not brought current." As of Nov. 11, the top five unpaid balances are: • Sysco food delivery, $18,106. • Bank of America for back taxes on payroll, $9,396. • Rebel Oil for gasoline, $8,459. • Daniel McArthur for accounting fees, $6,900. • Berry-Hinckley for gasoline, $2,839. Additionally, prior year debt in the amount of $71,000 exists for claims owed to Leo Daly architectural firm for design of the proposed new senior center building, now aborted. The debt has not yet gone to a collection agency. The recovery plan proposes a negotiated settlement with the firm, which wants to see a plan for the debt's payment. And then there're the senior center's long-term debts. This pertains mainly to a $135,000 loan from Bank of America, on which the senior center has been making payments of $960 per month - only on the interest due. The loan comes due in August 2006. It was co-signed by Gene Scheppmann, the owner of the trailer park who is trying to buy the senior center property and arrange a leaseback deal with the county. Scheppmann is at risk if the senior center defaults on the loan. "If the property sale, now in escrow, does not go through, the $60,000 in advances (taken by the senior center, further adding to its debts,) will turn into another debt owed to the Scheppmanns." Altogether the indebtedness of the senior center adds up to $328,000, with a lower figure hoped for in the matter of the architect's claim. Also planned is a re-amortization of the $135,000 Bank of America loan to stretch it out over seven years, pending the approval of the Scheppmann family. Current operations at the senior center for nutrition, transportation and administrative functions collectively average a monthly deficit of $10,000. The center's annual operating budget is $417,173. Its total annual income is $316,725 for a net imbalance of $100,448. |
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