An unprecedented financial deal to help a nonprofit make mortgage payments moved closer to approval amid concerns it would lead to similar handouts for other groups.
The Lesbian, Gay, Bisexual and Transgender Community Center was built eight years ago with the help of $5.7 million in city funding, but is not able to keep up with its mortgage payments without help from The City’s general fund reserve.
On Wednesday, the Board of Supervisors Budget and Finance Committee approved legislation, introduced by Supervisor Bevan Dufty, in a 2-1 vote that would set up “a mortgage payment reserve fund.” The City would put $157,500 in the fund, which could be “replenished” up to more than $1 million in subsequent years if necessary.
The fund is needed to convince First Republic Bank to restructure the center’s loan so the nonprofit could afford the monthly payments.
Supervisor Sean Elsbernd opposed the deal.
“I’m just not comfortable with the entire process,” he said. “Putting The City on the hook is just not something I think we should be doing.”
Supervisor John Avalos, the committee chairman, said he had concerns the unusual deal would open the door for other nonprofits seeking similar deals during the recession. But he said the fact that The City made the $5.7 million investment makes it a unique case.
“We need to continue with the investment,” Avalos said. “It would be a great loss to The City if there was a foreclosure and we wouldn’t have the LGBT Center. That’s why it’s a particularly thorny and challenging issue to resolve here.”
LGBT Center Executive Director Rebecca Rolfe said its financial projects are “not a rosy picture and it still supports our ability to make the interest payments and meet the terms of the loan.” The center is looking to make use of more commercial revenue, such as by leasing out space to a restaurant, which would require a zoning change. The center is located at 1800 Market St.
The Board of Supervisors could vote to approve the deal as early as Tuesday.