The Haines Senior Village must raise an unexpected $185,000 in the next 10 years to pay off a second mortgage on the 20-year-old housing project due to an apparent oversight.
When built, the 13-unit development carried a $325,000 mortgage that was to be covered by rents. As construction continued, more money was needed and a second mortgage was taken out for $185,000.
Since the 1990s, rents have covered monthly payments on the first mortgage, and the balance on it sits at $140,000.
A recent plan included paying off the mortgage over a 10-year period, but board members recently learned the balance on the second mortgage – $185,000 – also will be due then.
“I have no idea who or why or how this was arranged,” said Bob Adkins, a member of the village’s board of directors who serves as group treasurer.
When manager Valery McCandless was hired last fall, she discovered that few or no required payments were made on the second mortgage. Payments on the second mortgage are yearly and the amount due is three quarters of the income that the village brings in.
McCandless was out of town on vacation and didn’t return messages left for her this week.
“Somewhere along the line, one of the managers said, ‘Well, if we don’t make a profit, we don’t have to make a payment,’” Adkins said. The organization had a series of part-time managers in the early 2000s, he said.
Adkins said the group plans to expedite the process and pay off the $140,000 mortgage in the next five years, and then pay off the $185,000 mortgage in the following five years.
The Haines Senior Citizens Center Inc. is the nonprofit organization responsible for the Haines Senior Village. Its board of directors formed a fundraising committee in June – comprised of board members Joan Snyder, Rocki Rostad and Doris Peck – to begin brainstorming ways to raise money. It launched a 50/50 raffle and candy bar sale on July 4.
Adkins said they’ve netted about $5,000 to date.
According to Peck, the board has discussed soliciting living wills, looking for people to sponsor units in the village, putting some kind of a monument in front of the office or selling commemorative bricks to be placed around the village building.
Peck said people may want to leave money or bequest money to pay the mortgages. Raising the cost of rent is against the village’s mission to keep the cost of living low.
“We can make rents more affordable if we can take care of this now,” Peck said. “I’m glad to do what I can do.”
Manager McCandless is donating her salary back to the village to pay the first mortgage. The board has also talked about looking into grants or even refinancing.
Adkins said the problem with refinancing a 20-year-old building is that it would require an expensive audit and inspection. Alaska Housing and Finance Corporation, the company that holds the village’s second mortgage, is trying to get out of the commercial loan business.
The unexpected debt has revived discussion of a past discrepancy involving borough property taxes.
In 2006, Haines Borough Manager Robert Venables found the village paid almost $59,000 in property taxes since 1996 although the organization should have been tax exempt. The borough assembly reimbursed the village almost $32,000, with no interest paid.
The repayment was offered by the assembly on the premise that “they had no more money” and was accepted by the village board of directors with the reasoning that the village “doesn’t need the money anyway,” according to a document provided by Adkins that originated with the village board of directors.
“It was a complete mess up,” Adkins said.
Adkins said the village board has spoken with several members of the borough assembly, but they are not eager to talk about refunding the $27,000 difference.
Village board president Deb Vogt said she doesn’t think the borough tax issue should be revisited. She also said the senior village is right on schedule with payments on the mortgages.
“We’re not sinking; we’re not in any kind of trouble,” Vogt said.
Mardell Gunn, who serves as secretary on the board of directors, said she’s optimistic the village will be able to make it work. She said the board is trying to look ahead and be financially prudent now so a crisis doesn’t occur before the mortgages are due.
“I don’t feel like we are in a dire situation,” Gunn said.
She said that the senior village is thriving right now and is still a valuable asset to Haines. The small group of seniors that started the village in the 1990s had great intentions, but was not financially savvy, she said.
According to an April 1996 Chilkat Valley News story, the Haines Senior Citizens Inc. initiated construction of the village with $1.3 million. The Alaska Housing and Finance Corporation provided a loan guarantee and two grants, one of which covered more than $700,000.