The Senior Center Levy

Journal story...

MIDDLETOWN

Seniors group seeks city’s help in refinancing mortgage

MIDDLETOWN —
In order to save a few hundred thousand dollars, the Middletown Area Senior Citizens Inc. needs the city of Middletown’s borrowing power.

And City Council seemed to be in agreement with the plan to have the city use its ability to issue bank-qualified obligations.

Middletown Area Senior Citizens Inc. was struggling financially before voters this past General Election approved a 1-mill levy to help pay for its senior center mortgage, which is higher than the current value of the 2007-constructed building. Council assisted the senior citizens group with putting the levy on the ballot and now serves as a pass-through agency, where they collect the revenues from the property tax levy and pass it on to MASC Inc.

Brad Ruwe, a partner and attorney at Peck, Shaffer and Williams in Cincinnati, made the pitch on behalf of the senior citizens group to split the nonprofit’s $3.5 million mortgage loan with First Financial Bank for the senior center. The split would create two loans and allow one — between $2.2 million to $2.3 million — to be a tax-exempt obligation and paid over five years with proceeds from the 2012 voter-approved bond issue. The second loan — between $1.2 million and $1.3 million — would be a taxable commercial loan the senior center would pay from its general budget over 15 years.

“The internal revenue code allows for certain entities, such as 501c3 entities like the senior center, to take advantage of tax-exempt obligations. But in order to do that, they need the assistance of governmental entities such as the city,” Ruwe said.

Because the city was willing to put on a tax levy approved by voters this past November, Ruwe said they hoped City Council would be interested in the plan to further assist Middletown Area Senior Citizens Inc. “to serve at the conduit issuer, a pass through issuer of tax-exempt obligation.”

Charles Barton, first vice president of First Financial Bank, said the savings would be around $250,000.

“The bank is able to pass on (the savings) because we won’t pay taxes on the interest we earn of the loan,” he said. “We pass the lower interest rate onto the borrower. It’s pretty substantial of what they save.”

Voters approved with 58.6 percent of the vote the five-year, 1-mill property tax levy. The measure needed City Council’s authorization to place the issue on the ballot as it would collect the money for the senior citizens group and then pass the proceeds of the levy on. The levy is slated to generate $781,400 a year.

Council was OK with the request, and a formal vote will be required following approval from the Middletown Moving Forward CIC —which Law Director Les Landen said is legally required under the bond financing process — and a public hearing.

“The only impact financially to the city is reviewing the documents and making sure that everything is in order the way it’s supposed to be and we’ve already discussed with First Financial and Mr. Ruwe the city being reimbursed for whatever costs are incurred in doing that,” Landen said.

Councilwoman Anita Scott Jones said she understands the financial issues were inherited by senior center Executive Director Ann Munafo and her staff, but “if in five years down the road we’re coming back and we’re saying the same thing then I would have some concerns but right now I do not.”

OK, WE PASS A LEVY TO HELP THEM PAY FOR THEIR MORTGAGE. THE LEVY WILL GENERATE $781,400 FOR THEM. IF THEY CAN FIND A TAX EXEMPT STATUS ON HALF, THEY WILL SAVE $250,000. WE NEVER HEARD ANYTHING ABOUT A POSSIBLE TAX EXEMPT 501C3 STATUS THAT THE CENTER, IN CONJUCTION WITH THE CITY, COULD HAVE PURSUED PRIOR TO THE LEVY VOTE. WOULD THEY HAVE ASKED FOR THE WHOLE $781 THOU IF THEY WOULD HAVE KNOWN THEY COULD DO THIS? PLEASE EXPLAIN. WHY IS THIS JUST NOW BEING ANNOUNCED SO LONG AFTER THE LEVY APPROVAL?

"Council assisted the senior citizens group with putting the levy on the ballot and now serves as a pass-through agency, where they collect the revenues from the property tax levy and pass it on to MASC Inc."

AND HOW DO WE KNOW, WITH THEIR TRACK RECORD IN HIDING MONEY, THAT THE CITY ISN'T COLLECTING THE REVENUES AND "FINDING OTHER AREAS" IN WHICH TO FUNNEL THE MONEY? WHERE IS THE REPORT FROM MASC VERIFYING THEY HAVE RECEIVED THE CORRECT REVENUES? COULD THE PUBLIC BE MADE AWARE OF THIS SINCE IT IS OUR MONEY THAT IS BEING USED?