With only two choices before them, a majority of city council voted to hand over $505,000 in funding from its reserves to an anonymous charitable foundation in order to avoid the alternative — a Sault Ste. Marie with no YMCA.
A framework to help save the Sault Y was presented to council on Monday night, by which the city would provide $505,000 to a yet-unnamed charitable foundation so it could leverage those funds to access another $495,000 — $1 million in total — to complete repairs on the almost 60-year-old building.
The city would also backstop the $100,000 yearly lease for the span of 10 years, essentially acting as co-signer for the YMCA, which would go from being the owner of the building to a tenant.
The charitable foundation has agreed in principle to purchase the YMCA building at 235 McNabb St. at the fire sale price of $2 million — almost a million dollars less than the asking price — with the condition that the $1 million in upgrades be completed at the cost of the taxpayer.
Three of the YMCA building's four boilers are at or near the end of their working life, said Brent Lamming, the city's director of Community Services. He said some roof repairs are also urgently needed at the building.
Shelly Schell, chief financial officer for the city, said as the guarantor of the lease, the municipality could bear additional risk for major repairs that could be needed in the future.
”The unknown part that we can’t quantify right now is that through this kind of lease payment the city would be responsible for any major capital repairs that could occur during that 10-year period," she said. "That is assuming the Y does not have sufficient funds to manage that capital."
POLL: Do you support using taxpayer dollars to help save the YMCA?
Although he supported the part of the framework in which the city backstops the lease, Ward 4 councillor Marchy Bruni said he did not approve of the $505,000 in municipal funds being handed over to the unnamed charitable foundation for the improvements to the building.
"I believe the upgrades should come from the purchaser of the building or from the YMCA," Bruni told council. "If we pass this resolution in full we are setting a precedent with other non-profit organizations or even private organizations."
Bruni attempted to split the resolution into two parts: one to support backstopping the lease and a second to vote on the $505,000 for the repairs. But aftert some debate, the amendment was struck down.
Sault YMCA board chair Elise Schofield and board spokesperson Jake D'Agostini were in attendance at Monday's meeting of council to attempt to answer questions from councillors. Schofield told council listed inflation, increased operational costs and post-COVID recovery as some of the pressures that led to the YMCA's current financial situation.
D'Agostini noted that the Sault is one of the few communities across Canada that has rallied to save its YMCA.
“A lot of the YMCAs right across Canada have been facing financial hardship and they have never seen a reaction like this, so our community has stepped up in a big way,” D'Agostini told council.
Ward 3 councillor Angela Caputo told the board members she was concerned the investment by the city could end up being mismanaged by the same people who allowed the Sault Y to fall into crisis in the first place.
"If we're giving you this money and the operations department remains the same as the operations department that has allowed this building to go to shambles, are we throwing the money away?" Caputo asked. "Is there going to be a change in who's dealing with this?"
D'Agostini said due to its financial difficulties, the YMCA has been unable to pay for many of the repairs that have been needed.
"How long has that boiler been on the repair list?" Caputo asked.
D'Agostini couldn't give an exact number of years, but noted the replacement has been needed for the entire five years he has served on the board.
“I want to support this wholeheartedly, I really do,” said Caputo. “I am worried we are going to be giving these funds to an operation that has failed and that is not changing — we’re just giving money in places and potentially to people who have mismanaged it before."
“How are we being assured that this money is going to be put to the use that it should be?” she added.
In response, city CAO Tom Vair noted the city would be seeking board representation to keep a closer watch on its investment in the YMCA.
Asked after the meeting if the YMCA board has considered or approved representation or oversight by the city, Schofield said it has not, and that the matter will have to be discussed with YMCA Ontario and YMCA Canada.
"Obviously the YMCA and our board of directors would be open to any ideas moving forward to continue to offer services we do," D'Agostini said.
Back in council chambers, Caputo asked the board members the million-dollar question.
“Can one of you let us know how this happened and when I say 'this' I mean the sudden closure of the YMCA? And what precautions are being taken to ensure that this potential city investment and potential community investment are being put to good use?”
Schofield told Caputo the YMCA is not an anomaly among charities and has been negatively affected by inflation, operational costs and the costs associated with operating an aging building.
"In terms of our timing of the announcement, we uphold our values of confidentiality, as well as our mandate for human resources, so we had to operate within those foundations while we also made sure we maintained memberships and program enrolment as we looked to sustain the Y," said Schofield.
D'Agostini added that he believed the framework offers a sustainable future for the organization.
Caputo said she has not heard the staff or board take responsibility for the conditions that led the YMCA to the brink of financial ruin.
"Regardless of how I feel this operation has been managed in the past, I think the loss to the community would be massive," said Caputo. "I do feel there needs to be restructuring within the YMCA to make this work."
Mayor Matthew Shoemaker noted the $505,000 would be pulled from reserves the city has left over from its 2023 budget surplus, meaning the funding would not additionally impact the taxes of people in Sault Ste. Marie.
Just replacing the 120 daycare spaces that would be lost if the building closes would likely cost the city more than that to absorb, he said.
"There is 120 spaces on site at this daycare that, if the building closed, would have to be dispersed throughout the community, and probably wouldn't happen overnight," said Shoemaker.
To make it more palatable, Shoemaker suggested amending the motion from "Council authorize a contribution of $505,000" to "Council authorize a contribution of up to $505,000."
"I think we are getting off, frankly, fairly cheap for the continuation of services until we can find a better plan to move forward," Shoemaker said. "The plan, if we don't make this investment, is much more difficult and I think will cost us a lot more than $505,000."
That subtle change introduces an opportunity for the YMCA or other entities to contribute in a number of different ways to the $505,000 that is needed.
Vair noted that he has looked over the YMCA's financials and said the organization does not have the ability to contribute the money on its own.
In its 2023 annual report, the most recent publicly available financial statement available for the organization, the Sault Y stated that as of March 31, 2023 it had more than $500,000 in cash and short-term investments.
Ward 5 councillor Matthew Scott said he would support the motion based on the cost and time it would take to replace the YMCA with a new city building to offer the services that would be lost. Lamming told council a new 30,000 square-foot building with a pool would cost approximately $30 million and take five to seven years to construct.
“If you came to any councillor on an election year and said: 'How would you like to spend $500,000 and guarantee that these services are available for 10 years?' I think we would all tell you and make that promise at the door,” Scott said.
The motion passed 7 to 3, with councillors Bruni, Ron Zagordo and Sandra Hollingsworth voting against it and Corey Gardi abstaining due to a conflict.