Explaining the Loan that Might Help Save the Mateel Community Center

mateel Logo featureIn Tuesday’s report on the Mateel Community Center Board of Directors meeting, the Mateel Board of Directors said they were applying for a loan with the RREDC (Redwood Regional Economic Development Commission.)

The Board reported to the membership their efforts and intention to explore this loan to the point of going through the underwriting process to determine their eligibility, but the terms they provided to the questions of what payments and terms might be, were given for purposes of transparency with the membership. However, the application isn’t yet filed, and the terms are not in writing.

In phone interviews, Gregg Foster of RREDC and Partick Cleary of the Humboldt Area Foundation provided more information about the loan process and their organizations’ relationship to each other and the Mateel. Mateel Board President Megan Gomes also gave more direct information about the loan and also about the Board’s effort to keep the hall.

RREDC

Gregg Foster is the Executive Director of RREDC, Redwood Region Economic Development Commission, and, as he said, “proud south fork alumni.”

Foster said RREDC has met with board members from the Mateel Community Center, and the Board is compiling an application for RREDC to underwrite.

Foster explained that RREDC provides loans primarily to businesses but also to non-profits on occasion. RREDC’s first step is to meet with the applicant and learn their needs and their situation. Examples he gave included “whether they are trying to save jobs, whether it’s an expansion, whether they are trying to buy a new business, or in this case it would be refinancing some existing debt…”

Foster expanded on how the Mateel might benefit from the RREDC loan.  Foster said it will allow them

to take care of the current accounts payable and the unpaid vendors, and other issues and to do so in such a way that will provide a stable cash flow for the organization. And that is what a debt can do is ‘clean up your balance sheet by taking care of the vendors and everybody else and then you know how much you owe every month.’ Then you have some certainty about the cash flow each month as opposed to ‘we’re going to try to pay you a little this month and some [next] month, [but then] one of the vendors may be demanding all of it’

Foster went on to say the next step is for the Mateel to submit their loan application. Foster explained that RREDC

underwrites their loans because we do not have an infinite amount of money. We have a very fixed pot of funds…. Specifically, if there’s not a margin, we don’t have a mission. We are here to help the community, but we have to get our loans paid back, so we have to do that [underwriting] level of study.

Foster explained that an important component of the loan application is the need for the applicant to illustrate how the project or organization benefits the community economically.

Also, to be eligible for the loan, Foster said,

[RREDC is] going to need the Mateel to do a really good job on it’s business plan and its projections. To stabilize that portion of the cash flow for the organization going forward so there aren’t any surprises.

Next Foster said RREDC’s next step if underwriting is successful, looks at whether RREDC and the applicant need a partner in the finance package. And he said RREDC has previously partnered loans with the Headwaters Fund, the Arcata Economic Development Corporation as well as Humboldt Area Foundation.

Mateel Community Center’s Board President Meghan Gomes explained her optomism about the possibility of the RREDC loan,

I was very excited talking to Gregg [Foster] even though it was a preliminary [conversaton.]  It was kind of like the conversation we had with Patrick [Cleary], but it was more directional, which way to go.  And I thought ‘oh my god, we could see our heads above the water if this works out.’

Megan explained that she, Board Member Stephen Helliwell, who has work experience as a Financial Counselor, Board Treasurer Eryn Snodgrass, and Mateel’s bookkeeper Amie McClellan comprise the subgroup working on the loan application.   She acknowledges the three main tasks right now are finalizing the ‘actuals’ from July and August, finishing the ‘two year projections’ of income and expenses and completing their business plan.

Megan said that the effort on the part of the Board is preliminary, but they want to be sure the membership knows the Board is applying for the loan and why.

In the meantime, she also put the Board’s thinking about the actual potential of selling the hall to pay off debts into perspective:

I think that the sale of the building is exactly the way Garth brings it up. It’s the ultimate, last resort, worst case scenario if every other option were to fall apart, and the Board itself no longer [has] the drive to hold it together and the [wherewithal] to do it then I could see that as a possibility.

 

But I know for a fact that this board will do anything to not see that happen.

Board President Gomes doesn’t anticipate a plan for the building’s sale to be on the agenda at the Membership Meeting in November. She said if it becomes necessary to contemplate during the following year, the Board will call another meeting with a minimum of two weeks’ notice.

However, consideration of the loan by the membership will be on the agenda of this year’s annual membership meeting in November. Megan said the board is moving quickly to have as much of the underwriting process well underway in order to provide the best possible information to the Membership at the annual meeting.

Humboldt Area Foundation

Patrick Cleary, Executive Director, at the Humboldt Area Foundation said “its possible that Humboldt Area Foundation would be a lender alongside RREDC.”

Cleary said RREDC underwrites, or makes the assessment on the loan application, “because they are in the business of making loans, that is not our primary business.”

To explain how finance partnership works generally, Cleary said, “Let’s say it’s a half a million dollar loan, RREDC might make $250,000 of it, we might make $250,000 of it. RREDC would be the lead agency so they would do all the paperwork.”

Cleary articulated the importance of the underwriting process.

RREDC, I believe, needs updated financial statements that clearly spells out all the loans that need to be refinanced.   And a business plan that clearly spells out that the loan payments would be within the ability of the Mateel to comfortably pay it back because no one wants this loan to go bad.”

Cleary gave his impressions of the Mateel’s organizational opportunities, “

I think the Mateel at this point is, [speaking as] an observer and someone who cares deeply about the Mateel, about to evolve as an organization, whereas a lot of the financial fortunes [in the past] really revolved around the success of Reggae. …At this point there is an opportunity for the Mateel, through their partnership with High Times, through their ability to rent out the facility, through the Summer Arts Festival, which is a more predictable income stream, to get on a more steady financial footing, and not have the ups and downs of one event. The ups and downs of one event creates an element of risk.

With regard to the organizaton’s challenges, Cleary said

It’s clear that there’s a large mountain of debt to overcome. That will take a concerted effort on the board to make sure that the business plan is solid and that the debt is financed in a way that can be handled over a reasonable period of time. And that the Board sort of rethink its role that its primary service is to serve the community as a community center rather than to be the concert promoter of a rather large Reggae festival.

To clear up a misconception, the report that the Humboldt Area Foundation would receive the Mateel property in the case of forfeiture is not what it seemed to this reporter.

When asked, Cleary described what would happen if the Mateel had difficulty making payments in the future, “Anytime a borrower is unable to make payments, the first thing you try to do is change the payment schedule to make it more realistic. But if that is unsuccessful, ultimately in the worst case scenario RREDC would initiate a forclosure procedure in which the building would be put up for sale.” The Humboldt Area Foundation would not become the owner of that property.

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53 comments

  • One of the things that I know is that they haven’t been talking to the people that they owe money to that is the main reason some of them want to take the Mateel to court to try and get their money back instead of some good sound information maybe you should talk to some of them and find out but I guess you’re better at Burning Bridges then creating doorways

  • I don’t have any desire to see it saved. Anything we can do to kill ROR is a good thing.

  • Pharmstheproblem

    To take from Paul to pay Peter never never works out…. Nobody has yet to explain why employees taxes weren’t paid…. Didn’t the Mateel borrow from private donations to pay off Garth’s dept last year, did they get paid back… Business plan, joke, relying on maybes, future programs good luck as the economy take a dive in Humboldt….Sometimes you have to know when to throw in the towel…

    • At least the Mateel would pay off local people and debts, placing the financial burden directly on themselves.

      • True! I stand corrected, it would be best option for that.

        • if they default and then the burden is shifted to the community and those people who put their Blood Sweat and Tears into it for a long time as they lose the building and the property that it is on

          • The future board members will all have to deal with the debt- burden for 26 years–coming up with 4800 a month, and if they don’t make extra payments, we won’t be paying the principal until around 2030. That’s a lot a burden when you probably won’t be there in 5 years

  • As with any loan or refinancing the real question is…where will income be derived from? Benbow Arts Fair? Those Mateel shows don’t make any profit and now Reggae won’t add much ever again. I’m sorry to hear that the Humboldt Area Foundation (HAF) wouldn’t take possession in case of default. HAF has some business sense. Now it sounds like it will be sold to some private party (a corporate sell-out weed company?) unless somehow Benbow Arts Fair can turn a profit of $4000 x 12 months= $48,000 or thereabouts every year for 26 years? And then we will have the hall back where it was before it got gambled away for a big party?!! Please correct me if I have this wrong…and just how much profit did Benbow Arts Fair make this year?

    • The Board says the Mateel is paying more than $4000 now on debt and debt financing.
      Definitely they are going to have to prove that in the underwriting process.
      In the meantime, Megan’s feeling was that if the loan were approved, monthly income would be able to cover the guestimated payments and summer arts and other big income could be used to pay down principal and replenish the rainy day fund.
      I didn’t include that in the “printed story” because the numbers are “back of the envelope” at this point.
      If I write it “in the paper” it seems like precise plans, but the Mateel is applying and we’ll see what happens.
      The board will definitely need to present the business plan,the budget, and the projection to the membership.

      Editorializing momentarily:
      Hopefully the community sees the hall as a community center and looks beyond the failings of individuals.

      When folks gathered, last week, to listen and give feedback to the county and state reps around the permitting and abatement programs, I sat there wondering if it would be the last time we’d be doing that there.

      I see Cleary’s point that this is a golden opportunity to have the Mateel evolve away from the promotion aspects and engage more fully in it’s role as a community center.

      It’s challenging because we only replace 3 seats at a time which means the ongoing culture of “confidentiality” defines operations even when new members have goals of transparency.

      I have empathy for board members who have served a membership organization as intimate as the Mateel while trying to negotiate contracts and “do business” in the cold cruel world. What a nightmare honestly.

      My hope for the Mateel future is a wee bit grim. Currently, as Tom tries to point out, the Board is pretty closed as a group personality.
      Creditors say no one reaches out to ask them what they see and feel. We see the board making sad mistakes with it’s volunteers who might otherwise walk over broken glass for the organization in hard times. And I only see Bruce having ideas about how to include the membership and open the circle. And his ideas appear to be met with abject fear by some of the Board.
      But at the same time, those folks are serving in a really freegin hard time. The ones I like the least as people appear to work the hardest. I honor that.
      And simultaneously, the community doesnt appear to see they still have a level of responsibility if the Mateel fails. The community center is like democracy it seems to me. In Civics I was taught all citizens are responsible if the US government fails, so by comparison all of the membership is responsible if the Mateel goes away.

      And as Daryl Cherney tries to point out, the kids who are coming up need the center and they don’t care about all this political, personal nonsense. People in the future need the hall and they need this time period to figure out its importance and come up with something to solve the problem.

      • Kelley- Thank you! That was a kind, respectful and informative response. Many- myself included- have let their frustration spill into bitterness and anger. Moving forward I hope something positive comes out of the ashes. I hope lessons are embraced and not denied. I appreciate your transparency and wish for a Board of Directors which does the same. There were some very questionable deeds done by pretty secretive people. They should be scolded and we should move on. I will…

      • Kelley, have you read the MCC audits or tax returns? According to the MCC most current tax returns (2014, 2015, 2016) they are in the red every year. And that’s without paying state or federal income tax, payroll tax or payment of services rendered. And that was when the MCC had Reggae and now they don’t. Its not doom and gloom, its the stark reality of business, even if you are a non-profit. The MCC have always tried to have it both ways and it caught up to them big time and they say they never saw it coming? The MCC Board just kept kicking that can down the road, gambling next year would be better, keeping them from going off the fiscal cliff!

        For example: When faced with a persevering liquidity crisis, the board may face the decision of whether to
        file for bankruptcy protection, or elect a bankruptcy alternative, such as dissolution under state law. Bankruptcy is an option for nonprofits, although one taken far less frequently by nonprofits than for-profits, for a variety of reasons. A nonprofit that determines that the best course is to close its doors may liquidate under Chapter 7 of the Bankruptcy Code. A nonprofit that determines that its mission remains valuable and its financial situation salvageable can attempt to reorganize and continue its mission under Chapter 11. Unlike their for-profit counterparts, creditors cannot force a nonprofit into bankruptcy involuntarily, so the decision to file, or not, lies entirely with the board.

        And: The threshold question for a nonprofit facing a possibly terminal liquidity crisis is one of mission, rather than finances. While you begin to collect, analyze, and understand the financial and operational aspects of the crisis, you should initiate a hard look at your mission and role. Are you still necessary? In your absence, will your target community be underserved? If you take a hard look at your mission and your role in serving your target community and constituents and determine that your mission is fulfilled or can be fulfilled by others, then the decision to shut your doors rather than incur the time, expense, risk, and turmoil of restructuring is an easier one. You will still have transition and wind-down issues to address, including identifying client constituents who will be hurt by the closure and exploring ways to minimize the disruption of services to them. For example, there may exist a community foundation or other donor who could donate funds to ensure that client transitions, if necessary, are as smooth as possible.

        Once a board evaluates its financial status, it needs to formulate a plan on realizing the value of those assets to satisfy debts and the feasibility of continued operations. The plan to restructure the nonprofit’s assets and liabilities may include a partial sale of assets or sale of operations. For example, if a nonprofit falls behind on tax liabilities, and owns its office building, the board may consider selling the property and switching to renting space in order to satisfy that debt. Note that this is a viable option only to the extent that the nonprofit has equity in its holdings.

        A board of a section 501(c)(3) entity should take care in these situations to maintain tax-exempt status, which requires paying ―unrelated business income tax‖ on income unrelated to the entity’s mission. Do not assume that the entity’s tax-exempt status is a shield against capital gains tax on the sale of an investment asset or the taxes normally levied against the sale of personal or real property. The organization will want a tax professional to advise on that issue before undertaking these one-time transactions as part of a larger restructuring.

        https://www.guidestar.org/FinDocuments/2014/942/624/2014-942624598-0c45c993-9.pdf

        https://www.guidestar.org/FinDocuments/2015/942/624/2015-942624598-0d980e7f-9.pdf

        https://www.guidestar.org/FinDocuments/2016/942/624/2016-942624598-0ef961be-9.pdf

    • Didn’t the summer arts fair make 160,000 this year in profit or was that just gross revenues?

      Between the summer arts fair and renting out the hall the mateel should be able to handle 50,000 in payments every year I think.

      And I wouldn’t count out reggae as a source of revenue. Ya, high times owns it and we might not make any money for the next five years. And it definatley needs to expand beyond reggae music (reggae music peaked decades ago and it’s been down hill ever since). But with a good producer it could be a good festival again someday.

    • Tired of the haters

      SAMF turned around 160K profit, this was info in a mateel press release at the end of July.
      You’re underinformed sir

      • Sometimes it’s good to be “informed” and sometimes I think a lot of people who try to be “informed” just end up wasting a lot of precious time and energy.

        I’m personally taking a break from trying to understand what’s happening in sohum and where it’s going. I’m spending this year doing other things.

        But thank you sir for being an informed community member.

  • Sometimes you just have to give it up they have no way of paying back the loan they don’t have regular income so I never heard of giving a loan to someone without means of repayment so I hope they don’t do it sell building pay your debts and everyone get on with their lives for activities income is dependent on people and paying money

  • Man that Justin Crellin really dug this hole so deep nobody wants to be positive about the Mateel . He gets away with no stress and joins the Hospital board to try and save face ! Thx Justin

    • Hum, I thought ReggaeRising was responsible for this. That’s your legacy, own it Fools, instead of pointing fingers at others.

    • Blackberry Amnesia

      This is just a bad idea that is carpeted with more of the same thinking which resulted in a big old mess that has no resolution.

      The folks running and working for the Mateel have clearly indicated that they can not be trusted to do the right and honest thing with ANY amount of money.

      Sell it now, or sell it later, in the end, the result is the same.

      A different entity needs to be formed, if the community is to enjoy whatever benefits that the Mateel provides.

      The board already liquidated the main source of income, and the income streams remaining seem extremely weak.

      All persons involved in the current existence of the Mateel: please resign if appointed, and the rest of you are fired. Please let someone else take the reins, before it is too late.

      • Lotta Wordsworth

        Aw’ight. So who’s stepping up? The new gig still gotta have energy to git er done. You got any for it?

        • I’ll donate my clutter box old rusty Nuts and Bolts bent nails some screws with their tips missing some that are stripped out a big pile of broken hearts these things can be useful when trying to put a community back together again

    • I like stars too!

      But wait: Doesn’t being on the Board at SHCHD require dishonesty and incompetence?
      Certainly looks that way to me!

      Justin appears to be highly qualified!

    • Quess the hospital is next….

      • The Entropic Empath

        Except, I don’t think High Times will want the hospital, and nobody else will buy it…

        I predict the hospital will be out of business by January, anyway.

  • But wait, isn’t Daryl about to ride in with the million bucks he said he would raise?
    Oh right, just another blowhard emission in a long list of same…

  • Isn’t it nice the people here like to say things they don’t know about and make assumptions that again they don’t know about. Bottom line is that the lenders will have to be convinced that the Mateel will be able to make payments. The lenders will know more than anybody here making ignorant comments.

    • Prove me wrong I know a lot of the people that have not been paid and all of them tell me that the mateel has not given any options and have not talked to them maybe a few times in the beginning to tell them things that oh we are financially and debt and then just let it drag on for over a year now. The secrets in the sauce, BBQ anybody?

  • Discussing how borrowing money, that they will not qualify for, to pay past operating debts is nothing more than a stalling tactic. The cash cow, Reggae, has been sold, the board was not able to keep the Mateel operating with the Reggae income, they will never keep it going without it. This is already over, the board needs to admit that and stop trying to fool people into giving them more money.

  • Payroll taxes were taken from peoples pay checks .This is a crime that they chose to pay Arthur’s and not the people that worked for them .They stole this money .Period .They took it out of peoples pay checks and kept it for themselves

  • Having a board member who wants to purchase the Hall is a major conflict of interest and reeks of conspiracy. Perhaps Dustyn should step down, because his his ambitions do not seem in the best interest of the membership he was elected to represent. Tommy Dimmick still owns thousands of acres adjacent to French’s Camp where roads and culverts have been added to TPZ land. Who knows who his partners will be???? With High Times losing so much money this year, hard to believe as a corporate for-profit business they would risk it again. High Times purchased the right to produce ROTR, but it does not have to be at French’s Camp. Rumor has it they want to move the event to a more populated arena.

  • I think the board should ask around about HAF.

    How many local orgs have pulled their money and gone elsewhere due to how expensive HAF’ fee structure is?

    Didn’t I hear of Fortuna Sr Center and some others or am I nuts?

    • That’s brave of you Semper Fi, to ask that latter question of these readers! Lol.

      • If these people have any heart that you are trying to get this loan from they would drop you like a piece of s*** that you are go get a loan from some pawn broker who will take our building/ land then flush the toilet better yet put all your Collective properties up and keep the Mateel Center out of it. LOL

        • Trying to get it done but the jack is broken on this trailer hitch and can’t get it high enough to hook on once I get it hooked on the trucks things should be okay

        • I am not a veteran but much respect and I happen to like my collection of Rusty Nuts and Bolts only donating them because I thought you would use them to bring the community together Veterans for peace rule give thanks to those who battle for our freedom sometimes I get a little bit carried away

  • Blah Blah Blah, we all know this is a goner since weed $ has evaporated. Sell it and move on…that loan is lost money for sure… Redwood Run is now in Blue Lake Casino what does that tell you, SoHum is falling apart as we speak

  • “debt- burden for 26 years”

    !!!! Let that sink in.

    And even if a rough number crunch allows you to project enough income to make those loan payments keep in mind the costs of the day to day expenses like upkeep of the hall , insurance, wages , etc ,etc , they are all the while mounting on top of that!

    Historically and for many consecutive years the mateel relied on the usual 225,000 profit from reggae to cover that nut all year because as a rule they operated at a loss. Reggae allowed them to do that. But now ? During these decrepit money flow times? How on earth do you suppose they will magically start running month to month in the black?

    …And I hope someone was kidding , because if Justin actually joined the hospital board I am ashamed of the hokiness of our community.

    • Let me preface: I’m not speaking in favor of (nor against) the Mateel getting a loan. I just throw out information when I see things I can add to.
      Some annual staff costs were associated with the production of Reggae. So, as the Mateel doesnt have to produce that show for five more years their annual costs are expected to drop by quite a bit.

      Hopefully the board will distribute the projections and the business plan atthe next meeting and People can consider that information before the membership meeting.

      • Like I said, the MCC is always kicking that proverbial can down the road; its always “at the next meeting”. The MCC has gotten so far away from its original mission and why it was formed in the first place. If, and this is a big if, if the MCC is an honest to Jah “Community Center”, where is the “Community” to bail them out? If the MCC is so connected with the music scene, where are all the benefit concerts at the MCC?

        One great example is the Southern Humboldt Community Park’s “Fall Splendor” fundraiser. They had a very successful event held at the MCC. Said they packed the place, sold out, claimed they generated allot of income for local businesses and income for the MCC.

        Funny thing about this very successful “Community” event and fundraiser at the MCC, it moved to Eureka in 2017. So why did this local “Community” organization stop supporting the MCC?

        • Jenny Metz who is the “head” of organizing the Splendor lives up around Eureka and has more up there and to make that show at the Mateel caused a lot of people stress from her

  • 6% interest on a loan… The credit union down in Mendocino is giving 3% interest on loans ….the banking system is a huge part of the problem in our world that needs to shift…if the Mateel is looking for a loan I believe a lower interest rate is possible by shopping around

    • And maybe they could just ask the people that they already borrowed from if they would like some interest instead of a stick in the eye 2 to 3% might be okay especially if they start paying it down and maybe you could even retro it from when the debt started been trying to say this for a while but nobody seems to be listening knock knock could be the bottom end of your engine is ready to fall apart seems like a good time to start talking to the people that you owe money there are options you have resources geez

  • Remember back in the heyday of reggae, they just printed money with their wristband and lammie machines? Vendors were paid with wristbands, friends and family were out scalping them in front of Calico’s where the bus let people off. And apparently thousands of people were desperate to come pretend they were outlaws for a weekend, where you could buy and smoke weed right out in the open!
    All that money just gushing in. Nobody counted how many people went to reggae back then, the county just asked one girl, who was said to be really good at estimating crowd size (as long as there was no way to verify.)
    After the Mateel won the reggae war the board and staff could barely hide their glee. The Golden Goose was theirs! Make a deal with the Arthurs! The good times were back!
    But nobody seemed to notice that pot lost its frisson of illegality, and lots of different kinds of music had become popular. The rest of the world moved on, including the Golden Goose.

  • Its sad, just 5 years ago, you would have never known how much debt the MCC had started to accumulate after moving Reggae back to French’s Camp:

    http://www.redwoodtimes.com/article/zz/20131126/NEWS/131127720

    And it goes for the current MCC Board; on Aug 8th, speaking on KMUD, you would never know how poor the attendance was for ROTR 2018, given what they said. And this was after ROTR tickets were discounted 40% weeks before the show. If they thought 2017 was a low turnout and they lost money (-$170k), what was 2018?

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