The Sammamish Community Center, a $33m facility funded with $28m of  Sammamish taxpayers’ money and operated exclusively by the Y, generated at least $1.4m in surplus that is being sent to Seattle Y, raising questions regarding accounting methods.

The Community Center exceeded all expectations set forth in the city’s original plan.  The city thought the Community Center will attract 1,750 members, with a monthly membership rates for a family at $68.  In reality, more than 5,700 memberships were sold, with monthly membership rates for a family at $138.

The difference is sent to Seattle, although it supposed to stay in Sammamish.

The City of Sammamish built the community center with $28m of taxpayers’ money. The remaining $5m came from the YMCA, although it is subject to repayment should the city ever terminate the agreement before its 50-year term ends.  

The YMCA is not paying rent for using of the facility.

Surplus artificially reduced

In its agreement with the city, the YMCA committed to keep all surplus in Sammamish, as a reserve operating fund and for future improvements to the building.

However, when Sammamish YMCA Executive Director Dave Mayer delivered to city council the first operating report of the community center on Apr 2018, it was revealed it is not doing so – only a fraction of the surplus is kept in Sammamish as a reserve operating fund – the rest is sent to Seattle.

The report shows “depreciation” and “interest” expenses of $1.44m. This reduced the surplus from operating the community center to a mere $40,000.

Two independent sources, both accounting professionals, told Sammamish Comment it is inappropriate to expense depreciation and interest against revenues.

This produced an artificial reduction of the surplus by $1.44m. Both sources explained that the YMCA should have also recorded the value of the building as an asset in 2016, the first year of operation (adding $27m as an asset from which to depreciate) – which would have offset entirely the depreciation and interest expenses.

The YMCA is not showing such asset on the operating report presented to the city. It is not clear whether or not the operating report was audited by Moss Adams, the YMCA’s auditor.

However, in the 2017 audited financial statements for Seattle YMCA, obtained by The Comment the YMCA has properly recognized the Sammamish building as an asset worth $27m.

“At the inception date of the lease, the fair value of the building was estimated to be $32,597,241. This amount, less the $5,404,489, contributed by the YMCA was recognized in 2016 as a contribution and a leasehold asset,” the audited statement says.

Somehow, this assets recording did not flow to the operating report presented to city council.

A public gift, or not?

The YMCA’s recognition of the building as a “contribution” raises an old question about the legality of the deal.  Under Washington Constitution, gifting of public funds is unconstitutional.

Over the years, several citizens raised the issue with city hall.  The city brushed off the concerns with different reasons, none backed by  a sound legal opinion.

In fact, it may have been only recently, in December 2017, that City Attorney Mike Kenyon may have provided some analysis to the question. Requests to receive the analysis were denied, citing the attorney client privilege.

No new taxes…

Residents may remember the 2012 advisory vote, in which the city asked the residents to approve spending $30m to build community center, operated by a non-profit, which would require no new taxes.

Last year, an email from the then-Director of Public Works, John Cunningham, revealed that the money spent on the YMCA came from the road fund.  As the city council is now wrestling with the financial realities of how to pay for road improvements, it is unclear where the diverted $28m spent on the YMCA will come from–new taxes or bonds repaid by taxes. It does not seem that the city can find this money out of the general fund any longer.

Another option is to adjust the the rent paid by the YMCA.

Staffing levels ballooned

The city’s original plan for operating a community center anticipated the YMCA engaging 14 full times employees and equivalent to 40 full time employees in part time employment.

The YMCA has reported employing over 370 employees, declaring itself one of the largest employers in Sammamish. The YMCA’s report does not break down employment by location or departments. The large discrepancy between the city’s plan and the YMCA’s actual staffing raises questions on the efficiency of running the community center.

City council is questioning

During the April 2018 council meeting, Council Members Chris Ross and Tom Hornish questioned the YMCA’s representative on the vanished surplus. Ross is a finance analyst at Boeing. Hornish is a securities attorney at Wilson Sonsini.  The two demanded answers from the YMCA but then-City Manager Lyman Howard dragged his feet for months, refusing to address the issue.

Howard was one of the architects of the YMCA’s deal with the city.

Now with Howard gone, Interim City Manager Larry Patterson was able to arrange a meeting between the two and YMCA’s representatives, which took place this week.

Reached for comments the Y confirmed to The Comment that a meeting between YMCA’s leadership and members of the council indeed took place and that the YMCA agreed to address a list of their questions within one month.

• See this article from from the 2012 YMCA Advisory Vote.