Ohio University assumes financial responsibility of Muskingum Recreation Center

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Ohio University assumes financial responsibility of Muskingum Recreation Center

By Christine Holmes, News Director

Four years have passed since the dream of having a recreation center in Muskingum County came to life, but now the reality of its costs are setting in for those responsible for keeping the facility alive, and leadership changes are being made to do so.

As the Muskingum Recreation Center (MRC) faces the challenge of addressing outstanding debt and annual operational losses, members of the organization’s board fielded questions and concerns during a public discussion Wednesday evening.

Present during the forum at the recreation center were representatives from all four partners of the MRC – Ohio University, the Muskingum County Community Foundation (MCCF), Genesis Healthcare System and the Muskingum Family YMCA.

After organizing in 2009 and being in full operation since March 13, 2014, those who brought the vision of having a public recreation center in Muskingum County to fruition are now faced with financial reorganization and loan repayment deadlines as outlined by the New Market Tax Credit structure.

The Muskingum Recreation Center was made possible by private donors, as well as New Market Tax Credits (NMTC) financed through PNC, which allowed for a $12 million facility to be built for $7 million.

According to the United States Department of Treasury, “the NMTC Program incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities.”

During Wednesday’s meeting, MCCF CEO Brian Wagner said the partners have reached a point in their financial plan where one of the groups needed to take individual lead in reorganizing the funding as the end of the New Market Tax Credit period approaches.

According to Wagner, Ohio University will be the partner stepping up to take on that leadership role.

It was stressed by all representative parties that this change in financial leadership does not mean a change in ownership or daily operations at the MRC.

Ohio University Vice President for Finance and Administration Deb Shaffer said the MRC will remain under the same ownership as a non-profit organization.

Wagner reiterated those sentiments, assuring everyone at the meeting that the original community partners will still maintain an active role with the MRC.

“All four partners will remain as members of the board and are committed to making the MRC a community driven health and wellness facility to benefit the residents of Muskingum County,” said Wagner.

While the MRC will maintain its ownership and non-profit status, Shaffer indicated that other governing changes will be made in conjunction with Ohio University’s new role.

“What is changing is the governing membership and the members that underlie that,” Shaffer said.

Meaning, Ohio University will become the soul governing member, officially claiming the recreation center as one of its University affiliated entities.

Additionally, the MRC board will be restructured so that Ohio University will hold control and majority board seats, according to Ohio University Communications Director Carly Leatherwwood. Already existing members will have a minority vote.

“If we can convey anything today, it’s that tomorrow the lights are on, and there’s still spinning class and day-to-day operations, classes, those kinds of things. There is no change,” said Wayne Wycoff, Board President of the MRC representing the community.

When asked if the Muskingum Recreation Center has a positive cash flow from its daily operations, the answer from Shaffer was “no.”

“Today, if you took off any type of debt service, whether it be principal or principal and interest, and you removed all debt service from the operating statement, there is still a negative cash flow,” said Shaffer, who also noted the loss is more than $100,000 per year.

In a press release, Ohio University said certain debt guarantees could be triggered given current financial projections if the University doesn’t help subsidize the MRC through debt restructuring.

The 2017 Ohio University annual report indicates the University could be out $1.5 million if loans are not repaid on time.

The annual report, in part, states that Ohio University pledged $1.5 million as cash collateral on a $4,542,550 loan to the Muskingum County Community Foundation to finance a portion of the construction of the Muskingum Recreation Center.

That loan fully matures in 2020.

As of June 30, 2017, the University estimated the liability exposure would be around $300,000 as a result of the guarantee.

“The University made this commitment because it believed it would receive substantial benefits from PNC’s investment, which funded improvements to MRC’s leased property located on the Ohio University Zanesville campus, where the University is the landlord/owner,” the annual report states.

In addition to the $1.5 million cash collateral support, the annual report also included that the Muskingum Recreation Center owes Ohio University $750,000 in notes receivable.

When asked of the MRC’s strategic plan to resolve the financial issues discussed during the meeting, Wagner responded by saying the plan is pending side conversations with the four partners and PNC.

“I know that’s not a specific time table, but we are scheduling calls and appointments with each other to try to move this along as quickly as possible,” said Wagner.

In addition to a plan for financial reorganization, Ohio University also plans to supplement programming at the MRC to benefit the entire county.

Ohio University, along with Zane State College and Genesis Healthcare already pay corporate membership dues to make the facility available to their students and staff.

The Muskingum Recreation Center already serves as the official athletic facility for Ohio University Zanesville athletics.