Skeptical board members of the Jefferson County Industrial Development Agency came close to rejecting an emergency loan Thursday to keep Benchmark Family Services in Watertown from closing its doors, but decided to hold off for another week.
The board will reconsider the loan proposal next Thursday for the day care center at 1635 Ohio St., whose 35 employees face the prospect of losing their jobs if the loan isnt approved.
Economic development officials say time is running out for the nonprofit, which is neck-deep in costly state and federal violations that have brought it to the brink of collapse. If Benchmark doesnt get its proposed loan approved by the JCIDA board, it will be compelled to close its doors, said Donald Rutherford, CEO of the Watertown Local Development Corp., which, along with Watertown Savings Bank, would also provide a loan as part of the bailout.
The WLDC Board of Directors on Wednesday approved a loan of $118,054 for Benchmark, which already owes the local development agency $121,121. Watertown Savings Bank has signed off on a loan of $272,802, adding to the $238,004 balance that the day-care center owes the bank.
But those loans will go through only if JCIDA the lead agency for the transaction approves its loan of $113,870, adding to the $119,484 it has already lent Benchmark.
If all the loans are made, Benchmark will owe the bank and the agences a total of $983,335.
Mr. Rutherford said Benchmark owner Marguerite Peg K. Feistel notified him of the centers dire financial straits this month. He said members of the WDLC board discussed Benchmarks problems with Ms. Feistel Wednesday and are confident she will still be able to manage the center.
If these compliance issues arent settled, the doors will shut Thursday, he said. Our goal is to do everything to help Peg survive so that she can make the business a success moving forward.
But that sentiment wasnt shared by JCIDA board members, who said Ms. Feistel has a track record of failing to comply with state and federal guidelines for the day-care center, which receives funding from the state Department of Health and Department of Education.
I dont feel we have enough information to even look at this now, said board Treasurer Michelle D. Pfaff. Its taken them more than two months to figure this out, and they should have done this before and not waited until the (last week) to make a decision.
Board member Kent D. Burto pointed out that Benchmark has faced compliance issues for more than a year.
Thats the problem Ive had hearing about this issue then and having to pursue it again, he said. If we agree to this, we could be paying another $100,000 next year.
Board member Michael J. Docteur, who represents the Jefferson County Board of Legislators, said Benchmark should have corrected its problems a long time ago. The Jefferson County Board of Legislators also has dealt extensively with Benchmark to fix its financial woes.
Weve talked about several compliance issues, and I dont see how they havent been corrected, he said. I realize theres a lot at stake here, but I cant support the vote. State aid for child care will still flow to this area, so its just a matter of Benchmark or someone else.
For similar reasons, board President David J. Converse said he would also vote against the loan unless convinced otherwise by information detailing how Benchmark plans to regain its financial footing.
JCIDA board members were poised to vote on the loan Thursday. But after a half-hour discussion, board Secretary W. Edward Walldroff persuaded the board to take a closer look at Benchmarks business plan before issuing what would amount to a death sentence. CEO Donald C. Alexander agreed to present a detailed plan at the boards meeting next Thursday.
If we dont support this, then well be the ones that fired the shot to close the door, Mr. Walldroff said. The board needs to do our due diligence to make sure this is what we want to do. From my perspective, this business has a good fighting chance.
Chief Financial Officer Lyle V. Eaton said Benchmarks main problem has been not filing sufficient paperwork to the state on its operations. He said Ms. Feistel, who appointed herself compliance officer for Benchmark, will probably be replaced by another employee in that role.
Shes gotten into a hole that she needs tremendous working capital to get out of, Mr. Eaton said. The board will review an evaluation of Benchmarks ability to service the debt and decide if theyre willing to take the risk.
Jefferson County pays Benchmark for services and is reimbursed by the state after the center complies with reporting requirements.
Ms. Feistel declined to comment when called Thursday.
In other JCIDA business, the board approved a 10-year payment-in-lieu-of-taxes agreement, which includes a 50 percent abatement over the term, for Lawler Realty LLC to construct nine multi-family residential apartment buildings on 9.45 acres at Madison Barracks in Sackets Harbor. After 10 years, the units will be taxed at the full rate.
The PILOT was approved by the Jefferson County Board of Legislators, the Sackets Harbor Central School District and the village of Sackets Harbor.