Phoenix loaned Valley of the Sun YMCA $2 million in 2004 to provide dozens of affordable living spaces for at least 35 years.
But the YMCA closed the 75-year-old Lincoln Family Downtown facility on Sept. 30, evicting its low-income tenants and making plans to demolish the building.
City officials consider the action a breach of the 22-year-old contract and now demand $1.28 million of the loan back.
Phoenix Housing Director Titus Mathew sent a letter to Valley of the Sun YMCA CEO Bryan Madden on Sept. 21, reminding him of the contract terms stating a default means the balance is due "immediately."
"If YMCA is no longer providing affordable housing at the property, you will agree YMCA is in breach of the previously discussed contractual agreements
between the parties," Mathew told Madden in the letter. "The city will expect a response in the next 10 business days detailing when the anticipated loan repayment in the amount of $1,280,000 will occur. Thank you for your anticipated cooperation, and I look forward to working with you towards a resolution."
City leaders and YMCA officials have been meeting on the issue, according to Phoenix Housing Department spokesperson Kirstin Couturier.
Meanwhile, some tenants of the facility's transitional housing units and their supporters have criticized the closure. Several tenants and tenant rights' group members protested in front of the facility at 350 N. First Ave. on Sept. 29, drawing anger from motorists as they blocked traffic.
Ryan Knak, a YMCA spokesperson, confirmed the closure in early September, telling The Republic and other news outlets that the nonprofit didn't have plans to sell the property and was "actively working on plans for the future of the YMCA at this location." Knak said he would share more details in time.
Asked on Sept. 30 about the contract, Knak said the nonprofit was "currently working through the details related to this agreement and are in the process of preparing a formal response and proposal to the city."
The statement, which Knak attributed to Valley of the Sun YMCA, added: "Our partnership with the City extends well beyond any single agreement or project, and we look forward to continuing to work together to serve the Phoenix community for many years to come.”
The nonprofit declined further comment.
Contract gave YMCA a $2M forgivable loan
The contract, which was also obtained by The Republic under state records law, was signed by city and Valley of the Sun YMCA officials in August 2004, locking down terms of a $2 million loan from the city.
Voters helped the process by approving general obligation bonds in 2001 that could be used for the purpose, and the City Council approved the program in 2003, according to the contract.
The idea was for the YMCA to renovate the Lincoln facility so it could provide 42 low-income apartment units, a number that was later changed to 43. The budget for the project, the contract states, included the $2 million from the city, $477,000 from the state and $268,000 from the YMCA.
The YMCA would pay no interest on the loan and, as long as it kept up its end of the bargain, would never have to repay the city for its loan, the contract shows.
Its terms allow for a 35-year program that reduces the amount of payback by about $80,000 per year after the 11th year that the housing units were in place. The outstanding loan amount has since shrunk by about $800,000.
The 35 years started with a certificate of completion for the project, which the city granted in 2007. That means the affordable housing units should be in place until 2042.
City Councilmember Anna Hernandez said in a statement that her office was "unfortunately" made aware of the contract problem last week.
"We have met with city staff and know that they are in discussion with the YMCA regarding the contract and repayment," Hernandez said. "However, our office’s biggest concern is ensuring that the current residents in this building do not get displaced or become homeless."
Reach the reporter at rstern@arizonarepublic.com or 480-276-3237. Follow him on X @raystern.
This article originally appeared on Arizona Republic: Why Phoenix demands $1.28M from YMCA over closed facility | Exclusive
