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Landmark Sale Puts Denver Y On A New Path.

Old buildings make wonderful landmarks. But they can also become financial traps when nonprofits need to reach growing communities.

Like many colleges, churches and charities, the YMCA of Metropolitan Denver found itself ensconced in a venerable downtown headquarters that was threatening to become a money pit as the 20th century neared an end. Funds that could have supported important Y programs, such as daycare and youth activities, were instead going to preserve 94-year-old infrastructure.

Anchoring a block near the state Capitol and across the street from Denver's main transit terminal, the Central Y's sober facade: reflected .the quaint virtues of its pre-World War I heyday. As executives exercised, swam or played racquetball, less prosperous guests lodged in low-cost dormitories upstairs. But while the building stood as a charming reminder of Denver's early history, the YMCA could not afford sentimental attachments as the national organization neared its 150th anniversary.

"Our mission is about programs, not buildings," said Denver's Chief Executive Tom Craine. "With this antiquated facility, we found ourselves, developing programs to use the building instead of programs to help people."

Craine, who was hired from Denver's Iliff School of Theology to resuscitate the financially ailing organization in 1998, saw the Central Y as part of a larger problem. A fundraising campaign launched before Craine's arrival had fallen short of its goal as membership and donor commitment waned.

"We were a 125-year-old organization that had many issues to deal with," Craine said. "While we're a mission-driven organization, you can't have more mission than margin."

The problems were not unique to Denver. Through much of the 1980s and 1990s, local YMCAs across the country shifted resources to survive in a rapidly changing world.

San Diego County's YMCA provided, a template for others during the 1980s as it shook up management, arranged interest-free loans and sold property while developing a long-range plan to build financial strength. During the early 1990s, the San Diego-area YMCAs launched an expansion of services and a successful $15 million capital development program.

In seeking advice on how to reposition the Denver YMCA, Craine said that he turned to his peers in San Diego and Atlanta, where another turnaround effort proved successful. The new model became a "Y without walls" that could share space with schools, parks and community centers.

But closing or selling sites that harbor generations of memories comes hard.

"Ys come and Ys go, they build and they merge," said Arnie Collins, spokesman for the national YMCA. "And, they have to have a business plan that's likely to succeed."

To guide the Denver YMCA's board, a task force of community and business leaders was drafted to consider options for selling properties while preserving the mission. By bringing prominent decision makers into the process, the task force represented a step toward deeper commitment from potential investors.

When a decision was made in August, 2000 to sell the Central YMCA and seven other properties, including a cherished camp near Rocky Mountain National Park, the organization issued requests for proposals on use for the facilities. Because of its unique status, the Central Y was separated from the other properties in the bidding process.

Among the offers collected by a major real estate broker, three stood out. "None of them would have been embarrassing to us," Craine said. "All were first-class projects." The winner in the battle for the Central Y turned out to be another nonprofit with a mission that really did require a building.

Fearing the loss of 189 affordable housing units in an already tight market, the Colorado Coalition for the Homeless proposed buying the Central Y for $5.45 million, adding 25 to 50 rooms to the existing lodging. While the bid was $3 million less than the asking price, the YMCA would retain 35,000 square feet in the 160,000 square-foot building for its headquarters and fitness center. The Y agreed to give up its racquetball courts and some locker and exercise rooms.

Under the deal which is expected to close soon, the Colorado Coalition for the Homeless will run the residential portion of the building and plans to spend another $5 million in renovations, including replacing the roof, improving ventilation and adding bathrooms.

"Ultimately, we'll be converting from a transient rate to leasing on a longer term, with monthly and annual leases," said John Parvensky, executive director of the Colorado Coalition. "People will have more stability, and we'll be able to reduce the rent."

For the YMCA, the property sales will cut debt in half and allow the organization to maintain a downtown presence while transferring the landlord role to a nonprofit with greater expertise. "Housing is no longer a strong suit for the Y," Craine said.

Nationally, the fastest growing programs reported by YMCAs were Earth Service Corps, followed by older adult social clubs and performing arts programs. Day camp was the program most offered by YMCAs (80.3 per --cent), followed by youth swim classes (74.7 percent), aerobic group exercises (74.5 percent), youth basketball (74.4 percent) and pre-school and school-age child care, according to a Y study.

In Denver, a recent strong economy created even stronger demand for affordable housing and child services. "I hate to tell you how much money we lost in day care last year," Craine said. "No one is turned away, but you can't subsidize everyone."

With the real estate divestiture expected to be completed this year, Craine is also focusing on improving the Denver Y's balance sheet and boosting membership. "This YMCA's really at a crossroads," Craine said. "Right now, given all this flux, you can make a huge difference."

Richard Williamson is a reporter for the Denver News Bureau.
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Publication:The Non-profit Times
Article Type:Brief Article
Geographic Code:1U8CO
Date:Aug 15, 2001
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