Tillicum community center fighting for grant money

Shaky accounting means Tillicum center might not receive crucial federal grant funds

Staff writerMay 4, 2014 

The fate of the community center in Tillicum is uncertain as its board of directors and executive director wait to see whether the Lakewood City Council cuts off federal money for its operations.

If the center doesn’t get the money, it could be forced to close, board president Bill Hubbard said.

Executive director Karen Priest is brought to tears when she thinks about that possibility.

“The community center is the lifeline for this community,” Priest said. “This is where everybody comes, whether it’s for food, health care or to socialize.”

On Monday, the City Council will allocate a total of $471,752 in Community Development Block Grant money to various community groups. The Tillicum American Lake Gardens Community Center is one of six applicants vying for the roughly $70,000 in block grant money available to public service agencies. Requests totaled more than $367,000; the center asked for $92,150.

In the past the city has awarded the center between $60,000 and $90,000 in federal money — a large chunk of the center’s annual budget of nearly $225,000. But this year, the city’s advisory board recommended not supporting the center.

If the City Council approves that recommendation, it would be the first time the Tillicum center hasn’t received the block grant money since the city started getting it in 2000.

The advisory group also proposed taking away roughly $40,000 in money previously set aside for the center from fiscal years 2012 and 2013.

The center has been a fixture in the low-income Tillicum neighborhood since 1985. It contains a food bank, meal site, clothing donation center, after-school programs, a branch of the Pierce County Library, community garden and a nutrition program for women and children.

Families flock there for the Easter egg hunt, a safe trick-or-treat event in October and a holiday basket giveaway in December.

“It’s truly a blessing,” said Jennifer Jenkins, 28, who visited the food bank Wednesday with her 8-year-old daughter Arielle. “They have a good heart and encourage people to be better.”

FINANCIAL QUESTIONS

Concerns with the community center’s financial records and inconsistencies with reimbursement requests for previous CDBG funds were reasons for the denial recommendation this year, according to city officials.

The money comes from the U.S. Department of Housing and Urban Development. Federal regulations allow 15 percent of the total to be used for public service entities such as the Tillicum center.

Priest and the city have been at odds over the center's bookkeeping since 2011. Priest and Hubbard say the city’s concerns were addressed two years ago; city officials say not enough time has passed to prove the problems have been corrected.

An independent accountant hired by the city in 2012 to review the center’s finances didn’t form an opinion about whether the nonprofit misused federal money in fiscal years 2010 and 2011. Inadequacies in the organization’s accounting records were cited as the reason, according to a report issued Sept. 24, 2012.

“In my opinion it would appear she asked for reimbursements she shouldn’t have asked for,” said David Bugher, Lakewood’s assistant city manager for development.

TIGHT MARGINS

Even though the center hasn’t been able to provide receipts and canceled checks, the city does not think anything criminal occurred, Bugher said.

“This is an organization that runs tight to its margins,” he said.

Priest knows the finances weren’t recorded properly, but she maintains she did nothing wrong. The center relies on reimbursements to fund operations, making it difficult to maintain a steady cash flow, she said. She believes the city’s scrutiny is the result of her not cashing a paycheck on time.

“I was doing it for the benefit of the community center,” said Priest, who was hired in 2007. “I would do anything for this community center, even if it meant not cashing a paycheck.”

Priest’s actions could jeopardize the city’s ability to get future development grant money, said Jeff Gumm, Lakewood’s program grant coordinator.

Without proper documentation, he said, “the city is on the hook.”

The city is required by HUD to review the finances of the groups that receive the money every two to three years, Gumm said.

After its review of the community center in 2012, Bugher sent a letter to Priest and the nonprofit’s board of directors in March 2013 identifying three findings that needed to be corrected immediately. The nonprofit:

• Did not have adequate financial management systems to ensure effective control of grant funds.

• Requested reimbursements for ineligible expenses, including some that “did not occur at all.”

• Requested some reimbursements in advance of expenses being paid.

The letter suggested the nonprofit’s board should become more involved in the finances. It cited concerns with a lack of reporting of employee hours to the state Department of Labor and Industries, and missed Pierce County property tax payments.

“There was nothing missing. It was a matter of how we were keeping the records that didn’t satisfy the city,” Hubbard said. “They wanted it a different way. We did it.”

MISSED TAXES

The city suspended reimbursements to the center during its 15-month review. That affected the nonprofit’s ability to pay bills, including property taxes.

Priest didn’t know until this week that two of the center’s three tax parcels were in foreclosure for missed payments.

Pierce County tax records show the center owes $206 in surface water and foreclosure fees from 2011. If the nonprofit pays the 2011 balance, the foreclosure will be lifted, Pierce County Assessor-Treasurer Mike Lonergan said.

Tax records also show the nonprofit didn’t file for a tax exemption with the state on the two parcels in 2012, 2013 and 2014. The omission resulted in the accrual of $37,578 in delinquent property tax assessments and fees.

Priest said she was never notified about the missed filing or delinquent taxes. State and county officials said multiple notices were mailed.

Priest is working with the state Department of Revenue’s property tax division to restore the nonprofit exemption. If granted, it would wipe out all past-due taxes retroactive to 2012.

But before that can happen the center needs to get its nonprofit status reinstated with the Internal Revenue Service. According to the federal agency the status was revoked in May 2012. The IRS revokes nonprofit status after an agency fails to file its 990 tax forms over three consecutive years, according to its website.

Center leaders did not know the status had been revoked until this week.

Priest and Hubbard have reached out to City Council members in recent weeks, asking them to reconsider funding the community center. The city’s financial concerns have been addressed, they said.

Gumm said the Tillicum nonprofit has improved its financial reporting, but the city still has concerns about how well the board of directors is kept informed.

Priest said checks and balances have been put in place, and at least two board members are at the center two to three days a week looking at finances.

Bugher said the council faces a dilemma in allocating the limited federal funds.

“If we’re going to award the money to Tillicum,” he said, “someone else is going to lose.”

But if money doesn’t go to the center, people in Tillicum will lose, Priest said.

“I’m praying that they will come up with something,” she said.

Brynn Grimley: 253-597-8467
brynn.grimley@thenewstribune.com

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