LONGMONT — The Longmont Humane Society is asking for $772,227 in donations by Nov. 30 to avoid possible foreclosure later this year.
Construction cost overruns from the facility's expansion that began in 2006 and six years of financial deficits have drained the organization's reserves, leaving the humane society unable to make its 2013 and subsequent annual loan payments, executive director Liz Smokowski said.
The nonprofit needs to raise this year's payment within four months or the organization could face foreclosure or be forced to file for bankruptcy as early as December, said Smokowski, who inherited the loan when she was hired at the end of 2011.
In 2006, the town of Lyons, which uses the society's services, issued a bond for $6 million on behalf of the humane society under the state's Municipalities Development Revenue Bond Act to allow the society to begin construction. Wells Fargo now holds the loan.
In 2005, philanthropist Susan Allen of New York had promised the humane society $5 million for the expansion of its facility. That gift came over five years in $1 million increments.
The bond allowed the organization to begin construction right away on its expansion.
The organization's financial problems are due to construction costs for the 43,000-square-foot expansion and annual deficits from 2006 to 2011 exceeding $1.6 million. The cost of the expansion was forecast to be about $8.2 million but came in at $9 million by the time it opened in January 2009, Smokowski said.
Donations decreased starting in 2007 following the economic downturn, and operating costs increased once the expansion was completed due to higher utility costs and expenses associated with the care of more animals.
"The fact that we filled this building with animals right off the bat told us there was a community need and it was sort of an 'If you build it they will come' type of thing," Smokowski said. Currently loan-holder Wells Fargo has refused to renegotiate the loan. More than a dozen other banks have refused the organization's request to take over the loan, mostly due to the deficits, Smokowski said.
Last year, Smokowski reduced staff by 30 percent, closed three of the organization's four thrift stores and moved the clinic, which was located offsite, into the expanded facility to cut costs.
Further cuts are unlikely because they would put the quality of service at risk, Smokowski said.
The nonprofit has launched a fundraising campaign, The Longmont Humane Society: Serving the Community Now and Forever, focused on large gifts to achieve the organization's immediate and long-term goals, which include paying off the remaining $3.1 million on the loan by the fall of 2014.
Four loan payments of $772,000 remain, including the one due in November.
The humane society's building is collateral on the loan.
Longmont Humane Society Board President Shelly McLeod
said the organization is in "crisis mode," and asking for help from the community is one of the nonprofit's only remaining options.
"I think this problem goes back many years, to when the shelter accepted a large gift with strings attached and built a facility that is simply out of scale with the Longmont community and the shelter's donor base," said Clay Evans, who served as the interim executive director for the Humane society in 2008 and 2009. "Longmont Humane Society deserves praise for being willing to give animals a shot that a lot of shelters would put off, but you have the money to do those things or you can't."
Smokowski is the humane society's fifth executive director since 2008.
McLeod said excessive turnover has been a contributing factor to the organization's financial difficulties.