CHARLOTTE
The U.S National Whitewater Center announced Monday that lenders have forgiven roughly two-thirds of its $38 million debt, a move that the center's director said would position the center for long-term financial success.
Since its opening in 2006, the nonprofit center has been able to turn a small operating profit -- but hasn't come close to making a dent in its construction debt, The Charlotte Observer reported.
That has prompted local governments in Mecklenburg and Gaston counties to pay the center $1.7 million annually, as required by the original agreement that helped build the center in northwest Mecklenburg.
The center has been in default on its loans. It has paid no principal and very little interest.
After the bailout, the center will still owe its lenders $12.4 million. Executive Director Jeff Wise said that debt will be paid off in five years by the center's operating profit and the taxpayer subsidies. He said the center will also be able to build up a capital fund to replace broken equipment -- something it doesn't currently have.
The center -- which has rafting, rock climbing, running trails, zip-lines and a restaurant -- is considered by local governments to be an asset to the region. But projections for how many people would attend it fell short. The center, which doubles as a training site for the U.S. Olympic Team, has cut expenses to keep from falling further behind financially.
Wise said 43 lenders -- banks, foundations, corporations and individuals -- agreed to the bailout. They might have had little choice.
Unlike a house, which a bank can resell and recoup some of its loss, there are few alternatives for the 400-acre park. There might have been no one else to operate it in its intended state, and the land might have had no other potential buyers.
Charlotte Mayor Anthony Foxx said the debt reduction was "an example of the wonderful civic spirit of the community."
Wise said he couldn't speculate on the motivations of the lenders.
"But what they told us was they wanted to support a community asset," he said.
After the government subsidies are used to pay down the restructured debt, the center could owe as much as $3.9 million, which must be paid in five years.
The center's largest operating surplus was $452,000 in fiscal year 2008.
Over the summer, the center projected it would turn a small operating profit of $12,000 for the fiscal year that ended in October.
Wise said the center turned a $120,000 operating profit due to a strong summer and fall. There were 73,190 visitors in July 2009, compared with 81,393 a year earlier. But the average visitor spent more -- $20.75 compared with $18.32.
Wise said he's confident the center can pay off its remaining debt.
He said the accounting firm Grant Thornton has reviewed the center's budgets and signed off on the debt reduction. "This is doable," Wise said. "We want to pay back everything we can."
He said he expects the economy to improve, spurring more people to attend. In addition, the center will no longer have to pay hundreds of thousands of dollars on attorneys and consultants to help it navigate its loans.
Email
Facebook
Google
Twitter
Favorites
More
Advertisement