To overcome a near $30 million debt, the YMCA of Metropolitan Milwaukee filed for bankruptcy today and also announced plans to sell most of its owned real estate assets.
After making public its financial woes in April, the nonprofit organization has been devising a comprehensive restructuring plan in order to avoid shutting down.
The organization has already laid off staff members, put off needed investments at its centers, cut programs, and frozen salaries and benefits, but without a more dramatic restructuring plan in place, the organization warns that it will be insolvent by fall.
Under the new plan, the YMCA of Metropolitan Milwaukee will facilitate its education programs, health and wellness initiatives and childcare services at sites in urban communities and at sites that are mainly leased, restricted or gifted.
Those locations include the Rite-Hite Family YMCA, a site that the organization owns but that sits on heavily restricted land in Brown Deer. The Rite-Hite Family YMCA, which houses the YMCA Healthy Lifestyle Village partnership between the YMCA, Wheaton Franciscan Healthcare and the Walter Schroeder Aquatic Center, will lead the organization’s healthy living initiatives.
Other locations the YMCA will continue to operate include the Northside YMCA in the Lindsay Heights neighborhood, Parklawn YMCA on Milwaukee’s north side, and the John C. Cudahy YMCA in Milwaukee.
The nonprofit will also continue to run camps at Camp Minikani in Hubertus.
And while the YMCA of Metropolitan Milwaukee will continue corporate operations at its Downtown YMCA location, located at 161 W. Wisconsin Ave., it is currently searching for a new downtown location. Once it finds new space to lease, it will sell its downtown facility.
The YMCA also plans to sell its West Suburban YMCA, 2420 N. 124th St. in Wauwatosa; Tri-County YMCA, N84 W17501 Menomonee Ave. in Menomonee Falls; Southwest YMCA, 11311 W. Howard Ave. in Milwaukee; and Feith Family Ozaukee YMCA, 465 Northwoods Rd. in Port Washington. The YMCA of Metropolitan Milwaukee currently owns all four properties. The organization has a letter of intent from the YMCA of Central Waukesha County to purchase the West Suburban YMCA, Tri-County YMCA, and Southwest YMCA. The Kettle Moraine YMCA has issued a letter of intent to purchase the Feith Family Ozaukee YMCA.
Most proceeds from each asset sale will be contributed toward debt reduction, according to the organization.
However, total sale proceeds will likely fall short of the full debt, the YMCA said. As part of the bankruptcy process, the organization plans to ask its banking partners to agree to a reduction in its debt so that its debt level is surmountable as it scales back its operations.
“We believe this plan represents the most comprehensive solution possible for resolving the Y’s urgent financial and operating challenges, and is the Y’s best shot at survival,” said Bob Venable, chairman of the board of directors of the YMCA of Metropolitan Milwaukee. “The board carefully studied every viable option, and is confident that this plan is designed to achieve our objectives of establishing a sustainable financial and operating platform, while preserving our mission and continuing to best serve our shared community. With this new footprint, the Y will be able to strengthen its urban mission, can better deploy its human resources to ensure operations are well staffed and managed, will be able to substantially pay down its debt, and will become positioned to reduce its cost structure while maintaining sufficient earned revenue to support ongoing operations.”
Throughout the bankruptcy process, the organization plans to continue operating centers and programs uninterrupted as well as continue paying employee wages and benefits.