Kid Zone Growing Pains

Bob Houston, Board Chair of Neighbors For Kids in Depoe Bay addressed the Depoe Bay City Council regarding some growing pains that Neighbors for Kids (NFK)  is experiencing. For some years, NFK leased a parcel of land from the City. NFK was able to build a new, debt free building on the parcel to house their programs. Houston explained that in 2010, nearing completion of construction, the City of Depoe Bay gifted the property to NFK, but with a reversionary clause in the deed that the property would be used only for NFK programs or revert back to the City.

Until recently the reversionary clause has not been an issue, but because of the uneven nature of non-profit fundraising and recent growth of NFK, their fundraising has fallen short this year. Contributing to the shortfall, as NFK has grown, heavier use of the building began to over burden their existing 9 space parking lot. To meet City parking requirements, NFK found it mandatory to buy a parcel nearby and entered into a short term contract with a private seller to purchase a larger parking lot. The contract required a full payoff as of 12-31-2015. Fortunately a local supporter has now provided a refinance of the parking lot debt over a 20-year term to relieve that pressure, but NFK’s funding for this year is still mush less then needed.

Due to the very narrow acceptable uses of the building and property under the reversionary clause, attempts to leverage their debt free NFK building as security for additional funding were not successful. Houston asked to City Council to remove the reversionary clause to allow NFK the opportunity to more fully leverage the value of their debt free parcel. There was discussion about an ORS statute that only allows removal of a reversionary clause after a 20 year period. The council approved a motion made by Councilor Zeke Olsen to refer the matter to the City Attorney to determine if there is a way to mitigate the reversionary clause.

1 Comment on "Kid Zone Growing Pains"

  1. They like to think they are dept free, though in fact the reversionary clause is the dept. To serve as a beacon for the community kids. All contracts must have safety measures to ensure all goes as it should. I would love to have the city give me property for one noble deed then ask later to remove a particular clause because it prevents them from fund raising. Well the property was given to be somebodies private sublease entity. It’s for the kids solely and always shall be a community zone. Never private.

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