Talks on Sale of YMCA Building at Standstill

Blame it on bureaucratic delays or on pocketbooks and patience worn thin. Whatever the reason, the proposed sale of the landmark YMCA building in downtown Santa Ana is in limbo.

A year ago, when it shut its operation on Civic Center Drive, the YMCA of Orange County had hoped that by now, its 68-year-old building would be in the hands of the city’s Redevelopment Agency and on its way to becoming a single-room occupancy hotel for the working poor. The agency even formally approved the deal in March.

But instead, the homeless are camped outside as the weeds grow.

Negotiations have come to a screeching halt because the city will not accept the building until the asbestos has been removed. It would not be fiscally prudent, city officials said recently, for the agency to bear that cost.

But the YMCA board responded that neither could it afford the asbestos cleanup, which is expected to cost at least $75,000.

After pouring $12,000 per month into the vacant facility since May, 1991, to cover insurance, mortgage and maintenance costs pending the sale, the YMCA board decided finally in April not to spend any more money on the building. And having purposely failed to meet a $600,000 loan payment due to the bank last December, the YMCA is also facing foreclosure proceedings by Wells Fargo Bank.

“I would prefer not to go through a foreclosure, but we have just reached the point where we are saying, ‘Let’s get on with this,’ ” said Jerry Nutter, president of the YMCA of Orange County. “The need certainly has not gone away. Here’s another month that people who need housing don’t have it.”

Under the proposed sale, the Redevelopment Agency had agreed to pay $625,720, which is the amount the YMCA owed the bank after getting a loan several years ago to make seismic improvements to the building.

The city cannot afford the asbestos cleanup in addition to the purchase price because it will probably have to subsidize the development of the low-income hotel, said Bob Hoffman, city redevelopment and real estate manager.

City officials say that even if the bank forecloses on the building they do not expect to be able to buy it any cheaper.

“It’s not like the agency is assuming a windfall here,” he said.

After years of operating a health and fitness center and 80 single-room-occupancy units in the downtown facility, the YMCA closed the building last May because it had become a financial drain on the nonprofit group, which runs eight facilities countywide.

But its efforts to sell the building have been a constant struggle, Nutter said.

YMCA officials placed the facility on the market after taking $1 million off its real estate appraisal that showed the site worth $3.1 million.

There were no viable offers, however, and negotiations with the city got underway last summer.

“We thought we had a responsibility to the community, not just to tear it down and put in a parking lot,” Nutter said.

One of the early stumbling blocks to the sale to the city was the relocation of the Lighthouse Program, a day shelter for the homeless mentally ill that leased space at the site.

Several months were spent on the issue, Nutter said, because plans to move the program to a nearby church were objected to by neighborhood residents and members of the city Planning Commission. The day program eventually moved to Garden Grove.

Then, when negotiations with the city began to bog down again at the end of 1991 for a variety of reasons, YMCA board members decided they could not meet the $600,000 balloon payment due to the bank. They hoped that by not making the payment, the city would be pressured to speed up its purchase of the site, Nutter said.

“The meter keeps running at $12,000 per month,” he said of the YMCA’s expenses on the site. The YMCA also subsequently paid the $15,000 interest payment due for the first three months of this year.

When it looked as if the city was ready to purchase the building in March in an “as-is” condition, Nutter said, city officials backed off after conducting their own preliminary study of the asbestos problem.

“You have to know that a building 68 years old is going to have asbestos,” Nutter said. “That’s how the buildings were built back then.”

But Hoffman said their agreement to buy the building was based on the YMCA’s representation of the asbestos problem, which was less extensive than the city later determined.

“When that survey came in, we began to wonder whether the asbestos was not more pervasive,” Hoffman said. The city conducted its own study and determined it would cost at least $75,000 to fix the problem, he added.

“We just did not feel comfortable buying the building with that kind of unknown,” Hoffman said. The city official said it is now up to the bank to decide whether to proceed with foreclosure and how to market the building.

But he said he expects that the site will eventually become a single-room-occupancy hotel.

“It’s a one-of-a-kind building with limited marketability because of the way it’s designed,” Hoffman said. “The building is closer to being (an SRO) than anything else.”

While a stalemate has occurred, Hoffman added, he does not consider it “a calamitous tragedy.”

“I expect a deal will be arrived at,” he said.