The city is looking into taking over certain operational aspects of the Costa Mesa Senior Center in an attempt to keep the organization's doors open.
The center's budget problems came to light after Costa Mesa published an audit in January predicting that the nonprofit organization's general fund would run dry by June.
After the report surfaced, four of the nine senior center board members met with city staff to discuss the audit and ways to improve the facility's finances.
The city offered to shore up the dwindling budget by taking over staffing, payroll costs and rent, senior center board President Judy Lindsay announced during the board's meeting Tuesday morning.
She emphasized that the center and the city have not reached a formal agreement. However, she went on to explain the necessity of some type of assistance to deal with the shortfall.
"It's very obvious that our budget is in the toilet," she said.
The center's budget is about $850,000 a year, and it was projected to be short about $118,000 for 2014. The center is largely independent of the city but relies on it for some of its funding.
The center's board requested $160,000 in February from the Albert Dixon Memorial Foundation, a memorial fund created after a former senior center member died in 2002.
The foundation is waiting to hear whether its board will approve the request, said senior center treasurer Ronald Frankiewicz.
The City Council and senior center board will vote on whether to approve any formal agreement between the two entities, said Councilwoman Wendy Leece, who was present at the meeting.
The item is not currently on the city or senior center board agendas.
The center has operated as an independent nonprofit with a board of directors since 1987. Its aid from the city includes about $535,570 worth of in-kind services — including a rent break on the facility, which is owned by Costa Mesa — and $240,000 annually, according to the audit.
Tamara Letourneau, the city's assistant CEO and administrative services director, estimated that the city's assistance in handling operational functions would result in a $763,000 reduction in costs to the center each year.
"Considering what your expenses are, it would be a huge reduction," she said.
The senior center's payroll for full- and part-time employees amounts to nearly half of the yearly budget, according to financial documents.
If it entered into an agreement with the city, the board of directors would continue to collect revenue from classes held at the senior center.
The money would be redistributed to other programs, Lindsay said.
If an agreement is reached, the city would open all staff positions at the center and recruit and conduct interviews to fill them.
All current employees would be welcome to apply for their jobs, Leece said, adding that in return they would be offered retirement and other benefits afforded to city employees.
Though there are many unanswered questions, several of the board members expressed interest in pursuing an agreement with the city.
"The senior center is on life support," said board member Barbara Echan. "I think it's important to see this not as a hostile takeover, but as the emergency surgery that's needed."