Did San Leandro learn its lesson? City gives forgivable loan to Boys and Girls Club

The last time the issue of a large city-backed forgivable loan came before the San Leandro City Council, the financial future of a beloved non-profit was in doubt, followed by a sexual misconduct scandal that made headlines because of rendezvous at Foster’s Freeze and soft-serve ice cream cones.

The city council believes another long-time San Leandro non-profit deserves the city’s help. It unanimously approved a total of $600,000 in loans Tuesday night to the San Leandro Boys and Girls Club to augment a $10 million upgrade of their facility.

The pair of $300,000 loans–one using federal Community Development Block Grants (CDBG), the other from the city’s general fund–are both intended to be forgivable loans after 10 years. The city will charge three percent interest on the loans, officials said.

Boys and Girls Club officials said the project is fully funded, with philanthropy footing the remainder of the capital costs.

The Boys and Girls Club, located near the BART tracks on Marina Boulevard, has a 50-year history in the city.  “This has been an important services to the city for decades.” said Tom Liao, the city’s director of community development. “While it’s been a marvelous asset, its definitely in need of modernization.”

San Leandro Councilmember Ed Hernandez, however, referred to the specter of the city’s past involvement with the Davis Street forgivable loan on Tuesday night. He sought assurances the Boys and Girls Club loan is sufficiently structured to avoid some of the issues that emerged during the Davis Street controversy.

“We’ve had issues in the past with forgivable loans. I want to make sure that if we are doing the loan process, that [we’re] in the first position,” he said, referring to San Leandro officials later discovering the Davis Street Family Resource Center had secure addition loans on the building without the city’s knowledge.

San Leandro City Manager Jeff Kay assured the council the Boys and Girls Club loan is secure. Unlike the Davis Street loan, the city owns the land where the Boys and Girls Club is located.

Kay does not foresee the city falling into the same problems it had with previous forgivable loans. With an optimistic tone, he added, “Our hope and expectation is to never see this money again.”

City officials last year feared the Davis Street Family Resource Center could be in default of a $1.5 million forgivable loan given by the city in 2014 to allow the non-profit to purchase its building near Marina Boulevard. Repayment of the loans lagged and some councilmembers voiced strong criticism of Davis Street and its long-time executive director Rose Johnson.

The controversial has since stabilize, although relations between the city and non-profit are still in the process of mending. But the incident cost the city its city manager, who left last year for the same position in Anaheim.