Tennessee's Easter Seals chapter faces bankruptcy

Agency will close Green Hills Center, forfeit land holdings By Clay Carey • THE TENNESSEAN • May 18, 2009 Easter Seals Tennessee, which provides job training, recreational services and daily help to mentally and physically disabled children and adults, will seek Chapter 11 bankruptcy protection as soon as today to get out from under the $10 million it owes its banks, its top officials told The Tennessean. As part of that process, Easter Seals will close a fitness center it operates on Woodmont Boulevard that serves more than 200 clients, many of them senior citizens. It also will forfeit land in Green Hills and Wilson County to the banks it owes. "This will allow us to reorganize, eliminate these debts and continue on as an organization," Bill Andrews, chairman of the Easter Seals Tennessee board of directors, said Friday. Mary Martin's chiropractor referred her to the Turner Family Health Center five years ago for aquatic aerobic therapy to treat scoliosis. Its heated pool is one of the few in the Nashville area warm enough to do the job. "To me, it was a godsend. I've been able to garden and be active," Martin said. "It's just really sad. … There will be a lot of people whose lives will deteriorate because of this." The center's last day is a week from Friday, said Susan Armiger, CEO and president of Easter Seals Tennessee. "It's going to be very difficult for people who come to (the center)," she said. "We've known for some time if we couldn't keep the building we couldn't continue these programs." The bankruptcy won't affect other agency undertakings, including assisted living programs in West Tennessee and an effort to help disabled farmers, Armiger said. She and Andrews say the agency's financial struggles are rooted in an ambitious building project that began a decade ago in Green Hills, which has some of the priciest land in Nashville. It was the primary source of the debt that, along with the economy, they blame for a huge drop in charitable donations. Cuts proved insufficient In the past two years, the agency has cut programs, slashed staff and closed a child development center to save cash. It has tried unsuccessfully to sell its headquarters in Green Hills and a 100-acre campground on Old Hickory Lake. "This market just doesn't have any buyers for the property," Andrews said. "We finally came to the conclusion that it would be better to go ahead and file Chapter 11 and have the courts resolve this with our creditors." Easter Seals closed the campground last year when it went on the real estate market. The agency has partnered with other groups that own campgrounds, like the Boy Scouts, to continue its camping program. It was hard for Sandy Jenkins, whose adult daughter has cerebral palsy, to hear about the looming bankruptcy filing. "I guess we kind of knew it was in the wind," said Jenkins, a Lebanon resident who credits Easter Seals with transforming the life of her daughter 20 years ago. "It's awful. I know times are hard for everyone, and charities are the first place people stop giving." Building loans hurt In 1999, Easter Seals Tennessee opened the doors to the Turner Center, which included a fitness center and the aquatic therapy pool. Four years later, the $3.9 million McWhorter Child Development Center came along next door. Together, they occupied 4½ high-profile acres on Woodmont Boulevard. Easter Seals Tennessee's board of directors borrowed money to construct the buildings when fundraising campaigns fell short. Those loans are responsible for much of its current debt. "This organization got into this situation because they started to develop programs and build buildings with some capital funding and promises of continued capital funding, but not the money in the bank," Andrews said. "You just can't depend upon donations being there for you to fill interest costs and things of that type. You've got to be able to cover those things with money in your hand. I think that's the big mistake here." Jayne Perkins, Easter Seals Tennessee's CEO from 1985 to 2005, could not be reached for comment on the Chapter 11 filing. Former Easter Seals board members Cal Turner Jr. and Sam Howard declined comment on the filing. Both men were on the Easter Seals board in the late 1990s; Howard remains on the board today. 'Sensitivity to debt' Nashville attorney Aubrey Harwell Jr. joined the Easter Seals board just after the Turner Center was completed. He left the board in 2002, just before the organization built the children's center. "There was always some sensitivity to the debt" associated with the Turner Center, but contributions were strong at the time and there were few financial problems, Harwell said. Construction of the McWhorter Center changed that. "It is one thing to build," Harwell said. "But to have enough money to build, service your debt and handle operational needs — that's a different horse. Donations plunge Donations to Easter Seals this year are about 40 percent below expectations. Armiger and Andrews attribute that to the economy, which has reduced giving nationwide, and the debt. "When you're in this type of problem, with all this debt, it's hard to go out and raise money," Andrews said. "People don't want to give money to pay off debt." Initially, the bankruptcy filing may turn off potential donors, Andrews said. But in the long term, he believes any stigma from Chapter 11 will be easier to overcome than the stigma of $10 million in debt. If the restructuring goes well, Easter Seals could win back donors who might have shied away from the debt load, said Lewis Lavine, president of the Nashville-based Center for Nonprofit Management. "The concern in the community has been that they will not be viable," Lavine said. "With this move, they can have a clean slate."