The Boys & Girls Club’s Fiscal Partnership with the City of Watertown

History

The Boys & Girls Club of Watertown is different than other Watertown non-profits receiving City support, as the organization has a 99-year lease that was signed in 1984 which was developed by City leaders to ensure the Club will receive the on-going support of the City. After failed attempts to build a Recreation Center due to lack of community support, the City needed the help of the Club to raise the funds. The mayor at the time, Herb Jensen, would only agree to this if future support to the Club was guaranteed based on revenue to the Recreation Center, hence the 99 year lease.

When the Club planned for expansion, a business plan was developed to estimate projected budgets after the renovations. The annual City payment was included in future revenue projections. At no point during the capital campaign process did the City dispute the validity of the lease. 

In 2019, City officials moved the Club lease payment line item from the BBB (Bed, Board and Booze) sales tax fund to the general fund. Thus, after 34 years, the Club was placed in the external organization category of the general fund. The lease payment was never intended to be a line item in the general fund. The City’s unilateral move gives public tax payers the perception that continually funding the Club will impact essential services. That is simply not the case and is intentionally misleading.

Legal

The City takes the position that they cannot enter into an addendum because even a short-term one cannot “bind” future councils.  However, this City Council is not binding future councils. The City is already bound by the existing lease. Entering into a 1 year addendum allows the Council to guarantee funding for that specific year without affecting future Councils’ ability to negotiate a different figure each year.

Club officials have contacted the South Dakota Department of Legislative Audit. The  Auditor General is not aware of any concerns that have been raised by the lease agreement or its addendum. In addition, state law allows the City to enter into a lease of 99 years.

When requested by the City or the Recreation Center the Club has consistently and reasonably taken more responsibility for the financial obligations created by the lease. Since 2001, the Club has saved the City $1.8 million.

Funding

City officials have stated there is no plan to cut funding. However, the City continues to request the Club take responsibility for a greater share of expenses historically paid by the City. The City clearly states an intent to reduce funding and terminate the guarantee of funding provided by the lease. The Boys & Girls Club has a strong and sustainable financial position, but if funds are cut, the Club will have no choice but to cut programs. This will be detrimental to over 2,500 youth served and over 350 Watertown businesses that rely on programs and services provided by the Boys & Girls Club.