SMC Financial Update

Shambhala Mountain Center generally meets 75% of its operating costs through program revenue, rentals and store sales. It relies on fund-raising to cover the rest of those costs, as well as to make payments on the bond that it undertook in order to build the Sacred Studies Hall, Shambhala Lodge and Rigden Lodge. It also relies on fund-raising to build the new water treatment system required by Larimer County.  The combination of these three fundraising needs:  operations, debt service and the wastewater project – has made the annual fundraising challenge about $1,000,000 per year for the past several years.

2013 was different from recent years in several respects.  Funds raised were approximately $400,000.  Annual debt service was $300,000 less than usual because we were able to defer some bond payments following the 2012 fire.  Early registrations for 2014 brought in $100,000 more than usual.  To close the gap for the year we used $150,000 in cash reserves.

Our forecast for 2014 again shows the need to raise about $1,000,000 to cover operations, debt service and the next phase of the waste water project – upgrading the collection system that transports the waste for downtown to the treatment plant.  This project work was scheduled to begin in spring 2014 and we are in the process of requesting a six month delay in order to complete the fundraising for this next phase.  Shambhala Mountain Center is working on grants to cover part of the project costs.

Last fall Wells Fargo bank, which handles the Shambhala Mountain Center account, asked for a meeting with our Chief Financial Officer, Deben Tobias. Three bank officers were present:  a Vice-President from their Denver Credit Management Group, a Vice-President and Loan Adjustor from the Credit Management Group stationed in Fort Collins, and a Business Relationship Manager from the Boulder office.

They acknowledged that our cashflow may not be sufficient to cover operations, the debt service and the next phase of the new water treatment system.  The discussion covered a possible re-structuring of the bond and all other debt currently held by Shambhala Mountain Center. They want to avoid seeing us default or go into non-performing loan status. We will continue to explore options with the bank in the coming months.

In parallel with this, Shambhala Mountain Center is trying to build a sense in the community of the cross roads at which they find themselves. Shambhala Mountain Center has been on the edge for years – paying bills with future revenues, no cash reserves, working to resolve non-compliance with building code and wage codes, and so on.

To address these issues the leadership at Shambhala Mountain Center has assembled a team of senior managers and governing council members with operational and financial expertise. The goal is to fundamentally change the culture and professional and business conditions, while carefully managing the way through the next few years, which will continue to be very challenging. We believe our new team makes us better positioned to improve our operating revenue and work towards a more sustainable model for funding operations.

One of the ongoing challenges Shambhala Mountain Center faces is the accumulation of deferred repairs and maintenance. A good example of all this is Shambhala Mountain Center’s kitchen and dining building. The makeshift and partial repairs applied over the years were no longer sufficient and Shambhala Mountain Center needed to redo the roof, insulation, interior ceiling and dishroom floor.  The Shambhala Trust very generously funded the work.  Each year we will have similar items requiring attention.

One of the questions that gets raised periodically about Shambhala Mountain is this:  Are we going bankrupt?  The short answer is that the value of the property far exceeds the amount of debt we are carrying, and our net assets (total assets minus loans and liabilities) at the end of 2012 were over $6,000,000.  But we do have a considerable challenge to manage our yearly cash flow to ensure that we bring in enough revenue each year to cover operations, debt service, completion of the wastewater project, and required maintenance to the facilities.

 

If you wish to have more information or want to offer assistance, please contact development@shambhalamountain.org.