Tax Filings Show Allied Arts Property Lost Money Every Year Since 1998, and the Losses Are Growing
Original post made by A Worried Neighbor on Jul 30, 2007
The Woodside Atherton Auxiliary, now known as the Allied Arts Auxiliary (AAA), is the property's owner and files the tax returns. Their tax filings show some interesting patterns. For instance, the only year (on file) in which Allied Arts property rental income exceeded expenses was 1998, when a profit of nearly $7,000 was realized. In all other years (1998 through 2005) the property operated at a net loss, reaching a negative $133,000 in 2005. 2006 and 2007 filings will probably be worse.
The AAA's other significant source of annual revenues is the Tally Ho. However, profits from this activity have steadily decreased from a high in 1998 of more than $237,000 to only $133,000 in 2005; just enough to cover the property's rental losses in the same year.
Traditional Shop profits and losses were available but not analyzed, since they are not a major factor in AAA financial performance.
Of note, though, is the fact that while annual gifts to the Children's Hospital at Stanford averaged almost $208,000 for the eight years for which data was available, from a high of more than $323,000 in 2001 (just before the Guild closed for restoration), they dropped to $141,000 in 2005, after the facility re-opened.
Along the way (from 1998 to 2005) Woodside Atherton (now AAA) received donations of $5,000 or more from individuals totaling $2.4 million in 2002 alone, intended, we presume, to fund the restoration of the property. Other individual contributions in other years (possibly of lesser amounts) apparently raised the restoration fund total well above that amount, perhaps to as much as $6 million or more. In addition, in 2002, Woodside Atherton borrowed $2 million from the Lucille Packard Foundation, essentially raising the total funds available for the restoration to more than $8 million.
Now the hard questions. If the Allied Arts Guild property has run at a loss for so many years, as the numbers prove, why spend $8 million restoring it? Since most of the moneys donated to the Children's Hospital seem to have come from Tally Ho profits, why not concentrate on that event? What type of analysis yielded the belief that restoring the Allied Arts Guild made good financial sense in terms of benefits to Children's Hospital?
If the property continues to operate at a loss, as it no doubt will with no restaurant and declining revenues, and is eventually sold to stop the financial hemorrhaging, the $8 million invested in the facility will be wasted, since it is unlikely that a purchaser will pay a premium for the property because of it. It will most likely be sold to a developer who'll level the old buildings and build condos or townhouses.
The numbers simply don't show a history of sound financial management, and the current plans and statements by AAA's leadership don't offer much hope for wiser decisions in the future. The most likely scenario is that in a year or two, we'll have a new neighbor--an upscale condo or townhouse complex. That saddens me. It should bother you too.
Now a new restaurant is supposedly coming to Allied Arts. How long do you think it will take for the restaurateur to learn that you can't make money serving only lunches, with no alcoholic beverages, and a paid staff. If AAA is lowering the rental rates to attract the restaurant, then their negative cash flow will accelerate and the loser will be Children's Hospital. Seems like business as usual at Allied Arts.
on Jul 31, 2007 at 11:40 am
When reading this post, I had to stop for a moment and remind myself that the entity under discussion is a CHARITY, whose goal is to provide money to a children's hospital, and not the local branch of Enron. Accountability is lacking here-who is responsible for this debacle? Not just the hospital but the entire neighborhood is harmed by the incompetent stewardship wielded by the 'AAA', and stands to lose a community treasure. One hopes that AAA is taking a hard look at its board, and looking for leaders who are capable, not arrogantly feeble.
on Jul 31, 2007 at 11:50 am