Child care center's contract approved

Acknowledging the role a Bedford Avenue nonprofit child care center plays in providing affordable care in Lynchburg, City Council last week took the unusual step of OK'ing a financial arrangement with the facility that will in effect reimburse the nonprofit for real estate taxes it pays to the city.

Following a 4-2 vote at Tuesday's City Council meeting, with council member Mary Jane Dolan absent, Elizabeth's Early Learning Center will receive an annual payment from the city equal to the amount of real estate taxes EELC will pay once it builds a planned expansion scheduled for completion in the summer of 2018.

EELC pays approximately $11,000 in real estate taxes to the city annually, and the cost is estimated to increase to $15,000 once the expansion is completed.

This agreement is not a tax relief because the city will sign a contract with the nonprofit to make it an external service provider, which means the city is contributing financial resources to an outside organization that provides a service to Lynchburg. The city has similar agreements with other organizations, including Virginia Legal Aid Society and Amazement Square children's

'So if we receive support from thecity, then obviously it enables us toprovide the support to the kids and nothave the increase in our budget, which would ultimately result in the increases of tuition." - Ed Polloway, Elizabeth's Early Learning Center board member museum, but the agreement with EELC will come with specific requirements the nonprofit has to meet in order to continue to receive funding.

In addition to the requirement EELC complete its planned expansion to accommodate an additional 36 children beyond the 142 served now before receiving funding from thecity, council members also requested the city negotiate with the nonprofit to determine a set number of spots that will be set aside for children who come from lo win come families.

Currently, EELC already prioritizes children from families living at Miriam's House, a nonprofit that assists homeless women and families and provides scholarships to families who could not otherwise afford tuition. The full cost for care at EELC is approximately $10,000 per year for infants and $7,000 for 4-year-olds. According to John Falcone, the attorney who represents EELC, approximately 40 percent of the children currently at the nonprofit receive some kind of scholarship. The majority of City Council chose to grant the request due to EELC's work to meet the high demand for afford-' able child care and pre-K education for low-income residents, a need that has been identified by the city's Poverty to Progress initiative subcommittee on child care.

EELC's Executive Director Jane Gerdy spoke before council Tuesday and pushed for the agreement, citing the nonprofit's work to educate young children regardless of their family's ability to pay and the safe environment it provides children while their parents go to work.

Gerdy told council without the external provider contract, completing the expansion will be "hard" because of the extra burden on the budget.

"When we started looking into expansion, we realized this incentive of doing so, knowing that it would put stress around our budget - it would serve more kids, which we think is a community service, but we don't need to be larger, we don't need to serve more kids - but when you look at there are nine infants and toddlers in Lynchburg for every one slot available [at child care facilities], we were compelled to expand," EELC Board Member Ed Polloway told council.

"So if we receive support from the city, then obviously it enables us to provide the support to the kids and not have the increase in our budget, which would ultimately result in the increases of tuition."

Council members Jeff Helgeson and Turner Perrow voted against the proposal despite their strong support for the nonprofit's work because they felt it was too similar to tax relief without a big enough increase in services as a payoff to the city.

"I don't see the incremental value that the city gets from this that we don't already have," Perrow said. "I don't think this is a fair contract, ... Plus, 23 percent of our real estate is tax exempt. This is going the wrong way. We need to have more taxable property than tax-exempt property."

Helgeson reminded the board all city departments just have been told to develop a plan to cut 2 percent of their budgets for the next fiscal year due to lower-than-expected tax revenues, and "money is tight." Instead, Helgeson suggested EELC come before council during budget discussions and request a grant from the city.

"If you're going to want to give them money, we shouldn't call it something that it's not," Helgeson said. "... I appreciate what Elizabeth's Early Learning Center does, and I appreciate all of the folks there, but I don't think this is the right way to go about it. If you want to make the gift, bring it up during the budget time so the [council] can vote to give away taxpayer resources."

While most child care and pre-K facilities in Lynchburg are either for profit businesses, associated with churches or located on city-owned property - exempting them from taxation - there are at least two other nonprofits providing child care in the city that pay real estate taxes.

Both Rhema's "Gentle Care" Child Development Center on Alleghany Avenue and Little Wings Preschool at Human Kind pay real estate taxes, according to the city's website.

Council member Randy Nelson came out in strong support of the proposal despite council's past history of turning down similar requests.

"I would agree that past policies and practices have been as they were, but this time, we are engaged in a new landscape and a new arena with Poverty to Progress, whichmay justify council looking at some of those policies in the context of how we are dealing with the challenges of poverty," Nelson said. "... We know at this point - particularly in the context of Poverty to Progress - if we wait to educate our children in a quality way until they are school age, that is too late."

In response to Helgeson's view that the agreement is a gift to the nonprofit, Vice Mayor Treney Tweedy said church-affiliated day care centers and pre-K education centers are "sheltered" from taxes because of the religious affiliation and still do not do as much as EELC to meet the needs of lo win come families.

"If it's meeting a need, I don't consider it a gift when there's already organizations that may or may not be willing to step up and serve like you all do that are already getting that shelter benefit, which will give them more funds to do things they want to do," Tweedy said.

EELC has been petitioning the city to have taxexempt status since spring of 2016, according to documents attached to Tuesday's council agenda.

The nonprofit's request to become tax exempt was denied by former City Assessor Greg Daniels and City Attorney Walter Erwin due to a Virginia Supreme Court case from 1975 that found organizations cannot be considered taxexempt educational institutions if they serve children younger than public school age.

'So if we receive support from the city, then obviously it enables us to provide the support to the kids and not have the increase in our budget, which would ultimately result in the increases of tuition."

- Ed Polloway, Elizabeth's Early Learning Center board member