Soyuzivka update (09/04/05)

Soyuzivka update

by Roma Lisovich

PARSIPPANY, N.J. - Another summer season is coming to a close at Soyuzivka. Many of you continue to ask: What is happening? What are the plans for the future? Have we turned the place around? What happened to the town home idea?

Over the past two years, much effort has gone into preserving our beloved Soyuzivka. Ideas have been studied, proposals evaluated, projects implemented. Past reports of the Soyuzivka Redevelopment Committee were given a second look, concerned members' suggestions assessed; professional expertise obtained. We appreciate everyone's efforts in this regard. Believe me, it is a difficult process.

Visitors to the estate can see the visible changes. On the positive side, the number of guests is increasing, as there is an increased awareness about Ukraine since the Orange Revolution. We are witnessing a resurgence in interest in learning about our ethnic heritage. We see the need to preserve our Ukrainian American community. Soyuzivka is the perfect venue where this objective can be met. Where better to meet fellow Ukrainian Americans and share your rich cultural heritage?

Camps are flourishing as young families travel with their children to Soyuzivka as they had in their own childhoods. Teenagers are enjoying the estate as a prime meeting and social gathering place for weekends. Soyuzivka offers seniors' programs that concentrate on information about retirement, insurance and medical issues - and are delivered in a language our community members understand.

The facilities are being revamped, albeit slowly. The cost to remodel and renovate the tired old buildings is high, but little by little improvements are being made. The Soyuzivka staff is dedicated to making guests' visits pleasurable.

For the Ukrainian National Association our most important objective was to halt the financial drain Soyuzivka has had on the UNA's financial condition. In the past, the UNA, flush with a strong reserve position, could afford to cover the losses Soyuzivka operations incurred, funding it as a "fraternal benefit" to its members and the community. It no longer has the ability to do so. The deficits continue to have a negative impact on the UNA balance sheet and this is unacceptable.

Although occupancy has increased and revenue is up, Soyuzivka remains primarily a three-month revenue-generating enterprise, while the fixed operating costs, which include taxes, insurance, etc., remain constant throughout the year. The expenses outpace the revenues. The Soyuzivka management, with Nestor Paslawsky at the helm, continues to work on finding new revenue sources, and developing events and programs of interest, while managing operating expenses.

As a step toward finding a solution, heeding professional legal and accounting advice, the Soyuzivka LLC was created - first of all, to eliminate the impact of Soyuzivka on the UNA's financial position and, secondly, to eliminate the UNA's direct liability risk with regard to Soyuzivka's operations. Although it accomplished the latter, the limited liability corporation did not meet the criteria necessary to remove it from the UNA's financial statement.

With Soyuzivka reporting deficits on the UNA's financial statement, borrowing for expansion and renovation is precluded. This also put a hold on the town home project. The start-up costs for developing the necessary infrastructure to pursue this project (sewage, roads, subdivision, etc.) under the present scenario would require borrowing.

Many have asked us: Why not use the deposits people will make? It is necessary to point out that it is prohibited by law to use potential buyers' deposits for the purpose of pre-construction and/or development. All deposits are to be held in escrow until the time of closing. Therein lies the problem. We find ourselves in a Catch 22 situation. Money is needed for renovations and projects, but it would be financially imprudent for the UNA to borrow at this time.

This has made us step back from this project temporarily and "look outside the box" to find a solution that would preserve Soyuzivka for our members and the community, while removing its negative impact on the UNA's financial reporting. Once this is accomplished, new projects can be revisited.

Working with top-notch advisors, both legal and accounting, we think we may have a solution.

What function does Soyuzivka ultimately perform? Soyuzivka, since its inception, has functioned as a vital educational and cultural institution with a mission of preserving the Ukrainian American heritage. That mission is even more relevant today. We believe Soyuzivka truly fits the criteria for a non-profit foundation, and, more than likely, it should have been designated as such when it was established. We have studied this option with our legal and accounting advisors, and we believe this step brings us closer to our objective of preserving Soyuzivka for future generations.

Heritage Foundation incorporated

The Soyuzivka Heritage Foundation was incorporated in July. It is our plan to operate Soyuzivka as a non-profit organization that will be supported in part by donations, grants and annual memberships. Transferring Soyuzivka to a non-profit foundation will ensure that our Ukrainian American heritage continues to be promoted and recognized and that the foundation will continue in perpetuity.

This should help reduce some of the tax burden and allow Soyuzivka to borrow independently without impacting the UNA's financial position for capital improvements. When these improvements are completed, Soyuzivka should become a full-season facility with a steady stream of income throughout the year.

Although no final decisions have been made, currently under evaluation is a complete renovation of the Main House, which would convert the third floor space to 13 to 15 additional hotel rooms, add a business center, and an Internet-connected meeting room facility. This would allow for the expansion of a corporate/business seminar trade which is year-round and usually conducted Monday through Friday. No decisions have yet been made with regard to this proposal, as analysis is only just beginning and must be carefully evaluated over the coming months. Is there a market for such? How much income can we expect to generate? All of these questions must be answered.

Regardless which project is decided upon, creating a non-profit foundation, more importantly, will remove Soyuzivka as a reportable entity on the UNA's financial statement and allow the Soyuzivka Heritage Foundation Inc. to borrow funds in order to make the necessary improvements and proceed with whatever project plan is approved.

Donations will also play an increasing role in the success of the new foundation.

We now await IRS approval for the new 501 (c) (3) charitable foundation. Although this can take up to six months for approval, our legal advisors believe that Soyuzivka clearly fits the criteria as a cultural, educational entity, established as a place where people congregate, share their experiences and learn about the ethnic background and cultural heritage of the Ukrainian people.

The Soyuzivka Heritage Foundation Inc. will be composed of a board of directors. Two of the directors will be the UNA president and treasurer. The other members are: Taras Szmagala Jr., Nestor Olesnycky and Orest Fedash. The UNA will remain the sole owner of the foundation. We will report more about this entity as time goes on.

We are excited about this development and would like to thank all of our members and supporters of Soyuzivka for their devotion. We cannot thank you enough for all of your efforts and hard work.

Although donations to Soyuzivka have subsided somewhat, we again would like to emphasize that it needs every one of you. Please help and be generous. Soyuzivka's survival will depend on each and every one of us. I encourage you to get involved.

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