There’s a lot of wild information out there about the current cash-flow kerfuffle at KMUD. In my humble opinion, none of this should lead anyone to vilify or attack our beloved and vital community radio station or the community volunteers who’ve stepped up to serve on the board of directors.
Did they recently tell staff and listeners that KMUD might not be able to make payroll? Yes. Could that have been avoided? Probably. Did some of the good folks at the MUD tell us that the station might go off the air if they didn’t immediately raise $100,000? Unfortunately, yes again. Is any of that likely to happen? I don’t think so.
But is there a serious cash-flow crunch at KMUD? I think there is. The station is far from insolvent. Its assets are much greater than its liabilities. But there’s still a cash flow problem. Because of cost overruns due to bad weather and other delays, the major upgrade they’re doing to the Eureka transmitter site and eventually other KMUD transmitter sites has gone $60,000 over budget.
The federal matching funds promised to cover the bulk of the upgrade have been slow to arrive - KMUD had to complete the work before asking for reimbursement. And it also seems like a lower percentage of listeners than usual have paid the pledges they made during the last two on-air fund drives.
To deal with all this, KMUD has had to borrow funds on a short-term basis - they still owe close to $85,000 to private local lenders who’ve stepped up to help during the crunch. Those loans need to be paid off ASAP. And I think that the $10-$20,000 that’s been raised so far in response to news of the crisis is great.
But I think that KMUD has a better way to raise funds to cover those loans than to try to run two fund drives to raise $100,000 each during the next three months. They hold a note on a property that was bequeathed to them by a loyal programmer who passed away several years ago. It’s on the "Spyrock property" that was originally pledged by KMUD as our share of the funds used to match the federal grant we got to upgrade our transmitters.
Other than telling the CPB (Corp for Public Broadcasting) that we had this property, KMUD has done nothing to raise the funds for the project. Pledging the property was creative - normally CPB demands that you have cash in the bank.
The problem is that we live in SoHum, where buyers typically have trouble securing bank loans for their homesteads. So instead of getting $235,000 (less expenses) out of the sale, which would have completely covered the upgrade, KMUD got a down payment and a note with a current balance in the $150,000 range.
That note has a market value, probably a lot less than face value, but more than enough to cover at least the "$100,000" that approximates the current shortfall. It would also close the circle on the upgrade project. We pledged that KMUD would use the property to pay for the upgrade, and selling the note on the property would make that a reality. It would also allow us to relax a little before we hear the staff and volunteers ask us to donate maybe $100,000 in the upcoming October fund drive. Sell the note.
By the way, if there are any community members out there with spare cash looking for a good investment, KMUD could use a friend to buy the $150,000 15-year note at 7.25% interest. It would be a shame to have to sell it super cheap to some banker if there’s a private individual willing to step up and pay better value. Interested? Call the KMUD office at 923-2513.