Mount granted a month for debt
Berkshire said it had extended the deadline by 30 days. The Mount, the historic house and gardens of 19th century novelist Edith Wharton, now has until April 24 to come up with $3 million required by the bank, to clear up a large chunk of the $4.3 million owed on its mortgage and line of credit, which are in default.
The bank's total debt is more than $8.7 million, and its payments to all other major creditors are in default.
Stephanie Copeland, president and CEO of the Edith Wharton Restoration, said Berkshire Bank has "very graciously" agreed to the extension in light of new funds, which will cover operations for another 30 days.
Since Feb. 24, The Mount has raised more than $520,000 with an all-out fundraising blitz that seizes on the bank's foreclosure threat. The new, $30,000 grant will boost the numbers further.
"We have some very good friends in very high places who made this possible," Copeland said. "The National Endowment is extremely concerned about The Mount, and saving it."
"We are all over this," said board trustee Gordon Travers, who said he and the trustees are on the phone almost daily with each other and with Copeland.
Meanwhile, however, The Mount's prized collection of Edith Wharton's private library collection, purchased in 2005 for $2.5 million, could be in jeopardy.
British bookseller George Ramsden is owed $900,000 in connection with the book sale and did not receive his second scheduled payment last year. He holds a secured lien on the books and has sent a letter indicating he will reclaim them if The Mount cannot make good on its payments.
Copeland said she understood the letter was as "a pro forma" communication to secure Ramsden's rights, and was not immediately concerned.
Berkshire Bank's agreement to an extension appears to underscore what several sources agreed this week: Berkshire Bank does not want to take ownership of The Mount.
The 40-acre, century-old mansion is laden with historic preservation rules and development restrictions. The property cannot be subdivided or used for commercial purposes. It cannot be transformed into condominiums, and no structures can be built on the property.
The bank's prospects for selling The Mount as a private house are anyone's guess. And without a buyer, the bank would have to take control of maintenance and upkeep.
"Absolutely, positively, they do not want to own it," said Travers, who said he's been in touch directly with Berkshire Bank CEO Michael Daly.
"If we can find a way to save the day and pay them, it would be a great day," he said.
But other forces may be at play: Berkshire Bank reported a $2.5 million loss on a Albany-area commercial loan at the end of last year.
"They have to answer to their shareholders, and they don't win points for losing money," said Travers of the bank.
"That (debt) is a very, very large amount of money, and the stockholders will be starting to look over their shoulder," said another source, who asked not to be named due to his affiliation with another bank.
Daly did not respond directly to an interview request regarding The Mount, and Michael Oleksak, Berkshire Bank's vice president of commercial lending, said he could make no specific comment about a particular client.
"Whenever a situation like this happens, we go back and evaluate what went wrong, with a nonprofit or for-profit," said Oleksak.
But if the bank proceeds, it is a process that could take 90 days or more 90 days in which The Mount can continue to solicit funds.
Another area attorney familiar with the matter said the bank is seriously concerned by the prospect of foreclosure, but that the threat may in fact translate to a powerful fundraising tool.
As the Edith Wharton Restoration Inc. faced increasing financial shortfalls and shrinking donations in recent years, Berkshire Bank repeatedly extended credit.
Despite cautionary notes from auditors in 2006 and 2007, and declining fundraising numbers in recent years, the bank a year ago increased a $2.2 million line of credit by $1.5 million, to $3.7 million; at the time, a major fundraising campaign was in the planning stages.
The 2007 line-of-credit increase included tighter terms, which tied repayment to a planned fundraising campaign that ultimately faltered.
The Mount's Web site, www.edithwharton.org, has given over its home page to an urgent "Save the Mount" message; the phone recording at The Mount immediately refers callers to the site, where donors can make contributions by credit card or check.
Copeland said yesterday that the question now is whether The Mount should begin preparing to open for the coming tourist season.
"That's when we start making money," she said.
Meanwhile, questions have arisen from at least two former employees about funds spent to maintain a studio apartment in New York City, which had a lease last year of about $2,439 per month.
Copeland uses that apartment for business-related trips to New York. Travers said the expense is not unreasonable, given the cost of hotels in the city, where key fundraising sources must be tapped. Edith Wharton, after all, was a New Yorker, he said.
During summer months, The Mount sublets the apartment, and received $6,000 from that transaction in the year that ended March 31, 2007.
To reach Ellen G. Lahr: email@example.com, (413) 496-6240.
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