Trouble at Black Lake: The UAW's property exposure
DETROIT (Reuters) - If the United Auto Workers union has a sacred space, this rustic retreat and golf course known as Black Lake is as close as it gets. But Black Lake has also emerged as a sign of the union's overreach and looming financial woes.
For four decades, the United Auto Workers has maintained a sprawling property in northern Michigan as a shrine to the ambitions of the union's founder, Walter Reuther.
Reuther's ashes were scattered here after his death in 1970. He is the focal point of a painting of civil rights leaders in the lobby of the education centre. There is a "zodiac room" where metal and glass sculptures ring the walls, depicting the position of the planets at the time the labour leader was born in West Virginia.
Despite a three-decade decline in membership, the UAW kept up and expanded the site. It opened an 18-hole golf course during the SUV boom in 2000.
Over the past decade, the UAW has also been forced to provide about $39 million (25 million pounds) in loans to the Walter and May Reuther Family Education Centre and Black Lake Golf Course, known collectively as Black Lake, to keep them open.
The bulk of those loans were extended from 2007 to 2010, when the union made steep concessions in wages and benefits to the U.S. automakers, records filed with the U.S. Labour Department show.
The loans are listed on the UAW's books as assets. In a statement, the UAW said the funding for Black Lake is only considered to be a loan in accounting terms for the purpose of its filings.
"I don't even know why we call them loans," UAW Secretary-Treasurer Dennis Williams said in an interview in July. "I mean, it isn't like they pay them back."
The union says Black Lake was never intended to make money and its spending on the complex represents an investment in education for its members.
Still, the UAW hopes to boost revenue by marketing Black Lake as a tourist destination and meeting spot for schools and other unions.
But the clock is ticking. Black Lake is one of the biggest drains on a UAW balance sheet already weakened by tumbling property values and a shift of auto production jobs abroad.
PUTTING TIPS FROM 'SOLIDARITY'
The UAW bought Black Lake in 1967, a generation after Lucille Ball and Desi Arnaz spent their honeymoon there.
The union hosts classes and labour retreats there. Workers and their families can attend a week-long seminar with free room and board each summer.
In 2000, former UAW president Stephen Yokich opened the golf course. At the time, the union's membership was less than half its 1979 peak of about 1.5 million members. The union's bimonthly magazine, Solidarity, began to publish putting tips for members.
Black Lake took about $25 million in loans from 2007 to 2010, the UAW's government filings show.
The union says it has made "many attempts" to sell the golf course without success. In early 2010, then-UAW president Ron Gettelfinger revealed that the UAW had been exploring a sale of Black Lake for several years. The plan was shelved when Bob King became president six months later.
"It hasn't performed as well as it should because, quite frankly, I think we never looked at it from the revenue side," Williams said of Black Lake.
More than a tenth of the UAW's wealth on its balance sheet is held in real estate. This includes Black Lake, valued at nearly $34 million, and Solidarity House, the UAW's Detroit headquarters, valued at $17 million.
The UAW owns these properties through its nonprofit real estate arm, Union Building Corp. UBC also provides mortgages to locals to build union halls.
By and large, the halls are owned and operated by the locals themselves. But as auto plants closed over the past four years, some union locals forfeited ownership to the UAW to repay mortgages or late dues.
From 2005 to 2009, more than $4.7 million in property was transferred to UBC from closed union locals, financial reports published in Solidarity magazine show. That compared to less than $950,000 in property transferred from 2000 to 2004.
In some cases, the UAW has resorted to unusual arrangements to unload distressed properties. Last year, for example, the UAW sold the former Local 235 building in Hamtramck, Michigan, valued at $345,001, to a Detroit-based nonprofit called Making it to the Finish Line, which supports teenage mothers. It sold for just over $27,000 in cash, and a loan for $205,000 - provided by the UAW.
UAW officials, already concerned about the union's deteriorating finances, plan to tackle the property issues after finishing the current round of contract negotiations with Ford Motor Co, General Motors Co and Chrysler Group LLC, one person familiar with the matter said. One option could be leasing now-defunct union halls to cities or nonprofits.
It's a delicate issue for the UAW, which in this round of contract talks is hoping to draw more jobs to idled plants, thus keeping local halls open.
The UAW has already had some success on this front. A deal struck by GM and the union last week includes a proposal to shift production of a pair of vehicles to GM's plant in Spring Hill, Tennessee.
The former Saturn assembly plant was idled after GM killed the Saturn brand. At one point, the plant employed more than 8,000 workers, most represented by Local 1853.
The union local and city officials had discussed this spring leasing the 14,000-square-foot union hall. But the deal between the UAW and GM will create about 1,700 new jobs at the Spring Hill plant, allowing the local to keep its doors open.
The Local 1853 property sits on nearly 13 acres with a swimming pool and a banquet hall replete with chandeliers. In 2001, the city renamed the street the union hall sits on to Stephen P. Yokich Parkway, after the former UAW president.
"They've put buildings everywhere and they have a headquarters, they have Black Lake," UAW historian Mike Smith said. "That's fine when you have 1.5 million members.
"Well, everything changes when you drop in membership and you drop in revenue coming in."
(Reporting by Deepa Seetharaman and Bernie Woodall; Editing by Claudia Parsons)