What happens if you hold a meeting and nobody comes?
The Greensboro City Council almost found out on Monday, August 1 in the Council Chambers, when it held a special meeting with Sit-In Movement Inc. and only one member of the 20-member board of directors showed up to represent the International Civil Rights Center & Museum.
Sit-in Movement Inc. is the governing body of the museum and two members of the board were there representing Greensboro City Manager Jim Westmoreland and Mayor Nancy Vaughan, but only one Doug Harris representing the museum.
Harris is a member of the board but also often acts as the board’s attorney. However, Guilford County Board of Education member and chairman of the Sit-in Movement board Deena Hayes, and founders of the museum and life members of the board former County Commissioner Skip Alston and former City Councilmember and state Rep. Earl Jones didn’t attend, nor did any of the other 14 board members.
The reason the city called the meeting is because the International Civil Rights Center & Museum borrowed $1.5 million from the city in 2013 and the first payment on that loan was due on June 30. According to the city, no attempt was made to make that payment and now, a month later, the museum, according to the city, is in default on the loan and owes the full amount. The city says that $10,981 was due June 30 and that the total amount is $799,000. The museum says it owes nothing at this time and that the total it owes on the $1.5 million loan is $228,330.
According to the terms of the loan, the city would forgive $1 of the loan for each dollar the museum raised outside of its normal daily operations between September 2013 and July 1, 2015.
According to City Councilmember Justin Outling, the city was extremely lenient in interpreting the terms of the contract in the museums favor.
The big difference in what the city and the museum say is owed is $456,000 the museum received in interest as part of the estimated $20 million in tax credit financing. The museum counts this interest as a donation and the city does not.
In the two-hour discussion, whether or not this money should be counted as a donation was not discussed, other than having Harris threatening to sue the city if it wasn’t counted.
The City Council did vote down a motion by City Councilmember Jamal Fox to forgive the entire loan by a 6 to 2 vote, with Fox and Councilmember Sharon Hightower voting in favor of forgiving the loan and Mayor Nancy Vaughan and Councilmembers Mike Barber, Nancy Hoffmann, Yvonne Johnson, Justin Outling and Tony Wilkins voting against the motion. Johnson and Hoffmann participated in the meeting by phone. Councilmember Marikay Abuzuaiter was absent.
No vote was taken, but the City Council agreed to place the item on the agenda for the next City Council meeting on August 16.
City Attorney Tom Carruthers had prepared a resolution for the council to consider, but since the council was seeing the page-and-a-half resolution for the first time, and Johnson and Hoffmann were not seeing it all, the decision was made not to discuss the resolution, but to postpone the whole messy, complicated, controversial and emotional issue until the next meeting.
It appears what the City Council is planning to do is to forgive the loan without having to state that it is forgiving the loan.
Hightower who accused the city of operating in “bad faith” and said the whole thing “really left a bad taste in my mouth” because the museum was being treated differently from other organizations that owed the city money. She said that for other organizations the discussions were held in private. It would be interesting to know what organizations have defaulted on loan payments to the city and owe the city $799,000 that hasn’t been made public, but Hightower didn’t elaborate on who she was talking about.
The way the city will forgive the loan, stated in the resolution, is by extending the time that the museum can raise matching funds. The cut-off in the contract was July 1, 2015, which gave the museum 21 months to raise $1.5 million in donations.
The idea behind the dollar-for-dollar match was to encourage the museum to have some kind of fundraising drive or effort to raise additional funds, so the museum would not be coming back to the city every couple of years requesting more money. That didn’t work. Looking at the amounts the museum claims as donations, there doesn’t appear to be any special fundraising drive. The museum continued to operate during that time with a few changes to make it a little more customer friendly.
Giving the museum until February 2018 to raise $1.5 million in donations would give the City Council some political protection from forgiving the loan outright, and it appears that if the museum continues to operate as it has in the past, it should be able to raise the amount in question without adding in items that are clearly not donations, like interest income.
According to the resolution distributed during Monday’s meeting but not discussed, what the city would receive in return for allowing the museum additional time to raise money is a deed of trust as collateral for the loan because when the tax credits expire on August 19, the city’s current collateral effectively goes away and the city would be left with, according to its accounting, a loan of $799,000 to a financially troubled institution with no collateral.
Considering the amount of money involved and the fact that the city stepped up and loaned the museum $1.5 million at a time when the museum leaders said they absolutely had to have the money, it is incredible that some members of the board of directors didn’t make their way to the City Council meeting.
But they didn’t.
Stay tuned. No doubt by August 16 this whole story will have taken a couple of new twists and turns.
