Council Getting Comfortable with GPAC
At a Greensboro City Council work session on Tuesday, Jan. 28, Greensboro Mayor Nancy Vaughan and outgoing City Manager Denise Roth explained the current plan for the $65 million proposed downtown performing arts center by answering questions from councilmembers.
Councilmember Tony Wilkins grilled Vaughan and Roth primarily on the funding mechanisms for the performing arts center.
The construction of the center would be paid for by $35 million raised by the Community Foundation of Greater Greensboro and $30 million in city money.
Much of the negotiating over the performing arts center was done behind closed doors by former Mayor Robbie Perkins, Vaughan, Roth and representatives of the Community Foundation. Negotiating in small groups may have made the process smoother, but it wasn’t the best way to build consensus on the City Council, which, having been kept in the dark like the public, has a lot of questions.
Councilmembers had questions about the proposed relationship between the city and the Community Foundation, the arrangement between the Community Foundation and private donors, and, above all, the extent of the city’s possible financial exposure on the project.
Wilkins led the questioning about and how the Community Foundation would guarantee the money pledged by donors.
Wilkins asked how the $35 million in pledges to the Community Foundation would be secured – that is, how the city could be sure the money would be raised and the City Council could be sure Greensboro wouldn’t be left responsible for part of the $35 million.
Vaughan, giving the clearest indication to date of the state of the Community Foundation’s fundraising, said the Community Foundation will, at the beginning of construction, have about $5 million in cash on hand and will obtain a bank loan for the rest, guaranteed by the pledges of the donors.
Vaughan said, “We will not be collecting the pledges.”
Wilkins asked if the Community Foundation could sue to collect the donations if necessary. Greensboro City Attorney Mujeeb Shah-Khan said the Community Foundation could sue those who had pledged money, but doing so might not be productive.
Shah-Khan said, of the Community Foundation, “That is more their issue than ours.”
Wilkins replied, “That is not so,” implying that the city could be responsible for uncollected donations, and asked if there was a better way to secure the pledges.
However, if the Community Foundation gives the gives the city a check for $35 million, why does the city care whether the community foundation collects the pledges or not – it’s not the city’s problem.
The uncertainty about the issue has lingered because, unusually for such a large project, the City Council and the Community Foundation have let the performing arts center get far along in planning without any contract between them. The Community Foundation had a draft memorandum of understanding it was updating as recently as Dec. 9, 2013, which it wanted the city to sign, but Vaughan has said that document has been scrapped and a new one is being written.
Vaughan said that the Community Foundation will pay for the first $5 million in architect fees for the performing arts center and that city negotiators expect the Community Foundation to provide the remaining $30 million up front.
Vaughan said, “They have investigated the financial wherewithal of the donors, and we will get a check for $30 million.”
Vaughan told Wilkins he was pushing the financial responsibility issue before the contract spelling it out was ready.
Councilmember Yvonne Johnson went into the work session saying councilmembers had a fear of “an economic snafu of some kind,” and asked if the Community Foundation could put aside money to cover uncollected pledges.
Roth said the agreement between the city and the Community Foundation would include a means to cover defaults on pledges. She said, “The city shouldn’t be liable for it or be at risk.”
Johnson, who said she had heard concerns from councilmembers and the public, by the end of the meeting said her concerns had been allayed.
“I’m comfortable,” she said. “I heard what I needed to hear in terms of the negotiations.”
Councilmember Mike Barber said the city is grateful to the donors and called the fundraising remarkable. But he said that when people pledge money, it is typical for 5 percent to 10 percent to go uncollected. He said, “That’s just a truth.”
Barber backed Vaughan, saying she was negotiating for extra funds to be raised to cover any uncollected donations. He said Greensboro would get a $65 million performing arts center for about half the price.
The City Council was uninformed about the state of negotiations partly because the negotiations were handled by Perkins and Vaughan, who had met with Community Foundation President Walker Sanders and the Community Foundation’s main fundraiser Kathy Manning. The remaining councilmembers were also uncertain because the tenor of the negotiations changed markedly after Vaughan became mayor.
Barber said, “I can’t vote for it unless the city owns it.”
Vaughan replied, “And we’ve sent that message.”
Other than the agreement the city and the Community Foundation must reach on the funding to build the center, most of the councilmembers’ questions were about how it would be operated.
Councilmember Marikay Abuzuaiter said there was still a gap between the City Council’s expectations and those of the Community Foundation on operational control.
Abuzuaiter said, “I think we still have the elephant in the room, in that the Community Foundation wants to control it.”
There appeared to also be a gap between the expectations of some of the councilmembers and those of Roth, who was involved in the negotiations.
Barber said he couldn’t support the agreement unless the Greensboro Coliseum staff operated the performing arts center for at least the first three to five years after it was opened. He said, “I think they should have some input, without question, but I think we do have to control the project.”
Roth said that Vaughan has been clear that the city wants to eventually own the facility.
But Roth also said that, if there were joint ownership for five years, the Community Foundation could use the building as collateral for its loan. She said that, under that scenario, the city would take full ownership after the five years.
BY Paul C. Clark
January 30, 2014
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