GPAC Negotiations Progress
The City of Greensboro and the Community Foundation of Greater Greensboro are negotiating a memorandum of understanding on the construction and operation of the proposed downtown performing arts center.
The latest draft of a memorandum of understanding, dated Jan. 14, 2014, would give the city complete ownership of the performing arts center. It is not yet clear if the new draft is acceptable to the City Council or the Community Foundation.
An earlier memorandum of understanding, dated Dec. 9, 2013, would have created a nonprofit in which the city would have been only a minority partner, and whose board would have controlled the performing arts center budget.
The $65-million performing arts center would be funded by $35 million in private donations and $30 million in taxpayer money.
A version of the early memorandum of understanding might have won the approval of the old City Council, but it has become clear that the votes wouldn’t be there to approve it on the new council.
Some councilmembers haves said publicly that they are uncomfortable with committing that much public money without the city maintaining ownership of the center and controlling its budget.
According to Greensboro Mayor Nancy Vaughan and City Manager Denise Roth, whose last day as manager is Friday, Jan. 31, the Dec. 9 draft was written by Lee Lloyd of the law firm Brooks Pierce, which was hired by the Community Foundation. Vaughan said the Jan. 14 draft was written by City Attorney Mujeeb Shah-Khan.
In other words, the December draft is the Community Foundation proposal and the January draft is the city proposal.
The change in tone and content between the two drafts is immediately apparent.
The December draft spent paragraphs describing the creation of the private nonprofit, defining its powers and allocating ownership of the performing arts center building when it is finished. It would have given the city a 36.4 percent ownership stake in the building, and the nonprofit would have 63.6 percent ownership of the building. The private nonprofit would have had authority to make all management decisions about the building.
The opening statements of the January draft specifically contradict the provisions of the earlier memorandum. The draft refers to the performing arts center as the Steven Tanger Center for the Performing Arts (STCPA), the name proposed by the Community Foundation. Tanger, the president and CEO of Tanger Factory Outlet Centers, pledged $7.5 million for the center.
“The City shall own and operate the STCPA,” the January draft states. “The City shall have the ability to determine the management of the STCPA except as expressly agreed by the parties.”
The new draft provides, however, that some aspects of the operation of the performing arts center may be overseen by the joint public-private nonprofit.
But where the December draft gave the board of the nonprofit “authority and responsibility to make all decisions” of significance regarding the performing arts center, the January draft sharply limits the authority of the nonprofit board.
The new agreement would allow the board of the nonprofit to issue contracts of $50,000 or less in value, advise the City Council on performing arts center policies and recommend an annual budget for the center, which the City Council would consider as part of the city’s annual budget. It would allow the nonprofit board to recommend fees to be charged to people attending events at the center and to manage some financial aspects of the center, including VIP, patron and donor services.
Vaughan said, “They will submit a budget, and the City Council will have the ability to vote it up or down.”
Under the new draft, the city would be the project manager for the construction of the center and would have authority over all its design and construction contracts.
That is clearly not the ownership and management structure in the earlier draft written for the Community Foundation, but Vaughan said she thinks an agreement is near, despite the apparent gap in the city and Community Foundation positions.
Vaughan said the City Council wants Greensboro Coliseum Director Matt Brown and his staff to run the performing arts center.
“But we don’t necessarily want to get into the weeds of donor services and which Broadway shows come when,” she said. “If they want to do further fundraising for more seats or curtains, we don’t want to get involved in that. Or adding a room.”
Community Foundation spokesman Lynn Wooten said he thinks there will be another draft, negotiated to reconcile the positions of the city and the Community Foundation.
“The private sector simply want to have a meaningful seat at the table,” he said. “It’s not so much about the word control – it’s just the donors want to make sure they can continue to have meaningful input and make sure this facility is built the right way and serves the purpose it was envisioned to serve. Through this nonprofit organization, with the city and the donor representatives and others throughout the community represented on this board, we think we’re very close on this agreement.”
At a City Council work session on Tuesday, Jan. 28, much of the discussion was on how the pledges of the Community Foundation’s donors would be guaranteed.
Roth said the Community Foundation might be given an ownership stake in the performing arts center for the first few years so that it could use the building as collateral for a bank loan. The loan would allow the Community Foundation to hand the city a $35 million check, rather than wait for donations to come in.
Vaughan on Thursday, Jan. 30, said that almost all of the pledges to the Community Foundation are scheduled to be collected within five years, so the nonprofit’s ability to use the building as collateral would probably end then. She said she thought one private donation would be spaced over seven years and that Tanger’s would be spaced over 10 years.
The draft essentially tells the Community Foundation that the public funding is none of its business. It states, “The City shall fund its share of the project in a method and manner to be determined by the City.”
Greensboro Director of Financial and Administrative Services Rick Lusk, who briefed the City Council on its financing options during the Jan. 28 work session, has discovered a type of insurance policy that insures an entity collecting donations against uncollected pledges. Vaughan said it will take Lusk about a month to fully research how the new type of insurance could be applied to the project, but that the city hopes the Community Foundation will take out such a policy.
She said, “I think the important takeaway is that the city won’t be in the business of collecting pledges.”
Sanders could not be reached for comment.
BY Paul C. Clark
February 1, 2014
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