Overture board, city defend closed-door meetings on debt
In one morning meeting Wednesday, the executive committee of the quasi-public group that operates the city's Overture Center refuted claims it was being secretive while proceeding to schedule a closed-session meeting to discuss a proposal to eliminate its debt.
Rob Chappell, spokesman for the Overture Center, said there would be a closed-session meeting of the Madison Cultural Art District's executive committee next Tuesday. The group will discuss MCAD's negotiation strategy for a plan to pay off the center's $28 million in remaining debt using funds from its benefactor Jerome Frautschi, MCAD reserves and the city of Madison as well as the forgiveness of $8 million from lending banks. The plan asks for $4 million from MCAD, or the entirety of its reserves.
"It would be nice if this was a sit-down discussion, but it's going to be a negotiation," he said. "For them to be in the strongest possible negotiation position, they'll have to go into closed session to discuss strategy."
The full MCAD board of directors will meet Tuesday immediately after the executive committee in open session to discuss a formal response to a letter sent this week from the Overture Development Corp., which is the official owner of the Overture Center and has been negotiating with banks. The corporation sent a proposal to all of the center's partners, arguing that the groups should work to resolve Overture Center debt by the end of the first quarter of 2009 to prevent a bank foreclosure. Chappell said a foreclosure is highly unlikely unless the center's partners stop making debt payments.
Ald. Mike Verveer, a member of the Madison Cultural Arts District who is not on its executive committee, had raised concerns during the group's budget negotiations in early December that the group had been more closed than necessary by scheduling meetings at 8 a.m. and taking the entire budget into closed session. He noted in particular that city government bodies usually met openly even when discussing the possibility for staff layoffs, but that the MCAD board has never had to go through a layoff process before. The center laid off approximately 15 employees as part of its 2009 budget.
Other MCAD members were defensive of their budget meetings Wednesday morning, saying consultations with the Madison city attorney as well as attorneys for the center proved there were no open-meetings violations.
"I think this board has been careful and has acted in accordance with open records and open meetings laws, and I hope nobody has the impression that we have not," said MCAD member Carol Toussaint. "As far as moving to 8 a.m. meetings, how many times have our 6 p.m. meetings, thoroughly noticed, attracted no one?"
Verveer was quick to add, however, this next week's meeting is a very different story, with the negotiations resembling more of a litigation situation than a budget discussion. City meetings often go into closed session regarding legal action between the city and other bodies.
"I do think there are valid reasons for us to go into closed session next week," he said. "I do think there's a difference between my concerns with the budget and how we need to move forward with our position relating to the proposal by ODC."
Although MCAD has yet to form an opinion on the ODC letter, Overture Center President Tom Carto released a statement late Wednesday after the meeting regarding the proposal, which has been received skeptically by city officials.
"The proposal speaks to the urgency of forming a plan to address Overture's long-term financial strategy," Carto said in the release. "One thing we can all agree on is that sitting on our hands is not an option, and this proposal will at the very least get the conversation moving forward."
Carto also clarified in his statement that one element of the proposed debt relief plan -- selling the Overture Center to the city, MCAD or another entity for $1 once the debt is eliminated -- "has been a part of the cooperation agreement all along." The debt was originally scheduled to be paid off in 2036, and the city would have the first option to take over the center, but "obviously times have changed," bringing the center's operation back to the front burner, Carto said.
At Monday's Board of Estimates meeting, the city committee will have a formal discussion of the ODC letter, but many city officials have already spoken out against the plan. Mayor Dave Cieslewicz said he was currently opposed to the proposed debt relief plan because it would put 43 percent of the debt relief on city taxpayers by forgiving the Overture Center's annual payment in lieu of taxes, which covers police, fire and other city services to the center, for the next 30 years.
"It's not a purchase for $1, it's a purchase for $12 million," he said. "I certainly don't think it's a good deal for the city taxpayers. Taxpayers are currently not legally obligated or morally obligated for any of that construction debt."
Cieslewicz said negotiations for handling remaining Overture Center debt would need to take place between the banks and the corporation, which are legally responsible for the debt.
"I assume the ODC does not want to pick up $28 million in remaining debt, and I assume the banks do not want to foreclose and run an arts center," he said. "They're going to have to work that out, but under no scenario that I can imagine will city taxpayers be asked to step in."
Cieslewicz added, however, that the city would likely be willing to discuss taking on operations of the Overture Center after the debt is repaid. The city currently contributes $1.7 million per year toward the center's operations, and city operation has been talked about in the past.
The Capital Times
The executive committee of the Madison Cultural Art District, which oversees the Overture Center, is wrangling over a plan to pay off the center's $28 million in remaining debt.
