City - County Gov.Editorials

Pack Place/Art Museum – Current state of affairs

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By Ken Michalove –

Overview Issues: The proposed City of Asheville (City) Budget for 2013/14 allocates 2 million to the “Asheville Art Museum Renovations” (Art Museum); the City is proceeding with separating the lease between the City and Pack Place Education Arts and Science Center (Pack Place) into two leases, one for Pack Place and one for the Art Museum; the City is agreeing to physically separating the Pack Place building into two buildings; issues of having two leases and building separation issues have created an atmosphere of distrust towards the Art Museum among Pack Place Board members; there is limited information available about the Art Museum project and their day to day operations; there is the potential of destroying the Pack Place as an Institution; and, there has been limited opportunity for public input and information sharing regarding all of these issues.
I was hired as a consultant for Pack Place in December of 2011. I have more first-hand knowledge of management, issues and operations than any other person involved. I resigned that position today in order to speak as an individual and not for the Pack Place Board regarding the state of affairs regarding Pack Place and the Art Museum.
My personal opinion with regard to the above matters, after working for Pack Place for the past 18 months, are as follows:

$2 Million allocation to the Asheville Art Museum Renovations
I have heard the scope of the Asheville Art Museum capital fund drive being anywhere from 15 to 25 million. What is the amount? Where are they in the amount of money raised to date? When will the fund drive end? When will the new construction begin?

The Asheville Art Museum fundraising has got to be the longest capital fund drive in the history of Asheville and word has it that they are less than half way there. If the private sector had believed in the project the private sector would have funded it by now. My belief is that there is not another 9 to 15 million dollars of private money in this community for this project. So, now, in desperation, the Art Museum has come to the Council , the County Commissioners and likely the State for funding and separation of their portion of the building from the rest of the building.

What does investing 15 to 25 million in building a not for profit structure in downtown Asheville do for the economy and the community? Nothing and there is no tax base! I think the question is also answered by…What great loss did the City have when the Health Adventure went bankrupt and moved to Biltmore Square? (The Health Adventure was the 800 pound gorilla in its day; and, the Health Adventure had considerably more visitors than the Art Museum.) Is a new building, basically in the same space, really going to bring more people downtown than already come downtown? What will be the costs of establishing a second main entrance be and is that included in the Art Museum’s capital costs (legal, right of way, capital expense, safety, handicapped access, etc.)? Has Council seen an actual breakdown of the Art Museum’s capital costs and does it include the expense for a second main entrance?

(Additional questions are raised in Exhibit C)

I feel that due to numerous extenuating circumstances….the economy, water system issues, CRA, the minimal Fund Balance of 14/16% vs. 25/30% (see Exhibit A) , unheard of actions by the NC legislature… actions of Rep. Moffitt in particular, and other City needs, I feel that the Art Museum should not be considered for capital funding; and, that there be one lease between Pack Place and the City of Asheville. If necessary authorize Pack Place to sublease space to Member organizations.
Atmosphere of distrust towards the Asheville Art Museum
One person’s dream can be a nightmare for others. That is my assessment of the current state of affairs between Pack Place, an education, arts and science center, an “Asheville Institution”; and, the Art Museum, a Member of Pack Place that wants its independence. It appears that the Art Museum agenda for independence is paramount regardless of the damage to other Members and the Pack Place Institution. The current plan to separate the building into two buildings and to have two direct leases is a path to destroying this Institution. And, I believe that Council is giving in to sound management principles by creating a situation where the City management and Council have to deal with two organizations instead of one. Pack Place clearly has the corporate structure in place in terms of the existing lease, Council representation and funding by the City and County.

The Art Museum has been unnecessarily secretive in its dealings with the Pack Place Board. There is not a good feeling of free flowing and honest information sharing.

Has Council given the Board members and executives of Colburn Earth Science Museum, Diana Wortham Theater and YMI the same private audience regarding their “true feelings” about what has been going on as Council has given the Asheville Art Museum? Has Council done its own fact finding and homework?
Two Leases
I believe Council has been advised by the Art Museum that donors will not donate to the Art Museum if there is not a separate direct lease between the City and the Art Museum. I believe the major donor mentioned was the Tourist Development Authority (TDA). One, if you have asked the TDA for a written statement regarding this, I think you will find that is not a requirement of their grant. Two, Bob Oast advised the Pack Place Board, over a year ago, that any donor issue regarding leasing/donation protections could be easily resolved by adding one new paragraph to the existing lease between the City and Pack Place. Three, donors don’t care about leasing issues, they care about purpose and some care about having their names on structures.

A Direct Lease between the City and Asheville Art Museum is wasteful in terms of time and money; and, the idea should terminated and let the Board of Pack Place deal with the issues. Why should Pack Place, the Art Musuem and the City be independently paying attorneys to work out these issues?

Why not take the simple approach….The Pack Place Board can sublease space to the Asheville Art Museum and the other Members, a simple and inexpensive process.
Physical separation of the building into two separate buildings
Let me draw you a simple picture of this potential mess as if it were your home…your teenager comes in and says to you and your spouse “I am taking the front door entrance, the hall way, living room, kitchen and downstairs bathroom for my personal use, you can’t come in my space without my permission, even if you need to fix the plumbing…you will have to use the back door as your entrance and take your name off the mailbox and the house. I will put in a new heater in the basement but I will use your electricity, ductwork and plumbing. I will live here rent free.

The Asheville Art Museum has caused Pack Place and the other Members the unnecessary expense of tens of thousands of dollars in time and cash to cater to their desire for a separation of the building and a direct lease…. I believe all of this being basically for one person’s interests.

Separation of this building into two buildings is ludicrous and unnecessarily costly in terms of dollars, time and disruption.

You have no idea of the numerous complications separating the building entails.
Just to mention a few…. a second main entrance, dealing with safety and handicapped issues, disruption of the flow of pedestrian traffic, disruption of other members space, separating portions of the electrical and mechanical systems, encroachment into spaces of other Members (i.e. the new floor of the Art Museum separated building is over the entire Colburn Earth Science Museum). The fact is that the Art Museum building will still not be 100% separated from the remainder of the Pack Place building.

Have you asked the Art Museum architect and/or Barbara Field if there is a simpler way to separate spaces of Members and what the capital cost difference would be? What would the cost of a new building be in another location?

Destruction of Pack Place as an Institution

Pack Place is a nonprofit corporation. It has a 15 member Board of Directors appointed by the Members, the City and the County. Education, Arts and Science activities are the focus. Membership (the tenants) can and have changed since the inception. “The creation of Pack Place (PP) was an open, public conversation, complete with LOTS of private donors, public help from many sources, and even a referendum vote on the ballot to create this beautiful downtown entity and institution.”

The Art Museum has threatened to move out if they don’t get their way. If that is their desire there are numerous education, arts and science non-profits that would love to have this “free rent” prime real estate in downtown Asheville! In fact, the Colburn Earth Science Museum would love to have some additional space. My estimate of the market value of the Art Museum space is in the million dollar a year range if they had to rent the space.

My opinion is if the Art Museum can’t live with the decisions of the Pack Place Board they should vacate the building.
Public input and information
To the best of my knowledge, neither the PP Board nor the AAM Board meetings are covered by the media. Consequently, the public does not get the benefit of media coverage.
A quote from a prominent citizen closely associated with Pack Place.
“The creation of Pack Place (PP) was an open, public conversation, complete with LOTS of private donors, public help from many sources, and even a referendum vote on the ballot to create this beautiful downtown entity and institution.  Seeing it all going through MAJOR re-creation that is mostly off the radar from the media, community and many stakeholders is very difficult for me.

The value of this property & improvements is in the millions of dollars.  And here we are potentially getting ready to slice 55% of it away from the original PP plans, and give one non-profit exclusive use and control (not to mention millions in public funding) to the Asheville Art Museum)….but also doing all of this out of the public eye and with what appears to be a deliberate attempt to do so in order for the Council to try to satisfy everyone. “

I feel that Council has been provided only the Art Museum’s side of the story and that what you have been provided is likely biased, exaggerated and incomplete.

Pack Place entered an action resolution pertaining to the Asheville Art Museum and the other Members in 2003. That turned out to be a loosely written document that has proven to be a nightmare to implement. Each organization has their interpretation of that document. Keep in mind that each Member organization is represented on the Board along with a majority of the Board being at large appointees appointed by the City, County and Board itself. Basically, the Art Museum doesn’t like having only one vote; and, they don’t want at large Board Members having the voting control.

Best example of trying to implement the 2003 Resolution was that the Art Museum Board held up paying for moving the box office for over a year because the Diana Wortham Theater and the Art Museum couldn’t agree to the definition of “moving the box office” as written in the 2003 Resolution. In round numbers, the Asheville Art Museum paid only about 20% of the cost of moving the box office. And, that was only after holding the Diana Wortham Theater hostage, so to speak, for over a year.

What do you really know about the Asheville Art Museum and what is the City’s criteria for funding non-profit corporations?

What is the City’s criteria and policy for funding this and/or other nonprofit organization capital expenses? And, will Council do this for any other not for profit organization?

What does Council know about their budget…revenue (how much from ticket sales and memberships, donations, etc.) and expenses and the reasonableness thereof? Staffing? Are the staff compensated at reasonable Asheville/nonprofit rates of pay? (Continued in Exhibit B)

If you look up The Asheville Art Museum on the internet, what do you find? The Board members are not listed. Most other non-profits list their Board members.
Is it an organization that the City appoints members to the Board?
Does the Council have someone attend Board meetings?
Who is on the Board? How is the Board appointed? Is it broadly represented?
Is there appropriate turn over? How is the City of Asheville represented?
What influences are there in appointing Board members?
Are Art Museum Board meetings open to the public and media?
Are they properly advertised under the prevailing open meetings law?
Where do Board Members live? What percentage actually live in Asheville? Buncombe County? What are Board member attendance records since 2003? What is the Board representation (male, female, race) just to get a feel for the folks that theoretically lead this organization? Have reviews been done of bylaws, annual operating budget(s); projected operating budget(s) after the construction of the building; and, Charter?
Summary

After considering the issues I have raised and that others may raise in the near future, if the Council is of a mind to provide 2 million in capital funds and pursue the separation of the building into two buildings, I feel that the capital funds should be given to Pack Place and used for expenses associated with capital needs of the entire building first, i.e. roof, mechanical systems, electrical, security and plumbing as shall be voted on by the Pack Place Board. The entire building is in need of major capital improvements, not just the Art Museum. Such expenses have been proposed to the Pack Place Board and are a matter of record. The Asheville Art Museum needs should not come first.

Also, if it is Council’s decision to have two Direct Leases, the Asheville Art Museum lease should not be implemented until the buildings have been physically separated and construction completed. And, all matters thereof approved by the Pack Place Board. The City should extend the Pack Place lease for a minimum of 20 years and then amended it to mirror any lease between the City and the Art Museum. The City should have the role of management of the construction project and dealing with the day to day issues the construction will have on the Member organizations. The Asheville Art Museum should pay for all expenses associated with separating the building including but not limited the 2003 Resolution, legal (for Pack Place and all Members), architect and consulting fees of Pack Place, Diana Wortham Theater, Colburn Earth Science Museum and the YMI.

Pack Place is the Institution that the City and private interests created…the Asheville Art Museum is only a part of that Institution; Pack Place, the Institution and the Pack Place building, is what needs to survive as one entity.

Exhibit A – Fund Balance

Fund Balance: If I have read the proposed budget correctly
Proposed Budget 90,512,514 x 15% = 13,576,877 pg. vii

City Managers letter advises that the actual is going to be 16.2% or 14.5 M initially.

90,512,514 divided by 12 = 7,542,709.50 per month, divided into 14,500,000 = 1.92 months of reserves.

7.5 million sounds like a lot of money but it only represents 1.92 months of operations.

90,512,514 divided by 12 = 7,542,709.50 divided into 13,576,877 = 1.79 months. The Fund Balance later in the year after several issues are decided upon.

My dated information about what the LGC recommendations is, as related to cities the size of Asheville, that there should be a fund balance of 25-30% of the operating budget. That would be 22,628,128.50 or 3 months @ 25% and
27,153,754.20 or 3.60 months @ 30%.

So, is 15% or 16.2% a Asheville City Policy or a policy that is recommended by
the LGC?

Exhibit B – What do you really know about the Asheville Art Museum

What do you know about their attendance figures and how those statistics are formulated? Are they counting only paid customers? Do they count events outside the building or only inside the building? Free events vs. paid events? Do they count all of the people that walk through the front door or only visitors to the Art Museum? What are the projected attendance figures with a new building by type of event and how and who formulated those estimates?

Exhibit C- $2 Million allocation to the Asheville Art Museum Renovations
What does Council really know about the “new building”? How many more square feet of exhibit space, offices, storage will there be? What is their overall operating budget? How many more people will it serve? What are the expected results? Anticipated new operating budget?

What if the Art Museum doesn’t raise the remaining capital funds? What requirements/guarantees is the Council placing on your capital funding?
Has Council reviewed any details of the construction? Has Council seen the final drawings and specifications? To the best of my knowledge, detailed drawings and specifications don’t exist. Barbara Field, a Pack Place Board Member and original architect for Pack Place, has repeatedly asked for that kind of information.

Do you trust the source of the information? Do the Pack Place Member organizations trust the source of the information? Will the City Council approve the final plans and specifications prior to construction beginning and before the permitting process begins?

For out of town visitor benefits was it good business to remove signage for the Diana Wortham Theater and the Colburn Earth Science Museum off of the front of the building during this interim period of decision making and basically require those Members to place signage on Biltmore Avenue, that is covered by trees, and force an entrance/exit that is second rate and not approved by the City as a “second main entrance”?

Exhibit D – public input

A quote from a prominent citizen closely associated with Pack Place.
“The creation of Pack Place (PP) was an open, public conversation, complete with LOTS of private donors, public help from many sources, and even a referendum vote on the ballot to create this beautiful downtown entity and institution.  Seeing it all going through MAJOR re-creation that is mostly off the radar from the media, community and many stakeholders is very difficult for me.

The value of this property & improvements is in the multi-millions of dollars.  And here we are potentially getting ready to slice 55% of it away from the original PP plans, and give one non-profit exclusive use and control (not to mention millions in public funding) to the Asheville Art Museum)….but also doing all of this out of the public eye and with what appears to be a deliberate attempt to do so in order for the Council to try to satisfy everyone. “

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