CB Council ponders how to structure Center deal

Center for the Arts requests $1 million

by Mark Reaman

While the Crested Butte Town Council appears ready to donate a cool million dollars in cash and in-kind contributions to the proposed Center for the Arts expansion project, they first want to discuss and start to figure out the ownership aspect of the new facility. While the Center board was originally looking to control the building by owning the new space, that idea was giving town officials heartburn so it now appears the board will ask for a 99-year lease agreement. That arrangement could lessen the fees such a construction project would owe the town.
Apparently some of the potential major donors for the expansion do not want the town to own the expanded building. That would be a departure from how the town has traditionally partnered with nonprofit organizations, where the town owns the land and the building and leases to the organization. So the Center for the Arts staff and board have been discussing with town staff how to somehow strike a compromise. The idea of co-ownership or an extremely long (99-year) lease has been bandied about.
The ownership issue came up as the Center asked the Town Council on Monday, June 1 to pledge $1 million toward the project. Of that, half would be cash and the rest would be in-kind contributions. The in-kind aspect would come through wages of staff working on the project and supplies for the project.
Center for the Arts executive director Jenny Birnie said initial conversations with potential donors have been interesting. While they love the Center and the programs, they hate the current building.
“People really see it as a centerpiece of the community that brings everyone together, but they see the building as horrible. There’s a definite need to replace the building,” Birnie said. “The Center is a great economic driver in Crested Butte and we anticipate that the current $3 million impact on the local economy would double with the expansion.”
Birnie told the Town Council that the town demonstrating support with a $1 million pledge would go a long way in helping the overall fundraising effort.
Town finance director Lois Rozman said it could be appropriate for the $500,000 in cash to come from the interest earned on sales tax revenues over the last several years. That sales tax fund balance currently sits at about $700,000.
When asked what projects would take a hit by using that money for the Center expansion, Rozman said any number of projects would feel the impact. “But this provides a good balance for all the recreational amenities the town provides,” Rozman suggested.
Birnie said the $1 million figure seemed reasonable and fair as a request to the town.

But who will own the new building?
“I don’t have a problem with this. It is a valid role for the town to play,” said councilman Skip Berkshire. “But any motion of support has to be contingent on getting the ownership or partnership issues that are out there settled.”
Birnie and the board have apparently received some pushback from potential donors about putting millions of dollars into a new and expanded Center only to have the facility owned by the town.
“A handful of donors feel strongly about this issue, but of course they are the biggest potential donors,” said Birnie. “The idea of us owning the building came out of the Mt. Crested Butte Performing Arts Center model. Some of our biggest donors want us to own the building. We understand it has not been done like that in town before.”
“I’m a little shocked we are at the point of nearly cutting the cord and pledging a million dollars but we haven’t worked out some important structural issues with the ownership,” commented Berkshire.
“We didn’t want to tie the pledge to the ownership issue,” said town manager Todd Crossett.
“The ownership is a square one decision,” retorted Berkshire. “That is a fundamental issue. I’m blown away we are talking about this issue at this point.”
“The request is coming from the Center, not the town,” said Crossett. “The Center is having some issues with some donors who have an issue with donating to a building owned by the town. We are looking at various options. Maybe there is a co-ownership. That’s never been done before. We are trying to respond to the issue.”
“It is not just a Center initiative. It becomes a town project when we put a million bucks in it,” said councilman Chris Ladoulis.
“I am okay with the pledge contingent upon solving this problem,” said Berkshire. “That needs to be resolved before the money goes there. The answer may be that the funders walk away depending on the decision. I doubt it but it could happen. We need to understand the long-range impacts. We’ve never treated any other entity that way. We’re not done yet with our homework.”
“I agree this is a departure from the past and a square one issue,” said councilman Shaun Matusewicz.
Town attorney John Belkin said the ownership issue could organically solve itself as the process moved forward and financing decisions were made. “The conversation about the structuring needs to start happening,” he said. “It needs to be sorted out.”
“We need some information on the options and ramifications,” said Berkshire. “Where are other examples? The public needs to understand the deal.”
“A host of communities have different examples,” said Belkin.
“It has to make sense in the context of Crested Butte,” emphasized Berkshire.
“We can’t tell them how to choose their ownership option,” said Crossett.
“Sure we can,” responded Berkshire. “We own the dirt and we own the building. I want information on the various options. It will set a new precedent and we need to go into this with eyes wide open.”
“We want the staff to see how the deal would be structured and then talk about funding,” said councilperson Glenn Michel.
“Structuring is important. Everything is interrelated,” said Belkin.
“If the Center is saying that ownership is a deal breaker, we need to talk about that now,” added Ladoulis.
The staff was instructed to brief the council at its June 15 meeting about how such partnerships have historically worked in town. They want a summary of potential options and a value of the current building and its lease.
“Can we convey some support given your timing?” asked Matusewicz.
“Time is of the essence in some respects,” Birnie said. “People we will be talking to will be coming back this summer. They will want to discuss the progress and see where the town is. It would be great to have a pledge or commitment from the council before July. That’s when we’ll be busy with potential donors.”
The issue will continue to be discussed at the June 15 town council meeting.