I think the city attorney concluded that most of the amendments were policy, not legal issues. There are a few notes and comments, but almost all seem ok by him. See here for the MCAD/201 State response to the amendments. And, join Alders Shiva Bidar-Sielaff and Lauren Cnare and me! today on WORT (89.9 FM) to discuss all things Overture, as a preview to tonight’s council meeting.
Here’s the full city attorney memo.
Amendment No. 1
Sponsor: Ald. Satya Rhodes-Conway
Amend language:
“BE IT FURTHER RESOLVED, that the city acknowledges the ownership change of the facility, and, contingent upon the debt on the Overture Facility being fully paid, waives and releases its option to purchase the facility for one dollar at this time, but reserves the right of first refusal should 201 State Foundation, Inc. wish to sell the facility in the future, and,”
LEGAL ISSUE
This amendment proposes to change the existing option held by the City, which allows the City to purchase the Overture facility for one dollar once the debt is paid off. The City does not have the legal authority to change the terms of the option without the agreement of Overture Development Corporation (ODC) which granted the option. The City does not have the legal authority to unilaterally create a right of first refusal, but would have to obtain such a right from the new owner of the Overture facility. The City would have to negotiate such a right from the new owner, and could attempt to encourage negotiations by adding such a condition to the paragraph of the resolution on the conditions for future support of Overture.
The Madison Museum of Contemporary Art (MMoCA) also holds an option to purchase its portion of the Overture facility. The City also does not have the legal authority to unilaterally impact that option.
Amendment No. 2
Sponsor: Ald. Thuy Pham-Remmele
Amend language:
“BE IT FURTHER RESOLVED, that the city pledges its financial support for Overture in the form
of a grant to 201 State Foundation, Inc., or its successors or assigns (“201”), subject to annual
appropriation, starting at$2.5 Million (Two Million Five Hundred Thousand Dollars)$2 Million (Two Million) per year in 2012 and adjusted by the change in Consumer Price Index methodology in the State’s Expenditure Restraint Program each year thereafter, the purpose of the grant being to support the Overture Arts Facility in an amount approximate equal to the former City subsidy and an amount for capital costs, and,”
POLICY ISSUE
These amendments change the financial support for Overture and raise policy issues.
Amendment No. 3
Sponsor: Ald. Thuy Pham-Remmele
Amend language:
“BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to
the city:
1. An annual payment in lieu of taxes (PILOT), starting at $500,000 per year in 2012 and adjusted annually by the same method as the grant described above.In the event that the City grant falls short of the full amount as described above, 201 may reduce the amount of the PILOT by an amount equivalent to the shortfall.”
POLICY ISSUE
These amendments change the financial support for Overture and raise policy issues.
Amendment No. 4
Sponsor: Ald. Satya Rhodes-Conway
Amend language:
Replace conditions #3 & #4 with new condition #3 located in: “BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city…”
3. An annual plan with objectives with respect to fund-raising, paid attendance, non-paid or reduced price attendance, seats sold, community programs and program diversity.
4. An annual report to the community comparing actual results of the objectives described in the annual plan, the causes of any failures to meet those objectives, and strategies to meet objectives in the future.”
“3. An annual report that details Overture’s progress on the following metrics:
I. Number of free events held and attendance at them
II. Number of free/reduced tickets distributed
III. Range of ticket prices for shows produced by Overture
IV. An institutional marketing program focused on increasing a sense of community ownership
V. Policies and programs that encourage more “informal” use of Overture
VI. Detailed information about fundraising, including copies of the current fundraising plan and a report on progress implementing the plan
VII. Amount of capital endowment increase”
POLICY ISSUE
This amendment changes the conditions for future support of Overture and raises policy issues.
Amendment No. 5
Sponsor: Ald. Lauren Cnare
Add language after “BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city…” clause:
“BE IT FURTHER RESOLVED, that to protect the interests of employees, benefit packages (health insurance options and retirement plan options) offered to employees shall be equally available for all fulltime employees, regardless of position or salary, excepting stipulations in any union contracts.
BE IT FURTHER RESOLVED, that to increase community engagement in Overture and its programs, 201 State Foundation or the Overture Development Corporation, or their successors shall establish and maintain a Community Advisory Board comprised initially of Madison residents broadly representing the community in terms of culture, ethnicity, geography, age and socio-economic level. The board will meet at least quarterly to advise on free programming and educational outreach efforts. Upon review, the membership may expand to residents of other communities, and shall expand if/when other municipalities make financial contribution to Overture.
BE IT FURTHER RESOLVED, that to increase community engagement, the Board shall accept 2 members recommended by the Mayor and 1 member representing the resident companies.
BE IT FURTHER RESOLVED, that the city and the 201 State Foundation or the Overture Development Corporation, or their successors shall execute an annual contract requiring these conditions:
• A contribution to a building trust fund of $250,000 until a $2 million level is reached. Contributions may be discontinued at the $2 million level, but must be reinstated if the value falls below the $2 million. Contributions may be made to exceed the $2 million based on management discretion.
• X number of educational/outreach events. (Average of last 3 years’ programs.)
• Presentation of free xx community programs for free or reduced prices. (Average of last 3 years’ programs.)
• Successful fundraising equal to or greater than one half of the city’s annual contribution.
• Development of a 5-year strategic plan.
• Written notification when stated annual fundraising projections will fall short by more than 25% of goal.”Explanation: Based on the terms of this Alternate resolution (originally presented to the Common Council Organizational Committee on November 18, 2010) the City would relinquish its existing reversionary right to purchase the Overture Center property for a nominal amount, contingent upon the satisfaction of all past debt obligations associated with the facility’s construction and refinancing. The City would also pledge to provide annual funding to Overture at a net level of $2,000,000 per year beginning in 2012 to support both operating and capital costs. This annual support level represents an increase of approximately $700,000 per year when compared to the $1,297,473 budgeted in 2011 for Overture. In future years, the amount of financial support would be adjusted for inflation. Additional costs associated with the accrued employee benefits of current City employees working at Overture Center may be incurred by the City in 2011, 2012 or future years, depending on the specific timing of any changes in employment status resulting from this agreement. Additional information about any such changes is needed before the employee benefit costs can be estimated.
MOSTLY POLICY, SOME LEGAL, BUT OK
With the possible exception of the first and last RESOLVED clauses in this amendment, the amendment raises policy issues.
The first RESOLVED clause requires that benefit packages be equally available to all full-time employees, except as may be otherwise negotiated in union contracts. I do not read this amendment as requiring any specified level of benefits. To the extent this amendment simply requires non-discrimination in benefits pursuant to existing laws, it raises no legal issues. If it is attempting to require something different or more extensive than the existing body of law on non-discrimination in benefits, it may be preempted by federal or state law.
The final RESOLVED clause requires a contract between the City and the new owner with some specified provisions to be negotiated. I believe it would be a prudent and appropriate legal step to have a contract that specifies the terms on which the City is providing the $2 million in support to Overture.
Amendment No. 6
Sponsors: Ald. Satya Rhodes-Conway
Amend language:
“BE IT FURTHER RESOLVED, that the City intends to end it operation and cooperation agreement with the Madison Cultural Arts District as of December 31,20112012, with current employees staying under that agreement until that date…”
POLICY ISSUE
This amendment extends by one year, to December 31, 2012, the time during which the current operation with MCAD and City employees will continue. While there are legal issues that would need to be worked out in any such extension, they are not different that would exist under the date set out in the original Alternate Resolution. Thus, this amendment raises policy issues.
Amendment No. 7
Sponsors: Ald. Brian Solomon and Ald. Mike Verveer
Delete and add replacement language:
BE IT FURTHER RESOLVED, that the city intends to end its operation and cooperation agreement with the Madison Cultural Arts District as of December 31, 2011, with current employees staying under that agreement until that date, after which 201 State Foundation or Overture Development Corporation or their successors shall be the employer of any personnel working at Overture, and,“BE IT FURTHER RESOLVED, that the city intends to end its operation and cooperation agreement with the Madison Cultural Arts District as of June 30, 2013, with current employees staying under that agreement until that date. Prior to that date, 201 State Foundation, Overture Development Corporation, or their successors shall develop a staffing plan for any personnel working at Overture.
The new staffing plan shall keep Overture personnel as City employees or offer other alternatives if those alternatives clearly demonstrate better opportunities for long term operational success. If alternatives are offered, they must include a clear plan for transitioning employees from City employment, including financial recognition for benefits negotiated in good faith through the collective bargaining process. Final staffing plan recommendations must be approved by the Madison Common Council. Failure to approve final plan will automatically initiate an additional three year cycle at the end of which alternatives can again be presented for final approval by the Madison Common Council.
To ensure a smooth transition of staff during the transition period, all future Local 60 vacancies shall be limited to Local 60 members unless no Local 60 member applies.
Additionally, 201 shall be subject to the Living Wage, Prevailing Wage, Sweatshop, Non-discrimination and Affirmative Action requirements of City’s ordinances, according to their terms.”
POLICY ISSUE
This amendment is similar to Amendment 6, except it extends the current operation to June 30, 2013. It also requires that a staffing plan be developed and approved by the Madison Common Council and provides that the period of current operations will extend by an additional 3 years if the plan is not so approved. The amendment also explicitly states that certain Madison ordinances apply to the new operator “according to their terms.”
While legal issues will surely arise in the implementation of these provisions if adopted (e.g., what constitutes “financial recognition for benefits negotiated in good faith through the collective bargaining process”), the amendment essentially raises policy issues.
Amendment No. 8
Sponsors: Ald. Shiva Bidar-Sielaff & Ald. Chris Schmidt
Add language following “BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city…” clause:
“BE IT FURTHER RESOLVED that, annual City appropriation shall be subject to a contract that sets forth specific performance standards and measures. These performance standards and measures shall be developed by March 30, 2011 by a Common Council Working Group on the Overture Center’s Future. The President of the Common Council shall create the Working Group by December 15, 2010.”
LEGAL ISSUE – OK
This amendment requires a contract to set standards for the new operator as a condition of future support from the City. As noted earlier, such a contract is legally prudent and appropriate.
Amendment No. 9
Sponsors: Ald. Shiva Bidar-Sielaff & Ald. Chris Schmidt
Add language following “BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city…” clause:
“BE IT FURTHER RESOLVED, that,
• 201 State or its successor shall create an Overture endowment fund by July 1, 2011 containing a minimum of $500,000
• City of Madison appropriation shall be subject to the endowment fund reaching $100,000,000 by July 1, 2021.
• Annual fund growth expectation shall be set by the Common Council Working Group on the Overture Center’s Future.
• The President of the Common Council shall create the Working Group by December 15, 2010.
• Only interest and investment earnings of this fund shall be used to cover Overture Center capital and operating expenses.
• Investments of this fund shall be consistent with the City’s investment policies.”
POLICY ISSUE
This amendment sets further conditions, primarily related to an endowment fund, on the City’s future support of Overture. It raises policy issues.
Amendment No. 10
Sponsors: Ald. Shiva Bidar-Sielaff & Ald. Chris Schmidt
Add language following “BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city…” clause:
“BE IT FURTHER RESOLVED, that the City of Madison shall have auditing authority of finances of the Overture Center’s owner and operator.”
POLICY ISSUE
This amendment gives the City auditing authority over the owner and operator of Overture and raises policy issues.
Amendment No.11
Sponsors: Ald. Shiva Bidar-Sielaff & Ald. Chris Schmidt
Add language after last “BE IT FURTHER RESOLVED” clause:
“BE IT FURTHER RESOLVED, that the Board of 201 State or its successor will consist of 25 members that reflect the diversity of the City of Madison and engage the community by including, but not limited to:
• 6 City of Madison mayoral appointments, including at least 2 alders, one of which will be the Alder representing the area in which Overture is located,
• Individuals with significant fundraising expertise,
• Citizens with no connection to performing arts organizations, and
• Individuals from the resident organizations.”
POLICY ISSUE
This amendment establishes certain conditions on the make-up of the governing board of the new operator. It raises policy issues.
Amendment No. 12
Sponsors: Ald. Shiva Bidar-Sielaff & Ald. Chris Schmidt
Add language after last “BE IT FURTHER RESOLVED” clause:
“BE IT FURTHER RESOLVED, that 201 State or its successor will follow Wisconsin open law requirements. Budget deliberations and votes shall not be conducted in closed session.”
LEGAL “PROBABLY” OK – [I CAN’T IMAGINE HOW IT WOULDN’T BE]
This amendment appears to be intended to subject the new operator to the terms of the Wisconsin Open Meetings Law. As a private entity, this new operator would not be subject to the terms of the Law, but could opt to make itself subject to some, all, or similar open meeting rules. It is unclear how some of the provisions of the Law would apply to the new operator (e.g., if it has no public employees, can it go into closed session for performance valuation under sec. 19.85(1)(c), Stats., which on its face only applies to public employees?). Those sticky legal interpretation questions aside, the City probably has the legal authority to require the application of Open Meeting principles as a condition of financial support.
Amendment No. 13
Sponsors: Ald. Brian Solomon and Ald. Mike Verveer
Add language after last “BE IT FURTHER RESOLVED” clause:
“BE IT FURTHER RESOLVED that the following terms and conditions will apply regarding resident companies:
• 201 State shall form a Resident Company Committee in which each committee will maintain one vote. Recommendations passed by simple majority must be addressed by full 201 State Board in open session.
• All negotiated leases and agreements shall provide stability to each of the resident organizations. Rental rates must remain affordable for resident organizations.
• Any increases in rental rates must be brought before the Resident Company Committee before action by the full 201 State Board in open session.
• To the extent financially feasible, 201 shall allow and encourage free or reduced cost functions by resident companies. Resident organizations shall be charged reduced or free rates for events benefitting the community in this manner.
• Resident Company Committee shall develop priority scheduling plans (up to 2-4 years out) that supports programming needs. Plans and recommendations shall be brought before 201 State for consideration in open session.”
POLICY ISSUE
This amendment proposes conditions related to the resident companies and raises policy issues.
Amendment No. 14
Sponsor’s: Ald. Brian Solomon and Ald. Mike Verveer
Add language after last “BE IT FURTHER RESOLVED” clause:
“BE IT FURTHER RESOLVED that the following terms and conditions will apply regarding the formation and operation of a Community Input Committee:
• 201 shall create and maintain a Community Input Committee made up of an equal number of appointees from 201 and the City. The City appointments will be made by the Mayor with confirmation by the Common Council. At least two members must serve as minority representatives, one each from the City appointee side and from the 201 State side.
• Each member will be awarded one vote on this Committee.
• Recommendations passed by simple majority shall be acted on by the full 201 State Board in open session.
• The Community Input Committee will oversee a public charette process that speaks with artists, donors, and a diverse array of members of the general public.
Final recommendations must be acted upon by the 201 full Board in open session and must be submitted for approval to the Madison Common Council by December 31, 2012. Additionally, 201 State must determine ways to incorporate recommendations into overall operations.
• The Community Input Committee shall conduct reviews and provide recommendations on the following areas:
o Access to galleries
o Allocation of MCF funds
o Facility main area activity planning
o Ways in which Overture can support and engage and encourage participation of and by non-resident art companies and art organizations
o Ways in which Overture can develop and maintain stronger relationships to communities of color”
POLICY ISSUE/LEGAL NOTE
This amendment proposes the creation of a Community Input Committee to engage in a public process and make recommendations, to be acted upon by the Board of the new operator and to be subject to approval by the Madison Common Council. The amendment raises policy issues. I have concluded that such a committee has enough public characteristics (50% membership appointed by the City, required by Council resolution, final recommendations subject to Council approval) that it likely would be subject to the Open Meetings Law.
Amendment No. 15
Sponsors: Ald. Brian Solomon and Ald. Mike Verveer
Add language after last “BE IT FURTHER RESOLVED” clause
“BE IT FURTHER RESOLVED that the following terms and conditions will apply regarding governance:
• At least 20% of any 201 State Board and
• The Executive Committee must include at least one member with substantial experience in fundraising and financial management in the performing arts arena. Executive Committee will be comprised of appointments made by the Mayor and confirmed by the Common Council.
• Board meetings will be open to attendance by the public unless otherwise determined by 201. The Board shall establish in its bylaws the method and circumstances for holding meetings that are not open to the public. However, recommendations passed by simple majority of both the Resident Company Committee and Community Input Committee must be acted upon by full Board in open session.”
POLICY ISSUE
This amendment requires certain representation on the governing Boards of the new operator, and requires a certain level of public openness in meetings of those Boards without subjecting them to all the requirements of the State’s Open Meetings Law. It raises policy issues.
Amendment No. 16
Sponsor: Ald. Julia Kerr
Amendment to maintain current level of community programs and escalate annual using formula consistent with the calculation of the city subsidy (Note: Ald. Kerr will be providing formal amendment language)
POLICY ISSUE
Although the exact language of these amendments is not available, they relate to setting conditions related to community programs as a condition of the City grant, to the make-up of the governing Boards of the new operator, to acceptance of the capital needs projections prepared by the City and to acceptance of an annual audit by the City. These amendments raise policy issues.
Amendment No. 17
Sponsor: Ald. Julia Kerr
Amendment to maintain city three board members on operating entity and one on executive board to be nominated by the Mayor and confirmed by the City Council (Note: Ald. Kerr will be providing formal amendment language)
POLICY ISSUE
Although the exact language of these amendments is not available, they relate to setting conditions related to community programs as a condition of the City grant, to the make-up of the governing Boards of the new operator, to acceptance of the capital needs projections prepared by the City and to acceptance of an annual audit by the City. These amendments raise policy issues.
Amendment No. 18
Sponsor: Ald. Julia Kerr
Amendment requiring acceptance by 201 State Foundation and MCAD of the capital needs projections prepared by the City of Madison (Andrew Statz’ report) (Note: Ald. Kerr will be providing formal amendment language)
POLICY ISSUE
Although the exact language of these amendments is not available, they relate to setting conditions related to community programs as a condition of the City grant, to the make-up of the governing Boards of the new operator, to acceptance of the capital needs projections prepared by the City and to acceptance of an annual audit by the City. These amendments raise policy issues.
Amendment No. 19
Sponsor: Ald. Julia Kerr
Amendment to require acceptance of annual audit by the City Council as a condition to releasing of operating subsidy. (Note: Ald. Kerr will be providing formal amendment language)
POLICY ISSUE
Although the exact language of these amendments is not available, they relate to setting conditions related to community programs as a condition of the City grant, to the make-up of the governing Boards of the new operator, to acceptance of the capital needs projections prepared by the City and to acceptance of an annual audit by the City. These amendments raise policy issues.
Amendment No. 20
Sponsor: Ald. Julia Kerr
Amendment establishing, by the City of Madison, retirement benefits consistent with existing benefits for eligible employees moving from city employment to private entity. (Note: Ald. Kerr will be providing formal amendment language)
NO LEGAL OBJECTION IF DONE RIGHT
Although the exact language of this amendment is not available, it appears to be intended to continue current retirement benefits for employees moving from City to private employment. As noted in my previous legal analysis, to the extent this is intended to keep private employees in the Wisconsin Retirement System (WRS), such a plan is contrary to state law. To the extent it would require the City to supplement its grant to Overture to in some way approximate the level of WRS benefits, or to require the new operator to do so, the amendment would create difficult issues in determining exactly how to calculate those benefits. The amendment also has significant fiscal implications, and raises other policy issues.
Amendment No. 21
Sponsor: Ald. Marsha Rummel
A SUBSTITUTE ALTERNATE RESOLUTION
Establishing a City commitment to future grants to Overture subject to annual appropriation and annual reporting, and setting terms and conditions for such grants; and establishing a Madison Commission on Overture to make a recommendation on a sustainable model for Overture.WHEREAS, a group of generous community members have come forward and reached an agreement with the Overture Center’s lenders to resolve the Center’s remaining debt, and,
WHEREAS, under that agreement, the 201 State Foundation or the Overture Development Corporation, or their successors, will become the owner and operator of the Overture Center facility upon payment to the Overture lenders before December 30, 2010, and,
WHEREAS, the City has been informed that the debt will be paid, which payment also will release the City from any potential liability on its limited pledge guaranty related to the Overture debt, and,
WHEREAS, an interest in the long-term success of the Overture Center is shared by everyone in our community, and,NOW, THEREFORE, BE IT RESOLVED, that the city of Madison thanks the donors for their extraordinary generosity in supporting Overture as a vital community asset, and,
BE IT FURTHER RESOLVED, that the city acknowledges the ownership change of the facility, and, contingent upon the debt on the Overture Facility being fully paid, waives and releases its option to purchase the facility for one dollar, and,
BE IT FURTHER RESOLVED, that the city pledges its financial support for Overture in the form of a grant to 201 State Foundation, Inc., or its successors or assigns (“201”), subject to annual appropriation, starting at $2.5 Million (Two Million Five Hundred Thousand Dollars) per year in 2012 and adjusted by the change in Consumer Price Index methodology in the State’s Expenditure Restraint Program each year thereafter, the purpose of the grant being to support the Overture Arts Facility in an amount approximate equal to the former City subsidy and an amount for capital costs, and,
BE IT FURTHER RESOLVED, that as conditions of the grant, 201 shall provide the following to the city:
1. An annual payment in lieu of taxes (PILOT), starting at $500,000 per year in 2012 and adjusted annually by the same method as the grant described above. In the event that the City grant falls short of the full amount as described above, 201 may reduce the amount of the PILOT by an amount equivalent to the shortfall.
2. An annual audit, performed by an independent CPA selected by 201 and conducted in accordance with GAAP.
3. An annual plan with objectives with respect to fund-raising, paid attendance, non-paid or reduced price attendance, seats sold, community programs and program diversity.
4. An annual report to the community comparing actual results of the objectives described in the annual plan, the causes of any failures to meet those objectives, and strategies to meet objectives in the future.
The report is due within 60 days of the close of the fiscal year.5. The City’s support pledged herein is on an interim basis. Future support of 201 State or other owner or operator of the Overture Center is dependent upon a study, engaging the Madison community, being completed no later than October 1, 2011, making recommendations on the future ownership, operation, staffing and financial support of Overture. To obtain that study, the Mayor shall appoint and the Council shall confirm members of a Madison Overture Commission, with representation from City government, 201 State Foundation, prospective donors, Overture resident companies, members of the arts community with no direct association with Overture, and citizens with no allegiance to any specific arts organization or Overture. In addressing the ownership, operation, staffing and financial support of Overture, the report should also address the potential for long term private giving that will lead to a building endowment fund, an independent examination of the building and its financial needs, and an inventory of Madison’s artistic needs. The City will take appropriate action on the report in its 2012 Budget and thereafter. Current operations with MCAD and City employees shall remain unchanged until December 30, 2012, except for the change in the City’s grant as set forth above.
BE IT FURTHER RESOLVED, that the city intends to end its operation and cooperation agreement with the Madison Cultural Arts District as of December 31, 2012, with current employees staying under that agreement until that date, and,
BE FINALLY RESOLVED, that the Mayor and city clerk are authorized to execute any and all documents with 201 State Foundation, Overture Development Corporation and the Madison Cultural Arts District, all in a form approved by the city attorney, as shall be necessary to accomplish the purposes of this resolution.
SOME LEGAL ISSUES, NOT CLEARLY SPELLED OUT. OK TO PROCEED?
This Substitute Alternate proposes an interim situation in which the current operations remain until December 31, 2012, and a broad-based Madison Overture Commission is created to examine issues related to ownership, operation, staffing and financial support of Overture, to report back to the City by October 1, 2011. While this proposal primarily raises policy issues, there are legal questions regarding the status of the Overture facility in the interim. Without further agreement by the parties, payment of the amounts due under the Forbearance Agreement will trigger certain option rights which, if not exercised, will vest ownership in ODC. The City and MMoCA have certain options with limited times for the exercise of those options. Assuming the City’s option is not exercised, ODC (and perhaps MMoCA and MCAD), as owner, would have certain rights. The conclusions and recommendations of the proposed Madison Overture Commission might or might not be consistent with the desires of the owner of the facility.
Looks like the equivalent of the legal all clear to me, with a few points to consider.
