[media-credit name=’DEREK MONTGOMERY/Herald photo’ align=’alignnone’ width=’648′][/media-credit]The City of Madison Board of Estimates addressed concerns with members of the Board of Madison Cultural Arts District regarding the city's possible refinance of the Overture Center for the Arts at a meeting Monday.
The Overture Development Corporation is the private owner of the Overture Center, but lacking finances, the MCAD is seeking public support. The meeting was a response by the BOE to a request made by MCAD for city assistance in funding construction and maintenance of the Overture.
"The Board of Madison Cultural Arts District asked [the city] to get involved in the situation," Mayor Dave Cieslewicz said. "[T]hat's what these discussions are about."
According to Dana Chabot, treasurer for MCAD, the Overture's Endowment Fund is currently five million dollars short of the necessary $115 million to complete construction.
Ald. Zach Brandon, District 7, expressed concerns about the potential risk the city would be undertaking if common council approves the request for city aid in the Overture's refinance.
"It occurs to me that this is a similar structure to what it was before," Brandon said, referring to the proposed financial plan. "I'm just concerned the city will take a large hit on this."
Brandon added if the city agreed to help refinance, the Overture's funds would have to be managed differently. Chabot said the funds would be monitored more carefully.
According to Chabot, city funding may not even be necessary to finish construction, but the city's assurance of the completion of the center would be ideal for MCAD.
"This is certainly a risk for the city," Chabot said. "But we have received a commitment for private funding."
Chabot said Jerry Frautschi, a large monetary contributor to the Overture Center for the Arts, has offered the city and MCAD a four-year arrangement to deal with the five million dollar debt. Frautschi would pay no more than $2.5 million in any year, but would reach the five million dollar promise in four-years time.
However, because the endowment fund fluctuates, there is no guarantee Frautschi's five million dollar contribution would completely cover the Overture's debt. According to Jim Ruhly, chair of MCAD, the stability of the endowment fund depends on the value of the various stocks and bonds that make up the fund.
Brandon said the ODC would essentially be using the City of Madison as a backstop in case anything goes wrong.
"If anything goes awry with the endowment fund," Brandon said, "the city is the final stopping point."
Ruhly said the city's risk in this matter is not substantial.
"I'm comfortable we won't need to use city funds," Ruhly said. "I'd just like the city's assurance in case we have the worst-case scenario."
Cieslewicz said the BOE would closely analyze potential risks and rewards at their next meeting Sept. 26.
"It is important for us to consider the ramifications of this decision," Cieslewicz said.
Common council will send the issue to the BOE for review formally at their meeting Sept. 20.