The Problem of the Crystal Lake Civil Authority – Part 10 Maybe No Action Needed

The Raue Center is in front of the Home State Bank.

Here are the draft minutes of the February 7, 2017, meeting of the Crystal Lake Civil Center Authority.

Call to Order and Roll Call:

Crystal Lake Civic Center Authority Board Members present were: Chairman Tom Hayden, Vice Chairman Lisa Waggoner and Members Pete Affrunti, Greg Danielson, William Mack, Jr., Gary Reece and Fred Wickham. Members Tom Ormsby and Mike Splitt were absent.

Mayor Aaron Shepley, Finance Director George Koczwara, Special Counsel Victor Filippini, Secretary Patricia Eagle, and Executive Director of the Raue Center for the Arts Richard Kuranda were also present.

Approval of the Minutes of the December 6, 2016 meeting.

Board Member Reece moved to approve the minutes of the December 6, 2016 meeting. Board Member Affrunti seconded the motion. On roll call, all present voted yes. Motion passed.

Discussion regarding discontinuing potential issuance of revenue bonds.

Chairman Hayden commented that the December 6, 2016 meeting had been very brief because the bond consultants could not recommend issuance of bonds based on information that had become available a half hour before the meeting which needed to be reviewed.

Mayor Shepley stated that subsequent to that time, he had multiple conversations with Home State Bank, which he stated has indicated they no longer desire to purchase bonds as a means to restructure the debt owed by the Raue Center, and based on preliminary feedback that there were not going to be
many others looking to buy those bonds other than Home State Bank, it would make no sense for the Civic Center Authority (CCA) to create the bonds.

He stated that on the positive side, Home State Bank has come up with a plan for addressing the issues they have with documentation of the loan to the Raue Center for the Arts, and if they are satisfied that will protect them regarding any regulatory requirements, etc., there would be no reason for the CCA to take any action.

He encouraged the Board Members to contact Home State Bank with any questions they may have.

Board Member Reece asked how capital improvements for the Raue Center would be handled in the coming years.

Mayor Shepley stated that the lease between the CCA and the Raue Center for the Arts provides that the Raue Center would be responsible, but he noted that in the past, because of the Raue Center’s community impact, the City Council has approved payment of City funds for that purpose, viewing it as a reinvestment in the community, because it would not have been in the best interests of the community to have the Raue Center fall into disrepair.

Board Member Wickham asked what had caused the shortfall over the past few years with the Raue Center’s payments to Home State Bank.

Mayor Shepley advised that information would have been conveyed to Home State Bank and the CCA was only responsible for the Raue Center property which has been encumbered by a 99 year lease, and as long as the Raue Center pays the lease amount of $100.00 year and remains solvent, there was nothing to be done by the CCA.

He noted that prior to the recent re-creation of the CCA Board, the prior CCA Board did not meet because there was nothing for them to do.

He stated that he did not know what the shortfall was, but even if the CCA Board had that information, there was nothing they could do about it anyway.

Board Member Reece summarized that the loan was between the Raue Center and Home State Bank and the CCA was not involved.

Land Trust No. 4498 – Transfer property to the Crystal Lake Civic Center Authority in its own name and dispense with the trust.

Chairman Hayden asked for Mr. Filippini’s legal opinion on the letter and trust extension agreement received from the Home State Bank Trust Department.

Mr. Filippini stated that this was basically a housekeeping matter, noting that the original trust had been created 20 years ago and included an old common law provision that says if a trust still holds land, they have the right to dispose of it.

He stated that Home State Bank had presented the agreement which extends the trust as a customary request.

For now, as Home State Bank goes through the process of working with the Raue Center regarding the debt, his recommendation would be to table the matter of transferring the property and then bring back dissolution of the trust at a more appropriate time.

Board Member Reece asked what the benefit had been for putting the property in a trust, as that seemed illogical to him.

Mr. Filippini agreed, but stated that was where it was now and that having fewer “moving pieces” for Home State Bank to deal with would make the process easier; and the CCA Board could address this matter in 3 or 6 months.

Board Member Reece asked when the current 20 year trust expired, and Mr. Filippini stated that it had expired on January 15, 2017.

He stated that the trust had been created in 1997 when there was an escrow agreement between Lucille Raue’s family, the City, the Civic Center Authority and Home State Bank.

Board Member Reece summarized that in order for Home State Bank to execute their agreement with the Raue Center, the Civic Center Authority needed to leave the land trust in place for now.

Mr. Filippini and Mayor Shepley agreed.

Mayor Shepley stated that it was worthwhile to understand that there was a “rat’s nest” of legal
documents involved, and Home State Bank, being a community minded organization, wanted to loan money to the Raue Center for improvements to be made to the building, but they needed security for that loan as required by federal law.

He stated that the CCA cannot legally transfer or convey interest in the property, and with the creation of a trust in 1997, as misguided as it may have been, was a means to give that collateral assignment of interest to Home State Bank as their security.

However, legally the CCA did not have the authority to transfer the property to a trust in the first place, as it was a conveyance of real property.

He stated that there was now a plan for Home State Bank to restructure their arrangement with the Raue Center, and although it was sort of a fiction to continue the trust, it has provided Home State Bank with a semblance of protection since 1997 and the CCA may not want to pull that rug out until the deal between the bank and the Raue Center is finalized.

He stated that after that, the CCA could meet and direct Home State Bank to convey the property back, and then the CCA would have clear and unfettered ownership of the property, subject to the remaining years of the 99 year land lease with the Raue Center.

Board Member Reece confirmed with Mr. Filippini that Home State Bank had been fully apprised of this information.


The Problem of the Crystal Lake Civil Authority – Part 10 Maybe No Action Needed — 3 Comments

  1. What is the purpose of the Crystal Lake Civic Center Authority if it does not regularly meet, doesn’t have a website, doesn’t post minutes, doesn’t post agendas, doesn’t post agenda packets, etc.

    It exists just in case it is needed someday?

    Why not dissolve the Crystal Lake CCA unit of government.

    Raue Center for the Arts is the operational non-profit.

  2. Mark, The Civic center publishes every meeting prior to the actual meeting, and they are all open to the public.

    In fact we welcome public input.

    As long as there is nothing to discuss I wont call a meeting but every board member also has the right to contact me requesting a meeting.

    As far as a website, I would be happy to have one but have no funds to pay for one.

    If you know someone that will work for free I would love to have them contact me.

    Meeting minutes are posted, and you can also pick up a hard copy at City Hall.

    Currently the Board is focused on Saving the Raue.

    We have researched different grants and I myself called the Governors office and will continue trying to find ways to help eliminate the 2.5m debt that the Raue has amassed

Leave a Reply

Your email address will not be published. Required fields are marked *