The Crystal Lake Civil Center Authority Board was reconstituted after a long period of inactivity at a meeting on August 2, 2016.
Whoever took the minutes did a splendid job, so you can take the same journey of discovery that I did by reading them.
Oaths of Office
Mayor Shepley administered Oaths of Office to each member.
Call to Order and Roll Call:
Crystal Lake Civic Center Authority Board Members present were: Pete Affrunti, Greg Danielson, Tom Hayden, William Mack, Jr., Tom Ormsby, Gary Reece, Mike Splitt, Lisa Waggoner, Fred Wickham. None were absent.
Mayor Aaron Shepley, City Manager Gary Mayerhofer, Finance Director George Koczwara and Special Counsel Vic Filippini were also present. Review of Open
Review of Open Meetings Act/Freedom of Information Act Online Training
[This part is just a review of what state law requires of any board member.]
Basic Business and Organizational Issues – Bylaws
[Again, pretty standard, except that the Board apparently had not adopted by-laws previously.]
Relationship between the City and the Civic Center Authority
Mayor Shepley thanked the Civic Center Authority Board (CCA) members for their willingness to serve.
He stated that each member of the CCA had been selected by him because of their longstanding commitment to the City of Crystal Lake and the Crystal Lake community.
Mayor Shepley advised that the Civic Center Authority Board, because it was created by an act of the Illinois State Legislature, is a completely separate body from the City of Crystal Lake, with the only exception being that the Mayor of Crystal Lake has the authority to appoint members to the
CCA Board of Directors. Background Presentation of Civic Center Authority Board and Relationship to the Raue Center for the Arts
In providing background information, Mayor Shepley stated that the mission of the CCA was primarily about the Raue Center for the Arts, explaining that many years ago the State Legislature had enacted a specific grant of authority which enabled communities to create Civic Center Authorities for the purpose of having a civic center or a civic enhancing entity, and when that statue was about to “sunset”, Crystal Lake’s Mayor at the time, Carl Wehde, saw it as a potential benefit for the future, even though there were no plans to use it at that time. The CCA was created but it was never convened, and it was dormant until a few years later when the Lucille Raue estate made funds available to purchase and renovate the El Tovar Theater in downtown Crystal Lake. Mayor Wehde then put out a “call to action” and community leaders such as Bill Dwyer became involved and took the CCA forward.
Discussion of Possible Issuance of Revenue Bonds
Mayor Shepley stated that based on the money provided to the CCA for purchase of the property, the CCA has only one asset, the Raue Center for the Arts building.
The CCA owns it, but a separate corporation, the Raue Center for the Arts, was created to actually run it, and the CCA executed a long-term lease with the Raue Center for the Arts for a nominal annual sum.
Mayor Shepley stated it was a simple, long term land lease, but it became complicated when it came time to invest in renovations and the total cost was more than original Lucille Raue Estate bequest.
Funds were raised by the community and an $8 million loan from Home State Bank was taken out, which were all used to make the Raue Center for the Arts what it is today.
He stated that the CCA had entered into a “mortgage” with Home State Bank for that they would have a secured interest for the loan, which remained at $2.4 million still due today.
The problem was that the CCA did not have statutory authority to give a mortgage or borrow in any way.
He stated that if that is true, Home State Bank does not really have an interest in anything, but it was not their fault. Mike Splitt asked if there was a clear title.
Mayor Shepley stated that the CCA holds the title, but did not have the authority to give a mortgage.
Prefacing his next statement, Mayor Shepley urged the CCA Board members to only do what they believe is right and not do anything else, noting that was why he had chosen them.
He advised the CCA Board members that their mission going forward was to evaluate and execute a plan to issue revenue bonds to pay down the loan and straighten out the paperwork, because bonds were the only way the CCA could borrow money according to State Statute.
He advised that if the CCA Board decides to issue the bonds, it would not affect taxpayers because they would not be General Obligation bonds issued under the full faith and credit of the City of Crystal Lake.
He stated that they would be “risky” bonds because of the nature of arts organizations, but the only risk would be to those who purchase them, which would most likely be Home State Bank and the bonds would be paid over a 30 year.
Mayor Shepley advised that at the next meeting, the CCA could adopt bylaws, get information from a Bond Counsel and from Attorney Vic Filippini regarding the bond issuance, and then identify the next steps to be taken.
He stated that if the CCA decides to not issue the bonds, there would be consequences, but not to the CCA because they are still owners of the property and the Raue Center owes Home State Bank.
He stated that keeping the Raue Center as a valuable asset is in the best interests of the community, the downtown and all of the people who have invested blood, sweat and tears into the Raue Center over the years.
He stated that it had taken him weeks to unravel the “rat’s nest” to determine relationships, responsibilities, and what would happen if CCA is dissolved. Mayor Shepley also advised that although he will attend future CCA meetings, he will not run them.