This is a continuation of the minutes of the October 10, 2016, meeting of the Crystal Lake Civic Authority meeting.
The back of the Raue Center has a big sign.
Raue Center Financial Review
A review of the finances of the Raue Center was presented and it was noted that the Raue Center
has operated with losses in each year since at least 2011.
It was noted that the Williams Street Repertory Company had been created in 2013, but the finances were not separated from the Raue Center until 2014, as per an audit recommendation.
Gary Reece asked how they were able to depreciate property since they do not own the building, and Mr. Filippini replied that the value may be in the lease itself.
Chairman Hayden asked about business deductions, and the Raue Center’s auditor, Mary Miller, advised that they can depreciate assets.
Detailed revenues versus expenses were presented, and Mike Splitt asked if the revenues included the City’s contribution from hotel taxes.
Mr. Lewis stated that they were.
He stated that for revenue bonds, more concrete documentation would be needed regarding that allocation for the years ahead.
Mr. Filippini stated that an agreement between the City and the Raue Center may wish to include conditions as to what the Raue Center needs to do, because there is currently no formal grant agreement for that funding.
Lisa Waggoner asked if the City would be willing to commit hotel tax funds.
Mayor Shepley stated that the City Council would be amenable to consider committing to longer periods of time.
Gary Reece asked what would happen if different City Council members are elected over the years.
Mayor Shepley stated that the ability to bind a future City Council would need to be looked at, and noted that if hotel tax revenues dry up, the City would not want to dip into its General Fund.
He stated that the City Council could consider a longer commitment of hotel tax dollars in a “not to exceed” amount.
Mr. Filippini agreed, adding that it would need to be clear what the Raue was expected to do and how the monies would be used.
Mayor Shepley stated that theoretically, a condition could be made that the monies go first to pay down the debt service or the bonds and any remainder could be used for general operations.
Mr. Filippini agreed that could be done.
Mr. Kost added that showing feasibility was a legal requirement for issuing the bonds, and such language would help.
Mr. Lewis added that more information was needed as to why an increased amount had been budgeted by the Raue Center for the Stargazers ball, as well as regarding revenues from the Raue Center’s Oktoberfest, the Raue Now Business, and the Grants and Foundation Support from FY2015-16. Regarding budget vs. actual since FY2014, Mr. Lewis stated that more information was needed regarding the leases.
He also stated that information was needed as to what steps will be taken to grow the net revenue to pay the principal on the debt and not just the interest.
Regarding possible loan forgiveness by Home State Bank, he stated that although that would reduce the debt burden, the current budget provides net revenues sufficient to pay $60,000 of debt service on the Authority Bonds and $35,000 for the annual payment on the lease obligations of the Corporation.
He noted that converting the loan to bonds would not ensure the operations of the Raue center would generate sufficient funds under the amended lease agreement to pay the Authority Bonds, and the CCA issuing the bonds does not guarantee the bonds will be paid.
Mr. Lewis presented concluding considerations as follows:
Given the poor financial situation of the Raue Center, if the CCA issues Authority Bonds, the CCA should prohibit the bank from transferring ownership of them so that a 3rd party investor would not have recourse back to the CCA.
Mayor Shepley noted that any 3rd party investor would be well aware of the risks, and if so, what possible recourse could they have, unless there were misrepresentations.
Mr. Lewis stated that from business standpoint, it would be hard to get a 3rd party investor anyway, but he had been advised that it was possible that Home State bank might seek another bank, and also, if something were to go wrong, they would try to find an error on the CCA’s part.
Mayor Shepley asked what would happen in that case and if the Directors liability insurance would “kick in”.
Mr. Filippini stated that was a possibility, but the issue was that if the CCA issues the bonds they need to have a reasonable expectation that the bonds can be paid.
The risk could be that if there were a failure and it could be said that expectation had not been present.
He stated that the CCA’s chief consideration was whether or not they felt comfortable with issuing bonds and to what degree, and to make sure there was at least a reasonable basis for payment.
Mr. Reece added that if there were a default, the CCA would probably never be able to sell more bonds, and Mr. Kost agreed that it would certainly be awhile before that could be done.
Mr. Lewis continued by stating that the Raue Center’s strategic financial plan should also take
into account other capital needs it will need to address throughout the life of the bonds, such as
improvements and maintenance, and eventually they will probably need to do another borrowing to address future capital needs.
He stated that the CCA and its attorneys should determine whether it is ultimately responsible for all or a portion of the loan and therefore has the legal authority to issue its Authority Bonds to refinance the loan.
Mr. Kost stated that the CCA has the authority to acquire, purchase, improve and hold title to the
property.
He noted that the current encumbrances were a result of previous CCA Board action many years ago with Home State Bank and because of those actions and the lack of documentation, the CCA was now basically starting fresh with the ability to acquire a building free and clear of obligations, and it was not necessary to get into past CCA Board actions.
Chairman Hayden asked if the CCA had a bond rating, and Mr. Lewis stated that it did not.
Discussion with the Raue Center for the Arts representatives regarding its Financial Condition.
A detailed discussion ensued between the CCA Board, members of the audience from the Raue Center for the Arts, and all in attendance.
Michael Costigan, a member of the Raue Center Board, asked if the CCA could charge rent once the loan is paid off. Mr. Filippini and Mayor Shepley stated that it could, and Mayor Shepley added that there was already an agreement in place for the CCA to receive $100 per year for 99 years.
Mayor Shepley noted that the CCA has no legal mechanism to transfer ownership of the property.
Gregg Daniels confirmed with Raue Center Executive Director Richard Kuranda that the Raue Center’s finances are audited annually.
Mr. Kuranda stated that the Raue Center had a volunteer Board of Directors who were dedicated to building a strong business for the City and the community, and honor past donors.
Mayor Shepley assured the Raue Center representatives that this process was to ensure the long term well being of their organization.
Gary Reece asked if PMA had seen the Raue Center’s balance sheets for the past few years, and Mr. Lewis stated that they had not. Mr. Reece stated that he would like to see those balance sheets before making any decisions.
Tom Hayden asked what else the CCA could do to assist the Raue Center and if they had explored grants.
Mr. Kuranda stated that there were no state grants at this time, and any federal grants are routed through the state; however, the Raue Center was pursuing a landmark designation on the federal level to open up some funding.
He added that with the now active CCA, the Raue Center would welcome exploring any other possibilities.
Mike Splitt asked if having a landmark designation would tie their hands regarding future improvements.
Mr. Kuranda stated that that there would be restrictions, but the designation would also open up a whole slew of funding opportunities for maintaining historical buildings.
In response to questions from Tom Hayden, Mr. Kuranda stated that they had 220 events last year, and had also provided free rentals for community groups.
A steady stream of folks were in the Crystal Lake Kiwanis Santa Run. One waved to a family member as he went past the Raue Center, the headquarters for the fundraising event.
He stated that more profitable actions were in offering longer running shows with the Williams Street Repertory Company and they had high hopes that would continue to grow with donors.
He advised that it was now a professional company which had joined Actors Equity and could mount shows for 4-6 week runs at a lower cost and cultivate new donors.
He also advised that the Raue Center was partnering with Georgios and Retro Bistro, as well as booking popular rock tribute bands.
The web of deceit gets deeper and deeper.
These are the people that “run” this town.
They are a joke.
Mark 4:22
How much does the Raue Center get in hotel taxes each year?
@Steve Willson – The City gives the Raue 150,000 each year and the downtown association 30,000.
The information being presented is very sad.
It appears that the hotel/motel grant money was handed over to the Raue without any oversight.
Once again, the Crystal Lake Civic Center Authority should in the name of transparency post on a website the source documents obtained by Mr. Skinner in the FOIA request, and any Powerpoint presentations, reports, and other documents from PMA to the Crystal Lake CCA Board.
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Actors Equity Association (AEA) is a labor union.
It is located in the Actors Equity Building, 557 W Randolph St, Chicago.
http://www.ActorsEquity.org
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AEA is a member of the Chicago Federation of Labor (CFL), which is powerful Central Labor Council (CLC) based out of Chicago with many affiliated local labor unions.
The Williams Street Repertory is located in the Raue Center for the Arts, 26 N Williams St, Crystal Lake, IL.
http://www.wsrep.org
And here is the website for the Raue Center for the Arts, 26 N Williams St, Crystal Lake, IL
http://www.rauecenter.org
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The website for the Crystal Lake Civic Center Authority explaining its role in all this?
Nowhere to be found.
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This from the City of Crystal Lake Fiscal Year 2016 Comprehensive Annual Financial Report (CAFR):
“The downtown district is home to the Raue Center for the Arts, which is an 800-seat theatre that is one of the finest examples of restored art and decor in the nation.
The Raue Center provides a unique draw for the downtown area as the largest performing arts theater in McHenry County.”
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The City of Crystal Lake FY 2016 CAFR does not mention the funneling of the City of Crystal Lake Hotel / Motel tax revenue to the Raue Center For the Arts.
But, the City of Crystal Lake FY 2017 Budget, under Executive Department – Other / Hotel Tax, includes:
FY 2014 – $150,000 to Raue Center for the Arts
FY 2015 – $150,000 to Raue Center for the Arts
FY 2016 – $150,000 to Raue Center for the Arts
FY 2016 – $1,000 to Williams Street Repertory Theatre Co
FY 2017 – $150,000 to Raue Center for the Arts
FY 2017 – $1,000 to Williams Street Repertory Theatre Co.
The Budget also contains this from the Crystal Lake Planning and Economic Development Division:
“Continue collaboration with Visit McHenry County, Downtown Crystal Lake, the Chamber of Commerce, and the Raue Center to promote local events and to draw people to Crystal Lake.”
Daily Herald
April 15, 2016
Williams Street Rep Announces New Season, Equity Agreement
by Barbara Vitello
“Williams Street Rep also announced it has entered into an agreement with the Actors’ Equity Association, the association that represents 50,000 actors and stage managers in the U.S.”
http://www.dailyherald.com/article/20160415/entlife/160419023
Thanks, Reasonable.
So even with a $180,000 subsidy, the Raue Center still loses money.
As is often the case, answers beget questions.
Q1) Where does the Downtown Association get its money? Is it also from taxes?
Q2) Does anyone know the Raue Center’s total budget and annual operating loss?
By itself, an operating loss may be defensible and beneficial to a community.
Despite the emotional factors, the Raue does not seem to be sustainable.
Are we throwing good money at an indefensible entity?
Bill Dwyer would roll over in his grave if he knew of the ineptitude being exhibited at the Raue.
Bill donated hundreds of hours of his labor and lots of money to make the theatre prosper.
Since his passing the whole concept has been in a death spiral.
Bill Dwyer was tincupping around to get his name on something.
This project was loser from Day 1; who got the contracts (and the kickbacks) from this fiasco?
@Steve Willson – The 30,000 that the city gives to the downtown association is also from the hotel/motel grant money.
I doubt that the downtown association grant money is tied into the Raue operation, however the Raue is an integral part of the downtown identity.
I am guessing that the the grant money given to the downtown association is used to run parades and festivals?
I believe that the downtown association also charges a membership fee however, there are many businesses in the downtown area that are not members, yet still benefit from all the perks, attention, and favoritism that the mayor and many city council members shower on this small shopping area.
The city subsidizes the operations of downtown business/building owners by building, purchasing, rebuilding parking lots for downtown merchants.
These are large capital expenditures paid for out of the general fund (funded by retail tax dollars collected by the city) that benefit only certain businesses – the downtown merchants.
The city also plows, resurfaces, and stripes these parking lots at no cost to the downtown merchants/building owners.
Businesses outside of the downtown area pay for these expenses themselves, as they should, because this is a normal cost of running a business.
The many service businesses that fill the downtown area contribute nothing to the general fund and are really getting a nice deal!
The thorny issue is the existence of several long-time downtown businesses that operated “just fine” with street parking.
It would not be fair to make them pony up for all parking lots and other expensive projects/improvements that are now part of the downtown’s budget.
But what about the bigger businesses that have opened up that the city has issued large parking variances?
The city’s “downtown agenda” has been an expensive journey and it would be nice to know if the downtown area has come anywhere near to repaying the investment that the city has showered on this area?
The downtown area is siphoning money from the general fund that could be used for other important project in Crystal Lake.
Corporate welfare should not exist in city government.
It divides the business community and has hurt businesses outside of the downtown area.
The city’s favoritism has even trickled down into influencing the NW Herald’s coverage of small businesses in CL.
There is never any coverage of long-time, successful small businesses outside of the downtown area, which is such a shame.
In my opinion, city government should never engage in any activity that favors “certain” businesses, while damaging others.
Small business owners do not mind competition, as long as it is on an even playing field.
The city’s subsidy of downtown has artificially shifted the playing field.
Even real estate taxes in the downtown area are ridiculously low compared to similar commercial properties outside of the downtown area.
Why is this? What can be done?
Other downtown areas fund their operations by setting up an SSA, special taxing district, installing meters, paid parking lots, or setting up some other equitable plan that charges businesses/building owners for the cost of their operations, parking lots and other maintenance/decorating/landscaping expenses.
Apparently, our mostly “townie” city council thinks that it is OK to open the city checkbook to subsidize their childhood shopping area because it makes them feel good?
I boycott the whole downtown area because it is nothing but crooks patting each other on the back. (I also try not to shop in Crystal Lake because of their taxing fiasco.)
There is one self defense mechanism left to citizen taxpayers being exploited by self-dealing taxing body rulers, and that is economic boycott.
Individuals may come to that decision themselves as commented by Cindy. Personally, I am boycotting Woodstock.
But well organized (well publicized) boycotts of certain regions (predatory TIF Districts, self-dealing municipalities or school districts for example) have not been attempted locally, to my knowledge.
Susan – If real estate tax dollars were being used to prop up and pay for the operational costs of private businesses and building owners, local residents would be upset.
However, the city is using money out of the general fund, or retail tax dollars collected from retail tax-generating businesses, to subsidize downtown businesses and building owners.
However, the city did increase the retail sales tax in 2007.
I’m sure everyone has now adjusted to this new “normal”.
The city can easily hide behind this and continue with their corporate welfare/cronyism and quite frankly, they don’t give a rat’s a$$ about small businesses outside of the downtown area, as demonstrated by their actions and words.
Boycott’s should be well researched, and calibrated to punish abusers/cronyism, and reward the ‘losers’ outside the zone of abuse.
Williams Street Repertory is a theatrical production company located at the Raue Center for the Arts.
Its productions are one of several arts related events held at the Raue Center for the Arts.
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Williams Street Repertory is a 501(c)3 non-profit
Its EIN number is 27-5244146.
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Raue Center for the Arts is a 501(c)3 non-profit.
Its EIN number is 36-4147140.
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501(c)3 Non-Profits that normally have more than $50,000 in gross receipts are required to annually file an “IRS Form 990 Return of Organization Exempt from Income Tax” or “IRS Form 990 EZ” with the IRS.
501(c)3 Non-Profits that normally have less than $50,000 in gross receipts what is called an IRS Form 990-N aka “annual electronic notice” aka “e-postcard”.
The Raue does a very good job.
Tax money is not being wasted, and their overall budget is north of 2 mil.
The downtown is busy because of the Raue, and Bill Dwyer would be very happy.
Don’t know much about WSR but there are local Theater groups who only lose money because they insist on spending lavish amounts of money on their productions.
This is not very fiscally responsible in small areas like CL but it does allow the “stars” to fulfill their fantasies of being on Broadway.
From the article:
“He [Richard Kuranda] advised that it [Williams Street Repertory aka WSR] was now a professional company which had joined Actors Equity [a labor union] and could mount shows for 4-6 week runs at a lower cost and cultivate new donors.”
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How is WSR able to mount shows for 4-6 weeks at a lower cost?
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Richard Kuranda is
– the Executive Director of the Raue Center for the Performing Arts
– the Founding Artistic Director at the Williams Street Repertory
– a member of the Stage Directors and Choreographers (a labor union)
– several other notable designations and achievements as listed on the websites for those organizations
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Also the Propublica Nonprofit Explorer is a good starting point for IRS Form 990’s for many non-profits,
although there is a lag time of a few years for posting many of the documents.
https://projects.prupublica.org/nonprofits
Putting up a show for a short run (2-3 weeks) allows for a shorter recoupment period.
The longer the run the better chance to recoup, because the cost of sets, costumes, show royalties, and the personnel costs for rehearsals remains about the same.
Does unionizing the labor force and / or other changes somehow allow WSR to more easily mount shows for 4-6 week runs?
In other words what changes took place to allow WSR to more easily mount shows for 4-6 week runs.
And has WSR attempted a 4 – 6 week run in the past, and if so, was it more profitable.
The City has been contributing $35,000 annually to the “Historic Downtown Assoc”.
In an attempt to identify that organization, the names of two non profits surface:
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1.
From the IRS Form 990 for the following organization:
Historic Downtown District of Crystal Lake
PO Box 1738, Crystal Lake.
Employer Identification Number (EIN) of 36-4105965 (364105965).
IRS Tax Exempt Status is 501(c)3.
website: http://www.downtowncl.org
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The aforementioned Downtown Crystal Lake website does not identify itself as the Historic Downtown District of Crystal Lake or the Historic Downtown Assoc.
The website states:
“Downtown Crystal Lake / Main Street is a non-for-profit 501(c)3 organization founded by local community volunteers.”
“Downtown Crystal Lake is an accredited member of the Main Street America network.”
“Downtown Crystal Lake is a Premier Illinois Main Street Program, dedicated to the revitalization of our historic downtown district.”
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The Main Street America Network is networked at the state and national levels.
There is an “Illinois Main Street Program.”
And a “National Main Street Center” that has a trademark of “Main Street America” and is a subsidiary of the “National Trust for Historic Preservation.”
mainstreet.org
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2.
Crystal Lake Downtown Association
14 N Walkup, Crystal Lake.
EIN 36-3147373
IRS Tax Exempt Status is 501(c)6.
Is this non-profit organization dormant?
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A City of Crystal Lake Sustainability Committee Presentation to the Crystal Lake City Council on November 17, 2015 stated it had a relationship formed with the “Crystal Lake Downtown Association.”
Is the “Historic Downtown District of Crystal Lake” now known informally as the “Crystal Lake Downtown Association.”
Or is the Crystal Lake Downtown Association still active, but just a smaller not-for-profit?
(Information on smaller non profits can be difficult to locate).
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Is “Historic Downtown District of Crystal Lake” informally known as “Downtown Crystal Lake / Main Street?”
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The City of Crystal Lake also has an active Main & Crystal Lake tax increment finance district (TIF).
That is referring to the area around Main Street and Crystal Lake Avenue.
The Raue Center for the Arts is a short distance from that intersection.
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The City of Crystal Lake has an inactive Central Business District TIF that was in effect from June 18, 1985 to December 31, 2008.
The Central Business District referred to the downtown area.
Raue Center Receives Grant from the National Endowment for the Arts
by BWW News Desk May. 5, 2017
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Raue Center For The Arts is pleased to announce they have been awarded a $10,000 grant from the National Endowment for the Arts (NEA) to support their Next Generation Initiative and their in-house theatre company, Williams Street Repertory.
Last year, Raue Center focused their attention on attracting new audiences, donors and artists, and WSRep lead the initiative with new plays, community events, and educational outreach initiatives. Items like Williams Street Festival, coming up on June 3, new plays like “Any Other Name” by George Brant and new classes under the Sage Studio program were wildly popular.
Over the past year, Raue Center has seen a tremendous amount of growth both regarding artistic, audience and operational development. The new grant will be used to support marketing initiatives associated with WSRep and its Next Generation Initiative. The Willow Springs Foundation, which has been a long-standing supporter of Raue Center, quickly matched the grant.
The NEA is the federal agency that supports and funds the arts to give all Americans the opportunity to experience creativity and participate in the arts. NEA programs and funding support thousands of activities in communities large and small across the country. To learn more about the National Endowment for the Arts, please visit arts.gov. Follow the conversation about this and other NEA?funded projects on Twitter at @NEAarts.
“The National Endowment for the Arts is proud to support the excellence and diversity of arts programs across the country, including organizations like Raue Center For The Arts, that make the Arts Accessible to people in Crystal Lake, IL and further enhances the vitality of their community,” said NEA Chairman Jane Chu.