Good money after bad?


City officials shrug off Art Museum’s performance, default on County grants

By Roger McCredie –

Third in a series

For more than a year, the Asheville Art Museum has been in “performance default” on $1.5 million worth of grants from the Buncombe County Tourist Development Authority.

However, city officials contacted by the Tribune last week indicated they were either unaware of that fact, or that it was not important enough to keep the City from awarding the museum a $2 million grant of its own.

Records show the TDA, through its Tourism Product Development Fund (TPDF), awarded the art museum a grant of $1 million in 2007, the year that the museum began a major capital fund drive to finance substantial enlargement of its Pack Place facilities. In 2009, the museum received a second grant for $500,000. In 2010, the museum applied for a third grant but was turned down.

Then, on July 25, 2012 – just over a year ago – TDA sent a letter to museum Executive Director Pam Myers, in response to an update of fundraising activities she had submitted. “Due to the significant change in the construction timeline,” it said, “the committee and board have determined that the Grant Agreement is now in default.” The letter was signed by Ron Morin, the then chairman of TDA.

TDA’s grant agreements, such as the one it had with the museum, are often performance based. That is, the grant monies are set aside in escrow and are dispersed to the grantee in increments, upon documented completion of specified project stages, which the grantee reports to the TDA board.

Enclosed with the letter was a new grant agreement. “As you will note,” Morin’s letter said, “the new agreement outlines more defined terms and includes a commencement covenant.” Underneath Morin’s polite language was a not-so-veiled warning: “Should the project [for which the funds were being raised] not commence by its specified date,” he wrote, “the BCTDA may seek remedies including delaying disbursements or terminating the agreement.”

This new agreement, in other words, was a call for action and proof of performance from the museum, which has been guarded about its fundraising progress from the beginning. Latest outside estimates put total donations at about $11.4 million over a six-year period. This comes to less than half the estimated construction cost of $24 million. The December, 2010, issue of Asheville’s Verve magazine contained a profile of Myers which lauded her vision and fundraising abilities, but added, “Myers won’t say how much the museum has raised so far toward its financial goal (‘We’re in the quiet phase of the campaign,’ she says), but she did say she and the museum board are working with major donors.”

Former Asheville Mayor and City Manager Ken Michalove, who has recently – and very publicly — been investigating the whole Pack Place/art museum operations issue, has stated that the 2012 document agreed to continue to hold the museum’s $1.5 million grants in escrow until January 31, 2014. Michalove said records show that Myers signed the new contract on December 21, 2012, but added that “Myers [has] already admitted she can’t meet that deadline.”

Michalove did not indicate when or how Myers said the museum was in danger of defaulting to TDA a third time. He did provide a link to a June 25 WLOS interview in which Myers allegedly denied having ever defaulted on any TDA grant. An attempt to connect to the link led to a YouTube pop-up saying, “This video has been removed by the user.”

Councilman Marc Hunt, who is the City’s liaison member on the Pack Place board of directors, said he was aware of the default notice and subsequent developments but was not concerned. “It’s not a real default,” Hunt said. “It’s not like defaulting on a car loan, where they come and get your car.” Hunt likened the TDA’s warning to “one of those computerized late notice letters” that might be sent out by a credit card company.

Vice Mayor Esther Manheimer, however, seemed to indicate that Council has had little knowledge of the museum’s failure-to-perform problems with TDA. “… city council understood that the art museum was to receive monies from the TDA. The recent allegation of some kind of default is not something I am knowledgeable about,” she said.

One Council member who might be expected to be knowledgeable about the situation is Gordon Smith. Smith is actually Hunt’s counterpart – the City’s liaison – on the board of TDA, the very agency to whom the museum is allegedly in default. At press time, Smith had not yet responded to an e-mail from the Tribune asking if he recalled the TDA’s 2012 notice to the museum, and whether Council had been aware of, and discussed the TDA’s position before awarding the museum $2 million.

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