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Museum of Art funding request i5~~~E ~<k~ ~fl 7/5pb MEMORANDUM June 28, 2006 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Dubuque Museum of Art Loan Request The Dubuque Museum of Art has submitted a request for the City to forgive the debt they owe the City from a $300,000 loan they took out in July 1999 from the Downtown Loan Pool to rehabilitate the Dubuque Museum of Art building. I think approving this request would set a dangerous precedent. The Downtown Loan Pool depends mainly on loan repayments to finance future loans, even though there are also direct appropriations of downtown tax increment financing revenues that sometimes capitalize the fund. The program already has significant forgiveness components with grants of $10,000 for fac;ade improvements, $10,000 for architectural and engineering fees, and $2,000 for each job or housing unit created. Also, the program is a 20-year loan at below-market interest rates with interest-only payments for the first five years. The Dubuque Museum of Art requested a one-year deferral on interest payments in April 2003. The City Council agreed to the deferment with interest payments due May 1 and June 1, 2005, and principal plus interest payments to commence July 1, 2004. An additional request to defer came in April 2004, which was granted by City council authorizing deferment until July 1, 2006, with a balloon payment of $52,713.60 due at that time to "catch up" the deferred payments. The due date of that balloon payment has triggered this request. As a compromise, I would suggest that the unpaid principal be amortized over the remaining life of the loan at the same interest rate. This is affordable for the City at this time because the City will not need to pay Platinum Hospitality, the management firm for the Grand River Center, the budgeted subsidy payment for this year. That payment is not being claimed because the losses for the Grand River Center have not exceeded the agree-upon threshold. To go any further than this would be problematic because the Platinum Building is waiting on their Downtown Loan Pool loan for their project, along with three other important projects, which include the Fischer Company project in the old Betty Jane's building, the Silver Dollar building, and another economic development project. I respectfully request Mayor and City Council approval of the change in the loan agreements for not-for-profit entities. (1 JA t(~ rJL- Michael C. Van Milligen MCVM/ksf Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager .,/'''''''''''~''''~ i''3J.?% ~ ~ .r ;:: ~<> $ 1..+ """'101<0\\"" 701 Locust Street Dubuque, Iowa 52001 P 563.557,1851 F 563.557.7826 - Dubuque Museum of Art June 28, 2006 The Honorable Mayor and City Council Members City of Dubuque City Hall Dubuque, IA 52001 Honorable Mayor and City Council Members: I appreciate your willingness to consider options to settle the remaining debt the Dubuque Museum of Art owes the City from a $300,000 loan to rehabilitate the Museum's present facility, Under present terms, a $52,713,60 balloon payment is due July 21,2006, After discussing the Museum's present financial needs with Mike Van Milligen, he agreed to present a recommendation for alternative terms to satisfy the debt In his memo to you dated June 28, Mike recommended that the unpaid principal on the loan be amortized over the remaining life of the loan's 15-year amortization, Under this recommendation, the Museum's annual payment on the loan would be approximately $2,337, While we are certainly grateful for this recommendation, we respectfully ask you to consider several other options that would provide additional support to the Museum: 1, Extend the amortization of the loan over an additional five years, This would reduce the Museum's annual payment to $1,805, While this may not seem like a significant reduction in monthly payments, it certainly would be meaningful to the Museum, 2, Forgive the unpaid principal balance of the loan. If the City could find a way to forgive the debt, it would make a great statement about Dubuque's commitment to the Arts. Thank you for your past support of the Museum, and for considering our request Dubuque Museum of Art July 6, 2006 The Honorable Mayor and City Council Members City of Dubuque City Hall Dubuque, IA 52001 Honorable Mayor and City Council Members: We appreciate your consideration of our request and for allowing us to present background information regarding the Dubuque Museum of Art at last evening's City Council Meeting. Per your request, enclosed you will find the Museum's Annual Report, which contains our most recent financial statements. We think you'll find that they reflect an institution that is certainly viable. At the same time, the investments that are contained in our endowment have minimal ability to assist in the short- term cash flow needs of the Museum. As a result, we again respectfully ask you to consider forgiving the $300,000 loan in its entirety. While this would be our first choice, we don't want to overlook the other alternative of stretching the amortization of the loan over 20 years versus the 15 recommended by the City Manager. While it is a small adjustment, it would certainly help. With all this being said, we appreciate Mike Van Milligen and the City Staff in all their efforts with assisting the Dubuque Museum of Art and the City Taxpayers. '~~.'''''.'^. "~" .{' 'i . , .r. .'-' ~~, ..}' "'lev iO"O\'~ 701 Locust Street Dubuque. Iowa 5200 I P 563.557 J 851 __I F 563.5577876 701 Locust Street Dubuque, Iowa 52001 563.557.1 B51 dbqart.com Annual Report Fiscal Year 2005 r-. ~;12 \-- .C L-'-~ ::::-:... I.. Ii") ,. '-. LL c.L - ,", -',"---, () The following remarks were made on the occdsion 0/ the 2006 Annual Meeting of the Dubuque Museum of Art, May 23, 2006. "On the occasion of my first Annual Meeting of the DMA, I am very pleased to provide this Report for 2005, covering ac- tivities Jlld the institution's finallcial condition as of the end of December, the conclusion of ollr fiscal yeaf. Operrltiol1ally, the Museum ended 2005 in J stronger fincll1ci,ll position than faced at the end of FY 04. Robust 05 Art Auc- tion revenuE'S, attainment of llew program and operational grants, <15 \vell as a steady increase in the Director's Circle memhership level, mdde much of the difference ,,15 did contain- ing costs as much as possible. A report is included within. Embrace Art.' Tod7}-' for Tomorrow, the capital campaign that began in late 2004, concludecl on the occasion of the Mu- seum's M,l}' 23rd Annual Meeting. The campaign successfully raised $1.5 million in spite oj the 6 month [ull in 2005. while the Museum W,lS hetween Directors. These funds will be a big assist in casing capitell obligations from 1999. A complete list oj donors to this eiiort is found in our Summer 2006 News[et- ter. fundraising is an ongoing proposition - a reality of our life. At current operating levels, the Museum would require a $7 mil- [ion endovvrnent corpus to dttain sell' sufficiency'. Conse- quent[y, while Embrace Art is concluded, we will continue to he actively fundraising for both capitil! and operdtiona[ pur- poses. Thus far in 2006, we have been awarded over $46,000 in grants that wlll corne in hetore December 2006. Some of 1[1('Se ;In' for gt'ller,ll o[wr.lling - from the City of Dubuque and the 5teHe of [OvVd through the Iowa Arts Council, some ,1fe Spe- cia[ Project gr,lIlts. m,lcle from both of these agencies, as wel[ as from the A[liant Energy Foundation and the Duhuque Racing Association. We helVe been successful in attaining sponsor- ships (at some leve[), for every cxhibition offered in the 200S/200() schedule ,1Ild h,lVe been developing rw\\! iundrais- ing pro[ccts (ficirloom Discovery 5aturcby this f~hlst Mi.lrch and the Art Raffle this past April), ewgmenting the fundraising eHorts of our nO\\' legendary Ho[iday PMly and Art Auction every November. In the ~al[ oj 2005. \ve re-introduced ,1n art sJ[es component in the lobhy, {Pdturing wmk by artists exhibiting in our temporary exhibition galleries. While not a major revenue conteI', we hilVe l1liHle sales and find this venue to serve ,lS an ddditionill W..1Y to provide service support to the artists we are exhibiting. Programs: The Museum presented 12 temporilrY exhihitions during 2n()') ranging from I\rt Geisct't's book illustrations to paintings by memhers of the famed Sellmagundi Club - from all installation of furniture by fr,lnk Lloyd \.Vright to the [elrgc selic, black and white landscapes of Clyde Butcher - from paintings by Grant Wood to contemporary American studio glass. Additionally, we IJI"esented the Museum's fit'st f'ver off-site tem- porclry exhibition: Voices hom the IY,lIchollsC D/~~-trict. Tc'n artists were invited to instal[ contemporary \vorks of sc<lIe in 10,000 square fect of open \'Velrl'house Sp,lCC~. This exhibition proved to be J \,vinning collahoration belvveen the Museum, t!l(' ilftist5 ,lncl Wilmac Property Comp,lny ,15 wel! as olle of the most popular events vve have heen associated with, garnering huge atten(ll1lce numhers during its short run. Dubuque Museum of Art - 2005 Annual Report V Dices From the Warehouse District - 2 will be presented during the same approximate time period in 2006 before be- coming part of a rotating schedule with the Museum's new Biannual juried exhibition to be held in 2007. We look forward to generating more ex- hibitions in-house rather than using outside exhibition purveyors. Already this year, two exhibi- tions will be forth- coming from within the permanent col- lection, one of water- colors and another of photography, that begin to highlight the collection's breadth. A modification to the Lengeling Gallery will be made this summer to accom~ modate a more per- manent installation of works from our hold- ings of Grant Wood. An additional goal will be to work to- ward the establishment of an exhibition and collection en- dowment vehicle into which contributions can be sought to reduce the continual need for seeking sponsorship funding for these programs. Collections - 79 objects were added to the collection during 2005 including another large number of engravings by Art Geisert's from his book Pigaroons, as well as the painting Rab- bit Hole, by Mary Kline-Misol. Additionally, the grant re- ceived in 2005 from the Dubuque Racing Association, pur- chased five steel, sliding screen for secure storage of two di- mensional art work that has radically remedied storage con- tainment issues. Educational Opportunities: - Our Summer 2006 newsletter details the plethora of educational activities that occurred at the Museum; thus far in 2006 but a great many others were held in 2005, particularly from the period of July - December. Of particular note, are the series of Museum Family Matinees that are provided on about a monthly sched- ule, from September through June and included family program offerings in ballet and modern dance, theatre, music and art. In 2005, and I am pleased to report that again in 2006, the Mati nees are sponsored by the Alliant Energy Foundation. The Museum also provides hands-on art instruction for -..:..-.."" middle and high school students throughout the year as evidenced by the ,--_______~~________~_ After School Art classes. From TfwKi"!:I,,,,df,Cr;lndOpf'r,1Ik,uSl'2llllC,: IlfOducliol\. Page 2. Budding Artists" from the Spring 2006 After School Art class for middle schoolers Maggie Sulentic, Stephanie Greene and Michaela Hennings, pictured above, take a break at the end of such a class. Second grade elementary school students are serviced by Museum programming during March and April through Arts Trek program- ming that provides an opportunity for a Museum site visitation with students, their classroom , teacher and, this year because J of a special project grant from 11Io. the City of Dubuque, the school's visual art specialist. Arts Trek students toured all Museum exhibitions during their fifty minute excursions over these two months. Seen above are students from Irving Elementary school admiring the clay sculpture of Elizabeth Shriver with a Museum docent. Below, Irving students discuss photo+ graphs they saw with art teacher Terry Spyrison. This exhibition featured work by photojournalists working at Dubuque's Telegraph Herald daily newspaper. As an added feature, members of the TH photographic staff were present during the Arts Trek programs to talk about their work and show some of the equipment they use to make photographs for use in the newspaper. While it has not quite been a year since coming to the Museum (I am still connecting the dots on those Dubuque family trees), I am feeling extremely confident about the Mu- seum's future and our ability to achieve and grow. I am exceedingly fortunate to have inherited an excellent group of people with whom I am pleased to work. Diane Sass, Margi Buhr, Stacy Gage and Bill Parker have welcomed me into their work family and we are hard at it - having fun at the same time - and that, it seems to me, is as good as it gets to still be called work. Margi has "survived" to her 10 year anniversary with the Museum this year while Diane is working on #9. These two ladies have, I expect, more than held this place together during past, sometimes turbulent times that always accompany a change in loca- tion in the Museum business. I am happy to report that those times are over as we work toward expand- ing our presence in the Dubuque and tri-state community, working as of- ten as we can with our community sister arts agencies in a variety of future projects and concentrate on showing off what we have and are all about." Edwin Ritts, Jr. Director Dubuque Museum of Art - 2005 Annual Report Page 3. DUBUQUE MUSEUM OF ART DUBUQUE, IOWA STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2005 ASSETS Assets: Cash Investments Prepaid Insurance Unconditional promises to give (net of $9,774 discount) Beneficial Interest in assets held by others Property and equipment - net of $544,227 accumulated depreciation Art Collection $240,433 809,045 1,737 269,468 10,390 2,199,505 1 T ota I Assets $3,530,579 LIABILITIES AND NET ASSETS Liabilities: Accounts payable Accrued salaries Accrued payroll taxes Other accrued expenses Deferred revenue Notes payable Total liabilities $ 9,004 5,813 3,914 2,225 22,892 694.681 $ 738,529 New Assets: Unrestricted: Undesignated Temporarily restricted Permanently restricted $2,049,536 140,764 601.750 Total Net Assets $2,792,050 Total Liabilities and Net Assets $3,530,579 Dubuque Museum of Art 2005 Board of Trustees Dubuque Museum of Art Staff john K. Schmidt, President Malltc<l Schmid, Vice Pr('sident Stephanie Savage, SCOf'{,-lfY Eel Ulvc. Treasurer John Chapman, Immediate Pas! President Edwin Ritts, Jr. Direc/()r Diane Sass Deputy Director Ed Bahka Alan Bird Susan Butler Penny Cli.lrk Tim Conlon Kim D,wicl Jim Etheredge Susan Fdrbcr William Kruse Randy Lengcling Wi1lter PC'tcrson )c,lnnc Quann Dave Schaller Don Shine Rill Skemp Julie Steffen Chuck Stolz M<lrk Wahlert Chris Wand Nick Yizlnnias Margaret Guh,. Director 0/ EduCt1tio17 Stacy Gage Co//ections ,& Exhibitions Ivl,1I1dgC{ William Parker A1.1intC17dnCC Specia/isl Non-Profit Org. Us PostJge Paid Permit #137 Duhuque, IA 701 Locust Street Duhuque, Iowa 52001 ""J> "''''"4 <s~. <" v ' ~ ~ , . ~)"\, O...{? '"tv ~o .,0" ,. :--* ~~.~ .'""\j , ,0 1\~'"