City to approve new lease with Durham Arts Council

Dec. 08, 2013 @ 01:38 PM

City Council members signaled last week that they’ll approve a new lease for Durham’s old city hall to the Durham Arts Council later this month.
The deal for the Arts Council headquarters at 120 Morris St. will run to at least the end of 2024, and includes renewal options that could take it to the end of 2034
As negotiated by City Manager Tom Bonfield and his staff, it will continue to obligate the city to subsidize the nonprofit’s operation of the building. But it includes a clause giving city officials the right to raise or lower its annual payments by up to 2.75 percent a year.
That means the city will pay the group anywhere from $5.9 million to $7.5 million over the coming decade.
“The reality will probably be somewhere in between,” General Services Director Joel Reitzer said, indicating that officials aren’t assuming the group will receive the maximum possible increase or incur the maximum possible cut.
But Bonfield said the arrangement is setting a precedent for a still-pending deal with the Carolina Theatre of Durham Inc., the nonprofit that operates the namesake, city-owned Carolina Theatre.
The Arts Council’s old lease ran for 25 years and “had a guaranteed 3 percent increase [in subsidy] every year no matter the circumstances,” he said. “We’re going to get away from these guarantees.”
The new deal with the Arts Council will pay the group $649,500 in fiscal 2014-15, its first full year in force. That’s a slight cut from the $649,954 city officials budgeted for it in fiscal 2013-14.
Subsequent payments will be settled each year during the City Council’s spring budget debate.
Reitzer said the new lease also includes a long-term maintenance plan, similar to the arrangements the city put in place for the Durham Performing Arts Center and the Durham Bulls Athletic Park when it negotiated new deals with their operators.
The possibility of a budget cut will put the Arts Council on a more equal footing with city departments that are usually told at the start of the budget process to suggest spending reductions, Bonfield said.
Arts Council leaders supplement the city subsidy with outside fundraising and by charging for some of the group’s events and services.
Its most recently available federal tax filing, for fiscal 2011-12, shows it received $1.6 million in revenue and spent $1.6 million.
The new lease also gives the city the right to cut its annual subsidy if it arranges outside funding for the Arts Council from “other public entities or nonprofits,” provided the group’s board agrees the grants come on terms consistent with its “mission, governance or sustainability.”
Sherry DeVries, the Arts Council’s executive director, said it offers performance, display and teaching space and has contributed to the growth of the “creative economy: in Durham.
The Morris Street building was completed in 1906 and was Durham’s city hall until the late 1970s, when officials opened the current City Hall off North Mangum Street, near Trinity United Methodist Church.
What’s now the Arts Council building remains city property and is “Durham’s oldest building in continuous public service,” DeVries said. Since the Arts Council moved in, the structure has received three major renovations, completed in 1988, 2008 and 2011.