Tuesday started off not so good for the Friends of Hemming Park.
It didn’t get better as the day went on.
The nonprofit with a $1 million city contract to manage and program Hemming Park was seeking an additional $250,000 to sustain its operations through Sept. 30.
After a morning meeting with several City Council members, a bill before council authorizing transfer of the money from a contingency account was amended to $100,000.
That amount was approved later in the day by council, but not until after an audit of the nonprofit’s financial position was called for and the Friends’ transparency in communicating with council members was called into question.
Council Vice President-elect John Crescimbeni pointed out the city has invested $1 million in the Friends for management of the park and he’s not satisfied with how the organization does business.
“The more they talk, the less confidence I have in their ability to spend taxpayers’ money,” he said.
The management contract included $1 million, paid in installments over the first 18 months of the five-year agreement.
The 2015-16 general fund budget included a $250,000 contingency account to finance the operation through Sept. 30 if the organization failed to raise private funds to cover its operating costs.
After legislation was introduced to transfer the full amount to the Friends for operating expenses, the organization decided to take a different tack.
The Friends proposed using the $250,000 to build a permanent stage in the park and negotiated a five-year, $50,000-per-year naming rights agreement for the stage with Community First Credit Union.
The plan was to use the city money to pay for a capital improvement in the park, and then use the $250,000 lump-sum payment from Community First to cover operating expenses.
The Finance Committee amended the bill to include a clause that would allow the city to cancel the naming rights agreement after three years and reimburse the credit union $100,000 for the last two years of sponsorship.
That prompted Community First to notify the city it would not execute the naming rights agreement if the amendment stood.
In an email May 18 to Assistant General Counsel John Sawyer, Community First Vice President of Marketing Roger Rassman said the city’s opt-out is not acceptable.
He said in order for the credit union to convey in advance $250,000 to the Friends, “we need a written guarantee that we will receive the full five-year sponsorship benefit” and, without the guarantee, “that won’t happen.”
Council member Bill Gulliford said the Friends should not be taking the lead in negotiating naming rights for the stage.
“Community First should negotiate with the city. The Friends handle the operations, but the city is the owner,” he said.
Another issue at the morning meeting was the nonprofit’s current financial position and its accounting practices.
After a lengthy discussion about how much the Friends would need to continue in business through Sept. 30, council President-elect Lori Boyer said $250,000 for four months of operation is “excessive.”
Vince Cavin, Friends CEO, said the nonprofit spends $52,000 per month on basic expenses for salaries and benefits, insurance and pest control.
Gulliford said he has a problem with the nonprofit’s financial reports to the city because it’s not clear how much has been spent on operations versus how much has been spent on improvements such as fixtures and landscaping.
He also said it was council’s intent that the city fund operations only.
“If we give money, it’s for salaries and benefits, period,” said Gulliford.
Crescimbeni directed the council auditor to conduct an analysis of the Friends’ books to determine how much money is in the bank and how much is owed to vendors and subcontractors.
Friends President Wayne Wood said the organization would “welcome the opportunity” to be audited by the city.
The $100,000 approved Tuesday will sustain the organization until mid-August while another bill to transfer the remaining $150,000 from the contingency fund will be considered by council committees before a final vote.
Boyer said she considers the $100,000 transfer approved Tuesday a “stopgap” and whether the remaining $150,000 should be transferred will depend on “if we’re confident there will be ongoing support.”
The Friends have suggested for months that the city will need to contribute at least $500,000 per year to maintain the organization, a proposal that has gained little traction with council members.
Crescimbeni said he considers council’s action Tuesday a “bridge payment” and “it’s time to fish or cut bait with the Friends.”
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