The board will consider forgiveness of a large unpaid debt from the Nelson Center of Musical Arts.
Following a committee meeting, the board will receive a report this year on the cancellation of the outstanding balance of $762,301 on its $830,000 loan to NCMA, in which case it will decide whether to write off the debt.
NCMA Director James Donaldson did not seek debt forgiveness and spoke at the public forum at Thursday’s Community and Recreation Committee meeting to affirm the center’s commitment to repay the rest of his loan.
“We see this as an obligation that we intend to uphold, there’s no doubt about that,” he said.
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He said NCMA was setting up a new foundation which, in about a decade, would be able to distribute funds for the maintenance of its buildings and the “ongoing capital costs of owning a facility like ours”.
Donaldson also directed the board to institute a new formal relationship between NCMA and the board based on a Memorandum of Understanding (MOU) and three-year statements of expectations and intentions, with NCMA making a strategic presentation to the counseling every six months. .
“I think we have to take into account that we need certain statements in place, we need clarity on the relationship, on funding and reporting models, and I think a memorandum of understanding is the ‘place for it.’
Consultant Bruce Robertson then provided an update on his external review of NCMA’s business model, which was initially presented to the board in an excluded public meeting before being made public in December 2019.
The initial review included another interest-free loan of $150,000 from the board, bringing NCMA’s total debt to the board at that time to $830,000, with the intention that it be repaid at a rate of $33,000 per year. He also recommended that the board fund the NCMA in the short term on an annual basis in the amount of $225,000, plus GST and adjusted to the cost price index.
Robertson’s update on that review concluded that concerns raised in 2019 had been “substantially resolved” and that a proposed trade adviser role that would be partially funded by the board was no longer necessary. He made several new recommendations to help build the relationship between the board and the NCMA and for the NCMA to continue to focus on strengthening its financial stability.
His report also recommended that the board “may consider forgiveness of debt” on the condition that NCMA use the money for future capital renewal needs.
Initially, council was not going to explore debt forgiveness, but Councilor Rohan O’Neill-Stevens proposed an amendment to both explore the option and note that any debt forgiveness option “should not explore greater board control over the NCMA nor a reduction in current funding levels.”
O’Neill-Stevens said the NCMA “aligns closely with the council’s delivery of the Local Government Act…and their investment and upgrading of their building has been an important part of the civic investment” .
“It’s something we should be doing, it’s not something we need NCMA to ask us questions about, it’s something that benefits us, and continuing to build that trust and that support of that organization benefits all Nelsonians.”
Councilman Matt Lawrey said the power imbalance between the council and the NCMA puts the center in a difficult spot.
“It would be a very difficult thing for a person in [Donaldson’s] position to come to us at this point and say ‘we want our debt cancelled’. There’s all kinds of ways that would be perceived in the community…I think he’s doing the responsible thing for the organization, but we have to do the responsible thing for the whole city.
Councilor Pete Rainey said it was a matter of fair funding for sporting and cultural civic assets.
“I think the board and management [of NCMA] live in fear of reduced funding. The vast majority of the rest of our recreational assets don’t have that fear, because the council simply pays for things because the council owns them. It’s a significant burden for a decade, after a decade, after a decade, for NCMA’s Boards of Directors.
Councilor Brian McGurk spoke out against O’Neill-Stevens’ amendment, saying he admired the sentiment but would be best addressed as part of the MOU discussion process . Councilor Trudie Brand also objected, saying it could undermine the relationship building that had already taken place between the two organisations.
The O’Neill-Stevens amendments were taken separately and passed with three votes against. The substantive decision was also adopted.