By Jeff Keeling
Unless at least three city commissioners were on board with a multimillion dollar investment, Johnson City Mayor Ralph Van Brocklin didn’t want to waste time Monday night talking details of East Tennessee State University’s Fine and Performing Arts Center (FPAC).
Van Brocklin didn’t need to worry. Three other commissioners expressed support for what will likely be a 20-year commitment of around $530,000 a year to help East Tennessee State University’s planned (FPAC) increase its “Great Hall” to 1,300 seats from the 750 the state will fund – though several details were still in play Monday.
“I think in the long run it will be the right thing to do for this community over time,” Commissioner Jenny Brock said of the collaboration, which has been discussed for more than two years. “It will add a level of sophistication in the corridor from the hospital to downtown that really differentiates us from other communities.”
The FPAC, which will be erected next to the Millennium Centre, could begin construction next year. The state of Tennessee is funding 75 percent of the $41.7 million cost (not counting the extra seats). The agreement under consideration also moves the two parties closer to ETSU taking over operations of the Millennium Centre and its associated parking garage within three years of the FPAC’s opening. Were that to happen, paying the debt on its investment would get much easier for the city.
Monday’s discussions took place at an agenda review meeting, with commissioners expressing support for a memorandum of understanding (MOU) with ETSU that would set parameters for city usage of the facility and a host of other details. The issue was likely to come to a vote at Tuesday night’s commission meeting, after News & Neighbor went to press. Vice Mayor Clayton Stout didn’t weigh in as commissioners discussed last-minute details, but has told News & Neighbor he doesn’t support that level of commitment after the city already has agreed to infrastructure improvements related to the FPAC totaling more than $1 million.
“If we can agree on some terms, I’d like us to make the offer,” Commissioner David Tomita said. Brock and commissioner Jeff Banyas agreed, and the four commissioners then discussed several details they wanted ironed out in a draft MOU from ETSU.
Some of the major details commissioners wanted addressed from the draft MOU included:
An insistence that ETSU hire a professional performing arts management firm or manager not currently associated with other programming at ETSU. “I strongly feel it needs to be managed by a professional performing arts center manager and not current departmental staff at ETSU,” Brock said. “We learned that from Maryville.” (City commissioners have studied a similar arrangement between the city of Maryville and Maryville College.)
An increase from five to “10 or 12” in the number of “high quality” touring events not affiliated with university arts program that ETSU will bring to the FPAC annually in coordination with the city.
A plan to physically connect, through a covered walkway or some other method, the Millennium Centre and the new FPAC. The FPAC is set to be constructed within feet of the Centre, which could allow for concert-goers to enjoy alcoholic beverages prior to shows – something that won’t be allowed in the state-owned FPAC. “That becomes a complex rather than two independent buildings,” Tomita said. “I think to get the highest and best use out of that, you’ve got to have free flow between those two buildings.”
Banyas added that in his mind it would be, “a huge mistake” if the buildings weren’t connected.
Funding details, and the Millennium Centre piece
As has long been discussed, the 1 percent of the 7 percent hotel-motel tax that remains unallocated would go toward debt service on a 20-year debt taken out by the city. That currently brings in about $250,000 per year.
The city has enough debt service payments “rolling off” within a few years to cover the remaining $280,000 annually, which would be the initial plan. With payments not due until after the FPAC is built, the city also would be able to bank the hotel-motel revenues for a few years and possibly make an initial lump sum payment.
City Manager Pete Peterson said the bond market should allow for interest rates between 2.7 and 2.9 percent – the $530,000 figure is based on 2.9 percent, and would represent $2.55 million in interest if the city let the debt go through its entire 20 years.
Everything could change, and for the better, should ETSU wind up operating the Millennium Centre, as first reported in News & Neighbor Oct. 21. The city subsidizes those operations, which are managed by Sodexo, at an average rate of roughly $650,000 annually. It’s likely ETSU would run a lesser deficit due to its already having a food service operation, and the university would likely benefit from converting some of the space to classrooms.
Language in the MOU regarding the Centre says: “ETSU and the City of Johnson City agree that it is the intent to transfer operation of the Millennium Centre and the associated parking garage within three years of the opening of the Fine and Performing Arts Center. Both parties intend to create an agreement and structure that will maximize the use of the facility for academic and University functions and the enhancement and number of opportunities for community events.”
Brock said it was, “important how the Millennium Centre plays into it and how it will enable us to service the debt as we invest in the Fine and Performing Arts Center.” Taking the average annual subsidy off of the city’s books would more than pay the FPAC debt.
