ETSU, city discuss arts center funding as day of reckoning looms


By Jeff Keeling

Go big or go home. That phrase seemed to sum up Johnson City commissioners’ discussions Monday evening with a decision looming about whether to invest money – and, if so, how much – in expanding seating capacity at East Tennessee State University’s planned fine and performing arts center (FPAC) in Millennium Park.

ETSU President Dr. Brian Noland and Chief of Staff Jeremy Ross attended the commissioners’ agenda review meeting, ready to answer questions, two weeks after commissioners seemed surprised to learn that any FPAC investment over time would include interest costs. Noland and Ross brought a proposed memorandum of understanding (MOU) between ETSU and the city that would provide, among other collaborative measures, 20 days per year for the city to use the main hall – “for the city to determine the scope, the purpose and whatever else you want moving forward,” Noland said.

By meeting’s end, commissioners were discussing potential revenue sources to debt service $8 million over 20 years and bring the main hall from the state-funded 750 seats to 1,250. Getting there with a property tax increase did not appear to be on the table.

Commissioners Jenny Brock and Jeff Banyas listen as City Manager Pete Peterson discusses potential funding for the arts center.

Commissioners Jenny Brock and Jeff Banyas listen as City Manager Pete Peterson discusses potential funding for the arts center.

In addition to its own numerous shows, recitals, concerts and the like, ETSU would book an average of 10 outside performances per year, Noland said, answering one of commissioners’ lingering “what’s in it for the city” questions.

ETSU would enter into the MOU only if the city invests in enlarging the main hall. A committee with members representing both entities would oversee the details of shared usage. The FPAC as currently planned will cost about $41 million, with three quarters of that coming from the state and the rest from local pledges, which Noland said Monday are $2.3 million from their goal. (He also mentioned that prospective funders likely to get ETSU over the hump are waiting to announce until after the city makes its decision.)

Before taking questions, Noland briefed commissioners on the building and on ETSU’s plans for booking shows, among other details. He repeated his contention that ETSU and the city have embarked on collaborative projects that involve difficult compromise but yield positive results for both sides. In the case of the FPAC, ETSU has proceeded in getting permission to build it off campus, and bought the land to do so, with no assurances the city would invest in an increased size.

“I think we (ETSU and the city) have both gone into that (partnership) with eyes wide open knowing that by doing things together it’s quite often the more difficult path, but it’s the path that, if we stay consistent to the values – and that’s the values of what’s best for the people of this region, not what’s best for ETSU or what’s best for any one constituency – we’ll get farther in the long term.”

It became fairly clear during discussions that a $5 million (plus interest) investment to get the FPAC’s main performance hall from its state-funded 750 seats to 1,000 seats seemed like a half-measure to commissioners.

“The biggest thing for me is how to get to the 1,250, because I’m just very skeptical of the 1,000 seats,” Vice Mayor Clayton Stout said to Noland. “I think we’re really short sighted on the whole thing if you don’t go to 1,250. I don’t have the answer right here how you get to that.”

By late in the conversation, after Noland and Ross departed, commissioners were discussing potential revenue streams for an $8 million investment (plus interest) that would get the hall to an estimated 1,250 seats.

“I know that this is a large proposition to consider,” Noland had said earlier. “But we’re committed to the partnership regardless of how this direction unfolds.” He cited ETSU’s purchase of property for the FPAC off campus as evidence of that.

“We’re going to build the building on Lot 1 (next to the Millennium Centre) irrespective of the outcome of this conversation because I think it’s consistent with the conversations and the spirit of partnership that undergirds everything we’re doing.”

That 1,250-seat size, commissioners agreed, would give the community – with ETSU responsible for booking major shows – more chances to get the kinds of acts people in the region want to see, and a better chance for ETSU to break even on those shows.

ETSU officials have told the city the longest they could borrow for extra seats, with the city paying the debt service, is 20 years. At that term, and at 3.5 percent interest, annual debt service would be $556,800.

Commissioners have essentially agreed they can put 1 percent of the recently increased hotel motel tax (about $250,000 a year currently) to the FPAC, and another $50,000 annually that’s about to be freed up after a 10-year commitment to help fund ETSU’s College of Pharmacy is completed. That leaves roughly $260,000 a year to make up.

Commissioners talked of dedicating part of a solid increase in sales tax revenues in the most recent year to the effort on an ongoing basis – assuming revenues won’t decrease. City Manager Pete Peterson also said various debt service payments will roll off in 2019, 2020 and 2021, and those amounts could be transferred to this effort.

As those discussions wound down, commissioners – who are aiming toward voting on the issue at their Sept. 17 meeting – sounded warm to the idea of the partnership, which Noland had called, “a joint business venture.” (The MOU will protect the city’s privileges at the FPAC regardless of ETSU administration changes in the future. “We ought to find something that we agree to that provides the operating framework and ties the hands of those who come after us,” Noland said of the MOU’s importance.)

Jeff Banyas, Johnson City’s longest-serving commissioner, has had numerous questions about the wisdom of such an investment. Monday, he labeled the FPAC discussions, now more than a year-and-a-half old, as “a big picture thing,” adding, “there’s not going to be a second chance.”

Banyas said he had been thinking a lot about the issue, and about investments the city has made during his tenure. “We didn’t always choose the least expensive option,” he said, mentioning specifically downtown flood control efforts.

“The least expensive option wouldn’t have done anything to help downtown redevelop like it has,” Banyas said. “I don’t want to make the mistake here of not doing something because we’re scared of a big number.”


About Author

Comments are closed.