MEMORANDUM

SUBJECT: Chapel Hill Public Arts Commission Status

DATE: June 30, 2004

The Chapel Hill Public Arts Commission (CHPAC) has been working actively in cooperation with the Manager’s Office to address questions surrounding the legal status of the CHPAC.

BACKGROUND AND DISCUSSION

The Chapel Hill Public Arts Commission (CHPAC) was established as part of the Government of the Town of Chapel Hill, North Carolina on February 10, 1992, by vote of Chapel Hill Town Council, with the mission to enhance and enliven the community through art in public places. The Commission has always operated under the assumption that it is a part of the Town Government as stated in its bylaws.

Questions surrounding the CHPAC legal status were initially raised by the Finance Department in July 2003. The problem originally surfaced when the Finance Department realized that the CHPAC maintains its own bank account using the Town’s federal tax identification number; the CHPAC was not aware of any accounting violations. The issue was further complicated because any entity that receives funds in excess of $500,000 must be considered a component unit of the Town and needs to be included in the Town’s financial statements. Due to the upcoming Percent for Art projects in FY 2004-2005, the CHPAC budget will exceed $500,000.

The CHPAC has worked for the past 11 months to resolve questions surrounding its status in relation to the Town by researching a full spectrum of options.

At the January 15, 2004 Town Council retreat, the Council requested that the Manager’s Office work with the CHPAC to suggest and recommend possible models for a new structure for the CHPAC that would adhere to federal and State legal code. On May 3 and June 10, 2004, representatives of the CHPAC met with the Manager’s Office to discuss a possible model that would establish the CHPAC as a Special Commission of the Town with 501(c)3 status. The CHPAC discussed this proposal at their monthly meetings on May 19 and June 16, 2004.

The CHPAC voted to work with the Manager’s Office to pursue a model of becoming a Special Commission of the Town. At the May 19, 2004 Commission meeting, the CHPAC assembled a preliminary list of considerations regarding the future articles of incorporation, the bylaws, and the terms of the contract with the Town. The list was discussed with the Manager’s Office on June 10, 2004. The preliminary items are as follows:

Establish the Commission as a component unit of government, as required by law.

Have the majority of the Board membership be appointed by the Chapel Hill Town Council.

Have the majority of the Commission’s funding come as a line item from the base budget of the Town of Chapel Hill.

Have a multi-year renewable contract (e.g. a five-year contract renewable every year).

Continue to direct and manage the Town of Chapel Hill’s Percent for Art projects and Percent for Art Fund allocations as well as other ongoing programs.

Maintain open communication with Town staff and Town Council, through liaisons and other decision-making mechanisms.

Maintain office space in Chapel Hill Town Hall.

RECOMMENDATION

Chapel Hill Public Arts Commission’s Recommendation: At the CHPAC meeting on June 16, 2004, Commission members voted to recommend that the Town Council allow the CHPAC and Manager’s Office to pursue the terms that would establish CHPAC as a Special Commission of the Town with 501(c)3 status.