AGENDA #12.1(b)
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Proposed Incorporation of the Chapel Hill Public Arts Commission and Establishment as a Component Unit of the Town of Chapel Hill
DATE: June 30, 2004
This memorandum responds to the request by the Chapel Hill Public Arts Commission (CHPAC) to be incorporated into the infrastructure of Town government.
Adoption of the attached resolution would authorize the Manager to work with the Commission to complete the work required to form a nonprofit corporation.
BACKGROUND
On January 15, 2004 at the Town Council Planning Session, the Council was presented information regarding a proposed status change for the Chapel Hill Public Arts Commission. One of the changes recommended by the Commission was that the Council consider folding the Commission into the Town infrastructure by creating an Office of Public and Community Arts.
The Town Council asked the staff work with the Commission and bring the Council options for consideration of this request.
History of the Chapel Hill Public Arts Commission
The Town Council adopted resolutions in 1992 and 1998 establishing an endowment for public art and the Chapel Hill Public Arts Commission (please see Attachments 1 and 2). The Commission was established based on the following principles:
In March 2002, the Town Council enacted an ordinance establishing a Percent for Public Art Program to support art in public places. The Council adopted a resolution defining the policies of the Program which include the consideration, at least annually, of a Public Art Plan recommended by the Public Arts Commission.
Localities Authorization to Support Art Programs
Municipalities in North Carolina are authorized by general law to establish and support arts programs and facilities and can do so themselves or by contract with any other governmental agency or with any public or nonprofit association, corporation or organization: See North Carolina General Statute Section 160A-488:
§ 160A-488. Museums and arts programs
(a) Any city or county is authorized to establish and support museums, art galleries, or arts centers, so long as the facility is open to the public.
(b) Any city or county is authorized to establish and support arts programs and facilities. As used in this section, "arts" refers to the performing arts, visual arts, and literary arts and includes dance, drama, music, painting, drawing, sculpture, printmaking, crafts, photography, film, video, architecture, design and literature, when part of a performing, visual or literary arts program.
(c) Any city or county may contract with any other governmental agency, or with any public or nonprofit private association, corporation or organization to establish and support museums, art galleries, arts centers, arts facilities, and arts programs and may appropriate funds to any such governmental agency, or to any such public or nonprofit private association, corporation or organization for the purpose of establishing and supporting such museums, galleries, centers, facilities and programs.
(d) As used in this section, "support" includes, but is not limited to: acquisition, construction, and renovation of buildings, including acquisition of land and other property therefor; purchase of paintings and other works of art; acquisition, lease, or purchase of materials and equipment; compensation of personnel; and all operating and maintenance expenses of the program or facility.
(e) In the event funds appropriated for the purposes of this section are turned over to any agency or organization other than the city or county for expenditure, no such expenditure shall be made until the city or county has approved it, and all such expenditures shall be accounted for by the agency or organization at the end of the fiscal year for which they were appropriated.
As noted in paragraph (e), expenditures of public funds by independent agencies for arts purposes must be approved by the municipality and accounted for each fiscal year.
DISCUSSION
Current Organizational Structure of the Chapel Hill Public Arts Commission
The Chapel Hill Public Arts Commission and staff currently operate independent of Town government. Members of the Commission are appointed by the Town Council. The Commission’s staff is hired by and receives direction from the Commission. The Commission determines the work plan, programs and general activities of the staff. The Commission has established a separate bank account for financial transactions. The Town Council has allowed the staff of the Commission to use a small space in an area near the offices of the Council.
Proposed New Organization Structure of the Chapel Hill Public Arts Commission
We conducted research and then met on two occasions with representatives of the Chapel Hill Public Arts Commission to identify program and operational needs of the Commission.
The need for the Commission to follow and comply with governmental accounting practices was also discussed. The Commission’s current status as an independent entity appointed by the Council and receiving Town funds make it subject to the accounting rules of the Governmental Accounting Standards Board (GASB) that would make it a “component unit” of the Town. In accord with GASB rules, financial statements of a component unit must be shown and included in the Town’s financial statements.
The Governmental Accounting Standards Board identifies a component unit based on the following:
We believe that assisting the Chapel Hill Public Arts Commission to become a component unit as an independent nonprofit corporation would be beneficial to the Commission in pursuing its public art mission. As a component unit, the Commission would benefit from its association with the Town yet remain independent for many purposes.
Chapel Hill Public Arts Commission June 30 Memo to Council
The Chapel Hill Public Arts Commission has provided the Town Council with a memorandum for tonight’s meeting which discusses their status. The memorandum provides a preliminary list of items for consideration listed below. We provide comments to the items for clarification.
1. CHPAC: Establish the Commission as a component unit of government, as required by law.
Comment: We agree that the Public Arts Commission should be a component unit of government, although we do not believe that such a status is required by law.
2. CHPAC: Have the majority of the Board membership be appointed by the Chapel Hill Town Council.
Comment: We believe that the Town Council should appoint all members of the Public Arts Commission Board, because almost all funding will be provided by the Town.
3. CHPAC: Have the majority of the Commission’s funding come as a line item from the base budget of the Town of Chapel Hill.
Comment: We believe that the Commission’s budget should become a part of the Town’s base budget with a separate allocation in a lump-sum line item appropriation.
4. CHPAC: Have a multi-year renewable contract (e.g. a five-year contract renewable every year).
Comment: A multi-year contract would be subject to annual funding decisions by the Council. In addition, one Council cannot legally bind a subsequent Council. We believe it would be reasonable for the Council to commit to a 2-3 year work plan with a concomitant budget plan for the Commission.
5. CHPAC: 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.
Comment: The Commission was established by the Council and the Council has authorized the Commission to perform such work.
6. CHPAC: Maintain open communication with Town staff and Town Council, through liaisons and other decision-making mechanisms.
Comment: We agree.
7. CHPAC: Maintain office space in Chapel Hill Town Hall.
Comment: We believe that this is a Council decision. We believe that in the future limited space needs might warrant reconsideration of the location of the Commission.
RECOMMENDATIONS
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.
Manager’s Recommendation: That the Town Council adopt the attached resolution authorizing the establishment of the Chapel Hill Public Arts Commission as a nonprofit corporation, and authorizing the Town Manager to negotiate a performance agreement for the Council’s consideration that would allow the Commission to meet its obligations, carry out a work program approved by the Council, and comply both with Internal Revenue Service requirements and governmental accounting standards.
ATTACHMENTS
2. Minutes excerpt from 1992 Town Council Meeting, Item 7, Endowment for Public Art (p. 8).
3. The Chapel Hill Public Arts Commission By-Laws (p. 10).
A RESOLUTION AUTHORIZING THE ESTABLISHMENT OF THE CHAPEL HILL PUBLIC ARTS COMMISSION AS A NONPROFIT CORPORATION, AND AUTHORIZING THE TOWN MANAGER TO NEGOTIATE A PERFORMANCE AGREEMENT FOR THE COUNCIL’S CONSIDERATION THAT WOULD ALLOW THE COMMISSION TO MEET ITS OBLIGATIONS, CARRY OUT A WORK PROGRAM APPROVED BY THE COUNCIL, AND COMPLY BOTH WITH INTERNAL REVENUE SERVICE REQUIREMENTS AND GOVERNMENTAL ACCOUNTING STANDARDS (2004-06-30/R-21.1)
WHEREAS, the Town Council adopted resolutions in 1992 and 1998 establishing an endowment for public art and the Chapel Hill Public Arts Commission; and
WHEREAS, the Town Council appoints members of the Public Arts Commission; and
WHEREAS, the Town Council established a program for supporting art in public places;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council directs the Town Manager and the Chapel Hill Public Arts Commission to take the required steps to establish the Commission as a non-profit corporation, to negotiate a performance agreement for the Council’s consideration that would allow the Commission to meet its obligations, carry out a work program approved by the Council, and comply both with Internal Revenue Service requirements and governmental accounting standards.
This the 30th day of June, 2004.