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updated: 6/27/2013 12:20 PM

Elgin looks at financial plan for ESO

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The city of Elgin and the Elgin Symphony Orchestra are discussing a financial plan that includes the symphony repaying a $303,000 debt to the city and Elgin resuming yearly subsidies to the symphony.

City Manager Sean Stegall presented the plan at a city council strategic planning meeting Wednesday afternoon. The council made no decisions and is expected to take up the subject again sometime in July.

ESO stopped paying rent for use of the Hemmens Cultural Center in summer 2011, when the city announced that, starting in 2012, nonprofits would not get subsidies and would have to start applying for grants from the city.

The proposed plan would reduce the back rent amount to about $243,700, after a discount on rental fees retroactive to September 2012, Stegall said. That's when Stegall began financial discussions with ESO interim CEO David Bearden.

Other entities and nonprofits that use the Hemmens would also be eligible for the discount, Stegall said. Councilwoman Tish Powell said she liked that idea.

ESO would have 15 years to repay its debt, and the interest rate would be adjusted annually based on the city's borrowing rates. At the current 3 percent interest rate, the annual repayment would be $20,410, Stegall said.

Also, the ESO would commit to use the Hemmens for 15 more years, bringing about $60,000 in revenue to the city annually, he said.

The plan also proposes resuming Elgin's financial contribution to the ESO, Stegall said.

Historically, Elgin's average contribution to the ESO was $125,000 per year, always using riverboat fund money, Stegall said. However, that amount would be about $75,000 if adjusted for current riverboat revenues, he said.

Past city councils have traditionally treated the ESO like a city department, providing funding, facilities and technical support, Stegall said. The current city council must decide what policy to set moving forward, he said.

Councilman Toby Shaw, however, questioned why the symphony should be treated differently from other nonprofits.

The survival of the ESO is critical to the survival of the Hemmens Cultural Center, Stegall said.

"There isn't a universe of dependable renters that are going to rent it on Tuesdays in January, but the symphony does," he said.

Councilwoman Carol Rauschenberger said she wants to support the ESO.

"What is the Hemmens without our symphony, and what is Elgin without our symphony?" she said.

After running deficits of up to $700,000 in the last couple of years, the ESO balanced its current budget and projects a balanced budget for the fiscal year beginning July 1, ESO officials said.

Councilman Terry Gavin pointed out that even with the city's help, there's no guarantee the ESO will survive long term.

"We're gambling here," Gavin said, adding he represents "a large number of people who probably don't understand the value of the symphony."

If the city council decides not to support the ESO financially, that might affect decisions made by potential symphony donors, Stegall said. "I think it makes their situation go from incredibly difficult from very likely grave," he said.

Councilman John Prigge also disagreed with the proposed plan. "We haven't been paid a dime. If you want to make arrangements on a past due balance, you get something up front," Prigge said.

Under the proposal, the ESO also would be required to make changes to its accounting system and be subject to monthly reviews by Elgin CFO Colleen Lavery.

ESO board Chairman Bert Crossland said the symphony welcomes that. "We're very open for them to review and help us with our finances," he said.

Mayor David Kaptain said he plans to propose the city council first consider the debt repayment plan and examine possible subsidies at a later time.

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