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updated: 9/11/2013 11:25 PM

ESO, Elgin reach agreement on debt

Symphony, city come to agreement on unpaid rent

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The city of Elgin and the Elgin Symphony Orchestra finally have agreed on a debt repayment plan for the symphony after more than a year of wrangling, both in public and in private.

The Elgin City Council approved in a 6-3 vote Wednesday a plan that requires ESO to repay to the city $233,920 plus interest over the course of 15 years. Councilmen Terry Gavin, John Prigge and Toby Shaw voted against the plan, which city officials called a "loan agreement."

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The symphony stopped paying rent in 2011, when Elgin determined funds from the city's share of Grand Victoria Casino revenues would be given only to human services nonprofits through a grant process. Until then, ESO had been getting an average of $125,000 yearly.

The agreement includes a 50 percent discount on rental fees for ESO's use of the Hemmens Cultural Center retroactive to August 2012. That's when city and ESO staff members first began formal discussions about the debt. Council members have discussed the issue repeatedly since January.

ESO interim CEO David Bearden said the agreement was "fair for the city and fair for ESO" and would allow both parties to finally move forward.

The deal is bad for Elgin's taxpayers, Prigge said.

"It's not our job to bail out businesses, especially those who have received hundreds and hundreds and hundreds of thousands of your dollars," he said.

He also called Bearden "Elgin's Donald Trump."

"This guy has done a magnificent job strategizing this entire plan," Prigge said, equating ESO's refusal to pay rent -- which started under Bearden's predecessor -- to a "child throwing a temper tantrum on a grocery store floor when they can't get their Cocoa Puffs."

Bearden said Prigge's comments were just "politicking."

Fifteen years to repay the debt is too long, Gavin said. He also said Bearden should have asked ESO's wealthiest patrons for help in repaying the debt.

Councilwoman Carol Rauschenberger pointed out ESO is not a business but a nonprofit entity with a "relatively small budget" of just over $2 million per year.

"I'm sure they have been fund-raising as they always do every single day of the year," she said.

Many arts and cultural organizations have suffered financially in recent years, Councilwoman Anna Moeller said. "ESO provides value to the city of Elgin and it's worth saving," she said.

After looking at ESO's finances, the city staff decided 15 years was the minimum the symphony would need to be able to repay the debt, City Manager Sean Stegall said. In the future, the Hemmens will be rented only to those who are in good standing with the city, he said.

Without the retroactive discount, the debt would have amounted to about $294,700. City officials previously said ESO's debt was $303,000, but the figure was adjusted to reflect a past $6,500 cultural arts commission grant and $6,500 in billing adjustments.

Shaw said he supported the retroactive discount but also believes that 15 years is too long.

"If we have another not-for-profit agency have financial issues, would they go to the city to do some likewise agreement?" he asked.

Mayor David Kaptain said the city loaned more than $300,000 to the nonprofit PADS of Elgin homeless shelter in 2007. The city got its money back within a year, with interest, he said.

Under the agreement, ESO will make monthly payments through Oct. 31, 2028, at an initial annual interest rate of 2.83 percent, the city's current borrowing rate. The interest rate will be adjusted based on future borrowing costs for the city.

ESO also committed to using the Hemmens with regular frequency, and relinquished all rights to trade names, trademarks and logos, which Councilman Rich Dunne said was a significant plus.

The council also decided that from now on, all nonprofit organizations and Elgin-based renters of the Hemmens will get rental discounts. The council might consider retroactive discounts for other nonprofits at a future meeting.

Moeller's husband's brother is married to a musician who performs for ESO, but that doesn't pose a conflict of interest, Elgin Corporation Counsel William Cogley said.

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