Elgin poised to forgive much of symphony's debt
The Elgin Symphony Orchestra agreed in 2013 to repay the city a debt of $233,920, plus interest, after more than a year of discussions.
Now, the Elgin City Council is poised to forgive more than two-thirds of the debt, as symphony officials requested, saying it would increase their chances of getting grants.
The debt stemmed from the symphony not paying the city rent for use of the Hemmens Cultural Center from part of 2011 to September 2013. The "loan agreement" required repayment over 15 years, and the symphony has made regular monthly payments, city officials said.
Council members unanimously voted at Wednesday's committee of the whole meeting to forgive $161,841 out of the $183,241 remaining debt, or all but $21,400 in labor costs. A final vote is expected in two weeks.
The agreement was made when the city needed money in the wake of the Great Recession, Councilwoman Carol Rauschenberger said.
The symphony brings Elgin "innumerable benefits from a point of view of their image, their brand - not only in the area but as well in the state and nationally," she said.
"It's a no-brainer," Councilman Corey Dixon agreed.
The debt forgiveness won't have an impact on the city's financial planning because the money is not budgeted as revenue, though it adds to the city's cash flow, City Manager Rick Kozal said.
Symphony CEO David Bearden said the debt makes up most of the symphony's long-term liabilities, a major factor in grant approval.
About 35 percent of the symphony's income comes from ticket sales and about 65 percent from sponsorships, grants and private donors, he said. "We are trying to expand that more and more," he said.
Councilmen Terry Gavin and Toby Shaw voted against the plan in 2013 but supported debt forgiveness Wednesday.
"You have done phenomenal things in the last four years," Gavin said to Bearden. "It's like the phoenix rising from the ashes."
The symphony, whose yearly budget is about $2.2 million, ended the 2016-17 fiscal year with a "small surplus" and is projecting the same for the current fiscal year, Bearden said. The last time it was in the red was in 2013-14, with an approximate $32,000 deficit, he said.
Councilwoman Tish Powell was the only member who expressed doubt, saying the money is "nothing to sneeze at." Mayor David Kaptain suggested the symphony could open its rehearsals to the public as part of the new deal.
Symphony officials temporarily stopped paying rent after Elgin decided the symphony no longer would be getting money from the city's share of Grand Victoria Casino funds. That extra income had amounted to an average $125,000 yearly.
The symphony's debt originally was about $294,700, but the 2013 agreement included a 50 percent discount on rental fees retroactive to August 2012.