The Brown County Council and entities involved in the administration of the Brown County Music Center are working through some confusion about where any profits from the music center will go.
Last month, the county council unanimously approved a $200,000 line of credit for the Brown County Music Center. The management group requested it on a suggestion from the State Bank of Lizton, to cover operational expenses or a mortgage payment if revenue is low.
After a vote was taken, resident Tim Clark asked council members if they were aware of the administration agreement that gives 75 percent of excess profits from the 2,000-seat music venue to the Brown County Community Foundation and 25 percent to the county.
Council Vice President Dave Critser said he wasn’t.
“It wasn’t what was discussed. It may be what they wrote up, but it wasn’t what they discussed,” Critser said.
The administration agreement is among the Maple Leaf Management Group, the Brown County Convention and Visitors Commission, the Maple Leaf Building Corporation and the county. It outlines the management of the center, collection of revenue, operations and maintenance, and how money will be transferred to make payments. It also outlines how excess revenue will be distributed.
County council member Darren Byrd said that profit sharing was talked about in the beginning of project planning, when financing was being figured out. Byrd also serves on the Maple Leaf Management Group, which oversees the venue.
Under the administration agreement, revenue from the music center will first be used to pay the mortgage on the building. If there is not enough revenue to do that, the county’s 5-percent innkeepers tax will be tapped to make up the difference. Innkeepers tax is charged to visitors staying in Brown County hotels, motels, inns and tourist rentals.
If there is excess revenue beyond paying the bills, that money would go into a fund to be distributed in a specific way. First, it would go into a capital improvement account until the balance equals $1 million. That money would be used to do work on the music center when needed. If the balance falls below $1 million, the management group would be required to deposit excess revenue into the account until it is brought back up.
Once that balance is up to $1 million, any other excess money would go to the Brown County Convention and Visitors Commission to reimburse any innkeepers tax money that was spent to cover mortgage payments. That money could also be used to pay for “unforeseen contingencies” in the operation, or repair or maintenance of the music center with written consent from the bank, according to the agreement.
If all of those other commitments are being met and there is still excess revenue, the agreement states that 75 percent of the remaining revenue per calendar year will go to the Brown County Community Foundation. If the foundation ever ceases to exist, the money will go to a “similar non-profit corporation with a similar mission in the county,” the agreement states.
Changes to that agreement are in the process of being approved, including lowering the $1 million balance requirement in the capital improvement account to $500,000, and putting the CVC before the capital improvement fund in the lineup of which entity receives profits first.
At the Feb. 12 Maple Leaf Management Group meeting, the group voted to approve two fund agreements — one for a discretionary pass-through fund and the other for a field of interest endowment fund.
The decision was made to split the 75 percent profit which would go to the community foundation further, with 25 percent of it going to the endowment and 75 percent going to the pass-through fund. The reasoning was that money could get back out to the community faster through the pass-through account, said foundation CEO Maddison Miller, describing it as “a charitable checking account.”
How that “charitable checking account” would be used would be up to the foundation’s grants committee. It is responsible for picking organizations to receive grants in a process which involves applications and interviews.
“The foundation is more prepared to deal with doling out grants, so that was the rationale behind putting some of the money into the community foundation,” county commissioner Diana Biddle said at the February council meeting.
Critser said he was concerned about the possibility of giving the foundation access to “a million dollars” sometime in the future to distribute, since it is made up of people who are not elected.
“They answer to not one taxpayer,” he said.
Critser attended the Feb. 26 meeting of the management group. He asked if the group could earmark profits for public safety that only the county government can spend to help cover any additional police presence needed at the venue, like for traffic control, or to cover EMS runs to the building.
At that meeting, management Co-President Barry Herring reminded Critser the group had made a pledge to make payments to the county in lieu of property taxes, known as PILOT. “If you were going to tax us, what would you tax us?” Herring asked. “We would make that would-be payment.”
Biddle said that PILOT money could be earmarked for public safety.
Herring added that in the state legislature right now is a proposal for a $1 entertainment tax that would be placed on each ticket sold, and that money would go directly to the county for specific uses. “Just on the low end, where we estimated ticket sales to be, that’s $60,000 a year,” he said.
Schultz added that even using the entertainment tax money to do county road maintenance could be possible, since visitors will be using those roads to get to their cabins or other rentals.
The profit-sharing arrangement with the community foundation was modeled on Harrison County, which chose to put a majority of funds from a casino there into their community foundation, Schultz said. That community also gives money to the sheriff’s department and emergency management, he said.
Schultz is also on the Brown County Community Foundation’s grant committee.
Byrd said that putting money in the foundation also diversifies the profits.
The county will own the $12 million music venue.
Critser said he was not at the meeting to criticize, but to understand how profits would be shared within the county. “I have nothing against this whatsoever,” he said about the venue.
At the March 18 county council meeting, council members said they were not taking action to change the administration agreement.
Commissioner Jerry Pittman stood up to reiterate that the music center itself and the innkeepers tax are the only collateral for the project.
“No matter what happens, taxpayers are not going to be on the hook for anything. If the thing goes belly-up, which I don’t think it’s going to, the bank owns it and they sell it. It goes back on the tax rolls,” he said.
“We know who is responsible for it all. It will be a county property once it’s paid off, but until then it belongs to the bank, and the Maple Leaf Building Corporation are the actual owners right now.”
Resident Sherrie Mitchell said that the venue’s debt still belongs to the county even though it’s backed by innkeepers tax.
“We took on the debt, our credit score went up. That does fall back on the county,” she said.
“It was done in a way that was favorable,” Byrd responded.
