Sept. 21--GREENSBORO -- The unusual public-private arrangement behind efforts to build a $65 million performing arts center puts the city on squishy, though mutually accepted, ground with its partner, the Community Foundation of Greater Greensboro.
The foundation will raise $35 million for the project, the city will raise the rest. But who has the final say over multimillion-dollar details?
Who decides what the arts center will look like?
Who chooses the builder?
Which contracts will be bid publicly and which won't?
Was the foundation empowered to name the center after Steven Tanger this month when it announced a $7.5 million gift from the factory outlet CEO?
What attorneys and banks will be involved in hashing out project details?
And why did the foundation hire a real estate broker from its own board to negotiate a land deal that the city financed?
David Hagan, who is U.S. Sen. Kay Hagan's brother-in-law, will get nearly $586,000 -- about 5 percent -- as a commission on the $11.34 million purchase price.
The naming got after-the-fact support this week when City Council members voted 6-3 to back the foundation's move.
The city has four real estate brokers on staff, but Mayor Robbie Perkins and Councilman Zack Matheny said it made sense to use David Hagan because of the complex nature of the transaction and his contacts downtown.
At least some council members, including Councilwoman Nancy Vaughan, who has been deeply involved in the project, didn't know David Hagan had been hired until the last month or so.
Even larger contracts will be up for grabs as the project nears reality. The city attorney's office plans to address these questions with a formal document that defines Greensboro's so-far informal relationship with the foundation and the private donors it represents, City Attorney Mujeeb Shah-Khan said Friday.
He said there's no timetable to finish that document. It's not clear whether City Manager Denise Turner Roth can sign off on it or whether the council must approve it. The latter seems likely, though.
"We want to make sure the council, of course, will be happy," Shah-Khan said.
Projects financed with city money typically come with stringent bidding rules and require public votes.
But there's an exemption for downtown development work. If at least half of the money comes from private sources, it's exempt from state bidding regulations, according to Frayda Bluestein, a UNC School of Government professor who wrote an oft-quoted guide to state contracting laws.
That would apply to the performing arts center project, a fact not all of the council members knew Friday.
Mayor Pro Tem Yvonne Johnson -- a key "yes" vote on the performing arts center project -- said she'd have "real difficulty" awarding construction contracts without bids.
She didn't withdraw her support, but she called for an agreement that lays out city guidelines for public bidding, as well as participation of minority- and female-owned businesses.
Shah-Khan said the exemption would give the project flexibility and confirmed that he looked at the relevant state statute recently. He said it's "something that could come into play" but noted the council consistently has called for minority participation.
He said the agreement the city will reach with the foundation is likely to spell out these things.
"I think it's fair to say that it would be the council's preference to maximize that participation, whatever vehicle is used," Shah-Khan said.
The city's more-immediate focus is on completing the land deals the council approved. It bought most of the downtown block bounded by Elm Street, Summit Avenue and Lindsay Street. Purchases are set to close by September's end.
The city attorney's office will handle most of the legal work, but there "will be some costs that will be borne by the city" for outside attorney work, Shah-Khan said.
Those costs -- and any loan fees and ancillary costs -- won't take the whole land deal higher than $11.5 million, said Rick Lusk, the city's finance director. That's how much the City Council borrowed to finance the purchases.
Matheny said David Hagan's involvement saved the city more on the land than he charged in brokerage fees, but that's difficult to prove. The city paid a little more than 18 percent above tax value for the land, but much of the difference came from the last parcel purchased.
"They knew they had the heart of the watermelon," David Hagan said. "We couldn't do the project without them."
The land loan is with Bank of America. There wasn't a formal bid process, Shah-Khan said, but several banks were approached for quotes.
The city went with a variable-rate loan at 0.35 percent interest, plus the 30-day average Libor, a benchmark used worldwide to set interest rates. That loan runs two years. Then it will be paid off by a long-term loan, or package of loans, that also will be used to finance construction.
The project, including land, is slated to cost about $65 million up front, with the city covering $30 million and private donors putting in $35 million through the Community Foundation.
Once the interest is calculated, the city's portion will reach $51 million over 25 years. The city plans to cover those costs through ticket surcharges, hotel motel tax revenue and parking fees.
The foundation plans to develop a park between the center and the downtown library, but that will be a separate project, funded with a bequest from the late Carolyn Weill LeBauer.
On the block that will be home to the performing arts center, only the corner of Elm and Lindsay streets will remain in private hands. It's home to Blvd. Interiors Marketplace and will remain so, according to Anne Taylor-House, who owns the property with her sister.
"We are so excited about the performing arts center," Taylor-House said. "We absolutely are thrilled with it."
?Contact Travis Fain at (336) 373-4476, and follow @travisfain on Twitter.