STORY BY MICHELLE GENZ, (Week of September 1, 2011)
A minor change in a city lease over a road to the Vero Beach Museum of Art has triggered a summer storm of emotion that could erode the 25-year relationship with the Vero Beach Art Club that helped found the institution.
In March, the Art Club, a co-tenant with the museum on the lease of the land the Museum sits on in Riverside Park, reacted with outrage to being left out of a simple lease amendment process with City Hall.
That reaction threatened to stall construction on a $14 million museum renovation. As talks turned to removing the art club from the lease, museum Executive Director and CEO Lucinda Gedeon came back to the Art Club and suggested that based on its past use of space, it pay $40,000 annually in fees like those charged other non-profits.
That amount would quickly have bankrupted the organization, members say. The backlash has proved so vehement that some Art Club members have threatened to withdraw from the annual fund-raiser to which they contribute artwork for the museum’s benefit.
The road to a future relationship began to clear this week as the museum backed down dramatically, eventually reducing its proposal to charge the art club from $40,000 in fees to $2,600, according to museum attorney Ralph Evans. In the past, the art club has not paid fees beyond its office rental.
The Art Club’s position is that it is “absolutely not” going to pay to use space beyond its museum office.
“We don’t want to pay anything more than we’ve ever paid before,” says Sue Dinenno, board member and past president of the art club. “That’s the position of (President) Rita (Ziegler) and that’s what we‘ll take to mediation.”
The stance of the 500-member Art Club – which among other things stages the Under the Oaks Fine Arts and Crafts Festival each winter -- reflects the intense emotions the conflict triggered, and continues to raise a question crucial to the vibrancy of the Vero art scene: Can the two longtime allies for the arts find their way again?
A quarter of a century ago, the Art Club agreed to share its $1-per-year Riverside Park land lease with Vero’s fledgling art museum. It gave $47,000 of its own building fund toward the $2 million needed to construct the first incarnation of what would become the museum.
Within the grand structure, by decree of a 1985 agreement, the Art Club kept a tiny office, for which it pays $7,700 a year, and uses museum space for meetings and events at no charge when the rooms were available.
With negotiations suspended while art club President Ziegler is on vacation, members have been left to believe the Art Club could be forced into bankruptcy if the museum insisted on space use charges. By early this week, though, those numbers were slashed by the museum, which faces tough economic times as it undergoes renovation. Whether the numbers officially have been conveyed to the art club was not clear. Ziegler is scheduled to return Friday.
“I’ve been there through three directors,” says Evans, the museum’s attorney. “They were great, but Cindy Gedeon has taken that museum to the next level. It’s not fair the way she’s being treated here. For $2,600? What’s the big deal here? It’s much ado about nothing.”
At the same time, the museum continues to want the club off the land lease.
After 11th-hour hesitations by the art club nearly throttled progress on construction at the museum, Evans maintains it is precisely the art club’s entitlement to be involved in a permitting process that in no way concerns club business that drives the museum to want sole tenancy of the land.
Since 1985, the museum has kept in place a separate binding agreement with the art club that guarantees the organization a presence in the building. That agreement, though, contains a clause that lets the museum director set the art club’s space usage fees.
Evans says the museum was willing to replace that agreement with a sublease that would protect the art club from random rate hikes if the club agreed to come off the lease. He says the club did not respond to his offer before the new lease had to be signed and the rate increase debate began.
“We just ran out of time. We were in the 11th hour of the permitting process and construction contracts. The negotiations on the lease just went under the bus.”
The museum tried unsuccessfully – art club members say surreptitiously – to remove the art club from the land lease this spring. It proposed a sublease, charging an estimated $40,000 in annual fees for use of facilities. Negotiations subsequently reduced the proposal to $6,450, but the art club said it was still far more than it can afford.
“We are the poor sister,” says Chris Pierce, a retired top banking executive and CPA with a position on the art club’s negotiating committee. With the number at $6,400, Pierce claimed, “A couple of years of this stuff, and we would go bankrupt.”
Apparently, the $2,600 figure may still meet with resistance, given the ill will the controversy has generated.
Most of the Art Club’s funding comes from fees paid by exhibitors at the club’s Under the Oaks art fair. Last year, attendance was estimated at 90,000, with many also visiting the museum across the street.
All along, museum CEO Gedeon has emphatically denied any intention of pricing the museum’s use out of the range of the artists’ group. She calls the elegant museum a “hugely, hugely expensive facility to operate,” and says charging the art club for its use is “a reality check.”
A 1985 agreement, signed after the 1981 lease, guaranteed museum space for art club use. But it also included a clause that said rates could be set at the discretion of the museum director. But no charges were ever made for use of space, and the agreement was never modified until now.
The lease, on the other hand, has been modified five times. Three of those changes did not include the art club’s signature, according to Evans, the museum’s pro bono attorney. That led him to believe the art club might technically no longer be a party to the lease.
When the art club protested its omission to the city, Evans began negotiating with the art club to abandon its hold on the land. “I told the club, ‘I don’t understand why you would want to be a lessee. Do you want to accept some of the responsibility of a property the public comes on and off of?’
“I told them ‘We can give you everything in the 1985 agreement if you want it,’ ” says Evans. “But we don’t want any hiccups when we go to the city.”
Those “hiccups” – when the art club called the city demanding to be included on the lease – nearly caused a month-long delay in the start-up of construction, Evans says.
“That’s when the numbers hit the table,” says Evans, referring to Gedeon’s $40,000 user fee estimate. “In the meantime, I was preparing some alternative to them being on the lease, basically the right to occupy the place for the term of the lease with the city. But we never got back together. And then it got out of hand.”
“It’s all still up for negotiation,” Gedeon said in a plaintive tone, when told that emotions at the Art Club are at a fever pitch. “The art club does absolutely wonderful things for the museum. We are not trying to kick them out. We are not trying to bankrupt them.”
Nevertheless, the backlash has proved so vehement that some art club members are threatening to withdraw from an annual fund-raiser staged for the museum’s benefit. Others are looking at various sites to relocate, believing reconciliation to be hopeless. One negotiator for the art club says she has offered up a starting figure of $1 million to get them off the lease.
Evans says he heard a buy-out figure $3 million, based on a $6 million valuation for the lease. He laughs aloud at the notion.
In fact, in an annual report assigning value to the lease, the museum raised eyebrows because it made no mention of the art club, despite the organization being a co-tenant.
But CPA Kip Jacoby of Morgan, Jacoby, Thurn, Boyle and Associates, who audited the museum’s annual report, says the land lease value is fully assigned to the entity that uses the land, in this case, the museum, since it built and owns the building.
That value, while estimated at close to $6 million over the life of the lease, is discounted by standard accounting procedures for non-profits to around $1.7 million, Jacoby says.
In a letter Gedeon sent to club members explaining why the museum wanted the club off the lease, she wrote that the lease “should reflect the reality of the Museum’s sole responsibility for the land and its buildings, and provide the Museum with the authority to make the decisions necessary for its growth and care.”
The lease matter appeared to be resolved in the club’s favor July 17, when the museum agreed to sign an amended lease with the city with the Art Club as co-tenant.
“It wasn’t a substantial change,” Gedeon says. “There was no reason to notify the Art Club about that.”
What remains to be negotiated is a 1985 space use agreement that Gedeon says must be amended ”as a practical matter.“
The proposed fee for the art club office stands at $7,931, and would rise annually by 3 percent. That is down from a proposed $8,800 with a 5 percent increase. The club currently pays $7,700.
Pierce, a past art club treasurer, says the organization has $200,000 in its coffers, with half tied up in earmarked gifts, leaving $100,000 for expenses. “This was meant to be an alliance,” she says. “The art club was there with them from the beginning. But we have over the years been squished out, squished out, squished out.”
Indeed, the 75-year-old art club once had modest plans to build its own exhibition space, and had raised some $47,000. But in the late 1970s, backers for a much grander museum convinced art club members to share its $1-a-year lease with the museum-to-be.
The art club lease was for 7.2 acres of city land – then not much more than a dump for tree stumps. When it agreed to co-tenancy, it donated its building fund to the new cause, with a written agreement that its new offices and exhibition space would be in the museum.
While the art club exists to support local artists, the majority of its members have belonged to both the art club and the museum. The art club gives scholarships to the museum’s summer camp, and pays for art magazine subscriptions in the museum’s library. Its volunteers are docents and monitor the “open studios” for the public. They also volunteer on museum committees.
Some are museum faculty at its art school. It was the Art Club that initially purchased easels and demonstration mirrors for the art school.
A club office is part of the museum’s master plan designed three years ago, says Gedeon.
With a doctorate in art history from UCLA, Gedeon has been masterful in both fund raising and art acquisition since she arrived in 2004. Her staff and a generous board have raised the museum’s stature to one of statewide, if not national, recognition. Her erudite presence and gracious bearing have held up through nearly nightly museum-related events from November to May.
The furor with the art club has clearly drained her energies at a time when she would normally be able to restore herself for the winter season. “I’m tired,” she said when reached Sunday for another in a long string of queries by the press.
Talk of the controversy filled the air at Friday’s art stroll downtown, with some art club members expressing the desire to relocate there although many feel strongly about remaining close to the museum.
The historic diesel power plant downtown is being talked about as a new home, as well as a former lounge on 14th Avenue.
Already the art club has hosted workshops with well-known artists in the Women’s Club downtown. Those workshops used to be held at the museum. Now, the museum stages its own, at a far higher cost to attendees, according to Dinenno.
Dinenno alerted art club members to the proposed lease change when she saw a rerun of a March 1 televised City Council meeting.
“There’s (Director of Planning and Development) Tim McGarry talking about the revision to the lease because of their expansion program. And I went, ‘What?’ That’s exactly how we found out about it.”
Dinenno, a retired Space Shuttle project engineer with Rockwell International, immediately sent off an e-mail to then-interim City Manager Monte Falls. “I said, ‘Hey, what is this all about? If there’s a change to that lease, then the Art Club needs to be there to sign it,’ “she says.
In fact, it wasn’t the first time the lease had been changed without the club’s knowledge.
Of the five prior changes to the lease since 1981, three did not mention the art club. The first came just a year after the museum opened in 1986, when a license change involving responsibility for a driveway made no mention of the museum’s land lease co-tenant.
“It said the Center for the Arts (the museum’s former name) has full responsibility for the museum,” Evans says. “Those are your marching orders right there. The art club has bowed out, and they’ve agreed to bow out. Nobody forced them.”
The art club, however, did not sign that change.
On its third omission from the lease, in 2001, then-president Jeanne Peterson demanded a letter be added to the lease, making mention of the art club’s co-tenant status.
The fourth amendment allowed for a food concession in the museum and did not mention the art club. Evans agrees, as a co-tenant, it absolutely should have.
Assistant City Attorney Peggy Lyon noted the omissions when she set about merging all the addenda into one new lease last spring after the club complained to the city.
“When I realized that the 1985 agreement did not act legally to take them off the City of Vero Beach lease, that unless they were included and everybody agreed to it, the city couldn’t sign it,” she says. “I said, there’s no way they shouldn’t be on the lease. They’re co-tenants.”
The art club has also questioned why it was not assigned a portion of the value of the land lease listed in the museum’s annual report.
Dinenno recalls the board meeting in 2008 when the issue of claiming the lease as an asset first arose. “I said to myself, ‘Oh, yeah? And what’s its worth to the art club?’” She did not speak out, she says.
Pierce, however, was not so reticent. A CPA, she met with Gedeon earlier this year with art club Vice President Mary Ellen Koser in an effort to resolve the space use dispute. Gedeon mentioned wanting them off the lease by saying there was “no point in being on it anymore,” as Pierce recalls the conversation.
“I said, ‘I used to work with major developers involved in ground leases. I can understand a non-participating partner can be a pain. However, if you want to get your partner off the ground lease, it’s worth something.’ And she said, ‘How much?’ And I said, ‘I would at least start with $1 million.’ You don’t give up something of great value for nothing.”