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Helmut Schmidt, Published May 22 2012

Fargo School Board to pay $2.1 million Bluestem debt

FARGO – The Fargo School Board has moved to take over full control of the lease rights to the Bluestem Center for the Arts in south Moorhead.

The board voted 8-1 Tuesday to send a letter to the head of the Bluestem board of directors Dave Olig, and the bondholders, saying the district will pay off $2.1 million in bonds to take over lease rights.

The School District must wait 60 days after sending the letter to complete the transaction. In the meantime, the district must deposit $2,109,426 with the bondholder, Wells Fargo Brokerage Services in Minneapolis.

Paying off the bonds, according to the lease agreement with the Bluestem group, would mean all of the Bluestem board’s lease rights with the City of Moorhead to the amphitheater, main building and land would be transferred to Fargo Public Schools, the district’s attorney said.

Several school board members said the move would save taxpayers interest on the bonds – originally issued by Clay County to help build the arts center – and force a resolution to the tangle of which group controls the facility.

The facility is home to the district’s Trollwood Performing Arts School.

“We’re not in the beginning stages,” Dinah Goldenberg said. “This puts a real concrete” time limit on talks.

“We keep going round and round in circles,” she said.

Board President Jim Johnson said that during the past five months, there has been “a conundrum between the staffs” of Bluestem and TPAS over how the facility is run.

While the district has paid all of the bills since late December, Bluestem staff have not been turning over rental receipts for the facility to help defray the costs of running it, he said.

In addition to the $2.1 million in bonds Bluestem can’t pay, the group is also saying it can’t fundraise to pay back a $2.77 million loan issued by the district to cover the final stages of building the $15 million arts center.

Rick Steen said “the $2.7 million will still be an issue,” but that the letter is “a starting point to move forward.”

The district had to pay the December $286,000 bond payment for the arts center, and all of the operating costs since, when the Bluestem board failed to raise enough money from donors. Another bond payment is due in June.

Board member Linda Boyd said the district should consider hiring an entertainment facility manager or firm to handle the day-to-day operations of the Bluestem Center going forward.

“Clearly, if we’re in charge of that facility, we’re responsible for running it in a way that’s fair to taxpayers,” Boyd said.

John Strand was the lone “no” vote, and he urged the board to consider talks with the city of Moorhead to see if that body wouldn’t help take on some of the bond or loan debt.

Before the school board voted on the lease rights letter, Olig described his group’s latest offer of a memorandum of understanding to the board.

Among the provisions of the Bluestem group’s proposal:

E The group wants the school district to reclassify the $2.77 million loan to the Bluestem as pre-paid rent for future use of the center by Trollwood Performing Arts School.

No loan repayment would be made.

Olig told the board that TPAS has never paid rent for use of the facility.

The letter also argues that the nearly $5 million in debt that the district is being asked to shoulder would make it a partner in the center, nearly matching the

$5.5 million in bonds issued by the state of Minnesota and the roughly $6 million raised by FutureBuilders in Support of Trollwood (which later became Bluestem).

However, Johnson later told the board that the district has paid rent to use the facility.

• The Bluestem group wants to use the facility for fundraising. To that end, it wants a minimum of eight exclusive dates to use the amphitheater – two each in May, June, July and August.

• The school district would pay all costs of running, maintaining and promoting the facility to area arts organizations.

• The Bluestem group also says “there is a vital necessity” to have a site administrator in place whose goal is maximum use of the facility.

• The Bluestem group wants to oversee all rental operations at the center and reimburse the school district for costs from the rental proceeds. They also want to pay no facility use fees.

• Bluestem would also continue fundraising for “one or more of the following”: TPAS programs; capital improvements to the Bluestem Center; program expansion and community events at the center; their own corporate needs.

The school district would provide office services, meeting space and other support.

• The Bluestem group wants all proceeds from what are called “Visibility Package Mainstage Musical Sponsorships.”

Olig said paying the district back the $2.77 million loan is “not impossible, but extremely improbable. … I can’t find anyone who will tell me this is a good idea.”

Olig said his group believes the use of the facility must be broadened to make it viable.

He complained that the facility has already lost out on concerts by Chicago, The Beach Boys and Bob Dylan, as well as an unspecified concert that was to be held this fall.

Major donors have said “not another nickel until you get this straightened out,” Olig said.

Strand praised Olig.

“I commend you for sticking to your guns,” Strand said. “We (the school board) need to show some give. … I wish you luck.”

Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583