- Associated Press - Saturday, September 13, 2014

CARMEL, Ind. (AP) - Since early 2013, the nonprofit that runs the Center for the Performing Arts has shifted an escalating share of its operating costs onto Carmel taxpayers, expensing new furniture, electronics and meals to the city in the name of “maintenance obligations.”

Outraged City Council members took notice in August, when they discovered that two months earlier, the center had purchased 40 new box seats for the Palladium concert hall at a cost of $24,200 and billed them to the city.

But by that point, questionable costs had been mounting for months with the tacit approval of city officials, according to an Indianapolis Star review of city invoices.

In the past several months, tax dollars paid for Palladium employee name tags, business cards and $9,504 in stage equipment; computer software, a 50-pack of blank DVDs and more than $60,000 worth of audio/video equipment.

Those and other expenses charged to the city over the last 18 months have reached $1.2 million at the concert hall, the anchor of the $180 million Center for Performing Arts.

The bulk of these costs went toward building maintenance and utilities, expenses that the city in 2013 agreed to cover. But The Star review (http://indy.st/1uIBqBy ) of Palladium invoices found that the center also charged the city more than $121,000 in miscellaneous expenses that should not have been allowed, according to multiple city leaders’ interpretation of the 2013 accord.

The Star’s review came after Councilwoman Luci Snyder questioned the furniture purchases during a budget workshop last month, setting the stage for what could be a flash point in budget negotiations this fall. The costs came on top of an annual grant, worth $2.5 million this year, that the city provides to assist the center’s operations. There are no restrictions on how the money is spent.

“We just can’t allow this,” said Snyder, who chairs the city’s finance committee. “We (already) give them $2.5 million.”

City Council President Eric Seidensticker said the city’s administration needs to pay more attention to the bills it’s submitting on behalf of the Center for Performing Arts to ensure Carmel is not taken advantage of.

“The expectation is the directors of the departments are well enough qualified to not pay for things that they know not to be proper, fair and reasonable expenses,” he said.

City spokeswoman Nancy Heck said council members should have raised these concerns during the claims process, which requires their approval.

Meanwhile, Tania Castroverde Moskalenko, the center’s executive director, defended the costs, saying they are covered by the agreement, which is broadly worded. And, she noted, the city signed off on each of them.

But justifiable or not, the costs are escalating, to the alarm of some council members who had sought to scale back the nonprofit’s dependence on taxpayer subsidies. Through the first seven months of 2014, the city spent more on the maintenance agreement than in all of 2013, according to city records.

Snyder said she has no plans to cut the center’s budget, noting that the council has long supported subsidies to help the performing arts center succeed. But, she said, if a questionable cost pops up on a future claims docket, she’ll make a motion to block the city from paying it.

Center for Performing Arts officials dismissed the idea that the costs were questionable, saying that no one at the city had raised any issues regarding their spending.

Castroverde Moskalenko pointed to the 2013 maintenance agreement, which said the city would take over the nonprofit’s obligations to pay for “maintenance, repair, replacement and other property management services,” as described in the original operating agreement. The agreement also says the center remains responsible for “repair and maintenance (but not replacement)” of production equipment at the Palladium.

Center officials said the audio/video equipment, which included 14 LED monitors, a $5,599 high-definition video camera, cabling and installation fees, were purchased to replace defective digital signage in the Palladium’s lobby that hadn’t worked properly since they moved in.

“You as a guest come to the hall, and before you enter into the concert, the signage converts to actually what’s taking place on stage so that you don’t bust in during a performance,” said John Hughey, the center’s spokesman.

As for the furniture, Castroverde Moskalenko said the box seats were purchased to increase the Palladium’s revenue potential, which would help reduce the city’s future subsidies to the center.

“For us it would make no sense to have 1,600 seats that are owned by the city and then have 40 chairs that were owned by the nonprofit,” Castroverde Moskalenko said.

She said a set of shelves ($709.90) were bought to store Palladium documents that date back to when the building was still under construction.

So why wouldn’t the nonprofit pay for them, since they run the Palladium now?

“Well, it was our understanding that because these were documents that belong in the Palladium that it would be appropriate to be reimbursed by the city for them,” Castroverde Moskalenko said.

“Clearly,” she added, “(city officials) believe so as well because they did.”

But it’s not clear that all city officials think they should have paid. While city spokeswoman Heck wrote in an email that the “expenses were handled appropriately,” city administrator Steve Engelking gave a starkly different interpretation of the city’s responsibilities under the agreement.

“At the time that this (process) was first agreed upon, there was no mention of paying for replacement (of) equipment, new furnishing, carpeting, etc.,” Engelking wrote in an email to the City Council. “I perhaps should not have paid for the chairs, but that is already done.”

This lines up with language in the original operating agreement, which labeled the costs that the city eventually would take over as “maintenance obligations” with no mention of new equipment or furnishings.

His email goes on to contradict the account of center officials who said they were not told of the concerns.

“I have informed the Center for the Performing Arts Operations VP Nick Tigue that the budget does not envision these type items being paid for, and future invoices presented will be scrutinized to ensure that does not recur,” he wrote.

Councilman Rick Sharp, who said the agreement was the council’s idea in the first place, agreed that the costs were out of line.

“I thought it was utilities and building maintenance, which is the line item that they took the money from,” Sharp said. “Furniture obviously doesn’t belong in utilities.” Neither, he said, does the audio/video equipment.

Snyder, meanwhile, promised to go over the Palladium’s expenses “with a fine-toothed comb” from now on, whether Engelking approves them or not.

“I just assumed - I’m sorry I guess I’m gullible, but I assumed people were telling me the truth,” Snyder said. “It appears not.”

___

Information from: The Indianapolis Star, http://www.indystar.com

LOAD COMMENTS ()

 

Click to Read More

Click to Hide