Outside law firm brought into arts center discussions

The Arts Center of North Texas' days have appeared to be numbered since the project failed to meet its six-month funding goals earlier this year. The lack of private funding and corporate sponsorships has forced the project into limbo while the three owner cities decide how to proceed.

On Tuesday night, the city that began the organization's rapid decline -- Frisco -- may have put another nail in coffin for the center in its current incarnation. The ACNT board of directors canceled its March and April board meetings, and members have said they are waiting for direction from the cities before taking any additional action.

In May 2011, Frisco voters revoked their city's authority to sell $16.4 million in bonds for the project, effectively removing one-third of the funding needed to build the performance hall and arts park. On Tuesday, the Frisco City Council approved an agreement to hire the law firm of Bourland, Wall & Wenzel to help answer any questions the owner cities have concerning the dissolution of the project and division of the assets.

Frisco is the third city to approve the contract with the law firm. Allen City Manager Peter Vargas did not need the approval of his council and has already signed off on the agreement, while Plano City Attorney Diane Wetherbee did the same for her city on April 26. The costs will be split evenly among the three cities.

Frisco Mayor Maher Maso said bringing in an outside firm was necessary in order to get all three cities on the same page.

"There are a lot of what-ifs, and since the city attorneys don't typically do that kind of work they wanted to get the right people to give the councils of all three cities the options available to them," Maso said. "It is not about asking the law firm to do a specific thing, it is more about asking them what can be done -- what is allowed and what is not allowed. We need all three cities to understand what their options are as we continue to look at this."

At stake is potentially more than $22 million in assets. The Arts Center of North Texas has $2.7 million in cash, which has been collected from individual and corporate donors over the previous eight years. One of the biggest questions surrounding any potential dissolution is what must be done with the 124 acres of land, previously estimated to be worth more than $20 million.

The law firm has been tasked with answering at least seven questions, including whether the cash and land donations can be returned to the donors, whether the land be returned to the cities and then sold to a third party, and whether there are there restrictions that will be placed on the assets if they are returned to the cities.

The land was donated to the then Arts of Collin County in September 2005 by Janice Brittingham, not by Briar Ridge Investments as has been commonly stated by the arts organization. While Brittingham was affiliated with Briar Ridge, the company had deeded a small portion of the land to her more than a decade prior. That, combined with the land she already owned, was then donated to the ACC.

The 2005 deed makes no reference to the so-called "reverter clause," which would require the land to be returned to the donor if the project fell through. The reverter clause is contained in a separate document, entitled "gift agreement and bargain sale," which was signed by Briar Ridge Investments Vice President Charles Nies and then-ACC President Robbie Robinson in July 2005. A document provided by the city of Frisco, which contains the seven questions the law firm has been tasked to answer, raises doubts as to the validity of the gift agreement, stating, "Briar Ridge Investments did not own the property at the time of the execution of the gift agreement or when the property was conveyed to the ACNT." If the agreement is not valid, then the land would likely remain property of the three cities and be disposed of as they choose.

There could also be restrictions placed on dividing up the $2.7 million in cash between the three cities. According to an email from ACNT Interim Executive Director Mary Vail-Grube to Wetherbee, some of the donations came with restrictions at the time they were made. Vail-Grube's email was made public by the city of Frisco prior to Tuesday's meeting.

A $100,000 donation by Kenneth Sellers was earmarked for a grand piano, with a written agreement stating that if it was not used for that purpose, it would be turned over to the Plano Symphony, which is also a 501(c)(3). More than $90,000 from Robbie Robinson was only to be used for construction, and if not, for the cities to fund arts and culture, the email said.

A similar situation could also exist with a portion of the $1 million donation from AT&T. The AT&T Foundation, a 501(c)(3) and the third largest donor to the project, has $750,000 of its total donation earmarked.

"They have stated, in writing, although not in any agreement upfront, that the funds are to be used only for construction expenses related to the [performing arts center]," Vail-Grube wrote.

Any cash that is given back to the owner cities would likely have restrictions on it, although the law firm will help determine whether the restrictions are binding. The art center's revised Articles of Incorporation, approved in July 2006, state that upon disposition of the assets by the cities, the assets shall be used exclusively for religious, charitable, educational, scientific, public or cultural purposes that qualify under Section 501(c)(3) of the Internal Revenue Code.

While he said he can't predict what the future holds, Maso said he hopes the owner cities can soon move on and put the project behind them.

"I don't have a crystal ball, but it is in Frisco's best interest to resolve this as quickly as possible and to do so by working with our partner cities," Maso said. "I would hope and don't expect this to be in the news a year from now and don't expect it to be a source of conflict between the cities. I think our council wants this issue closed. While we may not all agree on exactly how to do it, we want to work with the other cities and do what is in the best interest of our residents."

Plano Mayor Phil Dyer agreed with Maso, saying that all three cities have spent a tremendous amount of time talking about the project over the past few years. He said at the moment the project appears to be going nowhere, and it is time for the cities to move on and tackle other issues.

An email to Allen City Manager Peter Vargas seeking comment was not returned.

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