With just two weeks before an auction to sell the Schermerhorn Symphony Center, no settlement has been reached between the Nashville Symphony Association and financial institutions seeking to foreclose on the concert hall.
And Metro seems unwilling to step into the dispute.
At a meeting with City Paper and Nashville Scene editors to discuss transit issues, Mayor Karl Dean was asked directly if any public money was available to help resolve the situation.
“Right now, I mean, where we are is you’d have two private parties, symphony and banks, which are more than one private party, but going through their discussions. And I think our role right now is to encourage the parties,” Dean said. “I think that an agreement is possible. It’s certainly in the interest of the city and certainly all the residents of the city. That’s what we’re encouraging, is for people to come together.”
He refused to characterize the state of negotiations, but again offered for Metro to mediate.
“Well, you know, as a lawyer, I know that there are trained mediators who would be in a much more neutral position than somebody who has an interest in this matter, obviously,” he said. “So I wouldn’t be the right person. But there are plenty mediators who make a living out of doing that, and they’re very, very good at what they do, having done mediation before. And that’s one avenue they could take to move this along.
“The way the scenario is structured right now, you are approaching a deadline of sorts. There was notice given for foreclosure, and the clock is ticking. So if it was safer riding, it certainly moved into a whole different frame now.”
The two sides arrived here after Bank of America, holding more than $80 million in construction debt related to the building of the downtown center, served notice of foreclosure after months of negotiations. In March, the symphony association declined to renew a letter of credit when the banks refused to renegotiate better terms for the debt. The symphony claims that post-2010 losses related to the flood put the nonprofit on shaky financial ground made it unable to repay the construction debt. Sources close to the banks have characterized symphony spending as “too much.”
The symphony’s financial disclosures filed with the IRS and available to the public show an organization with stable-to-declining donation and performance income, increasing interest expenses and a shrinking investment portfolio. The information comes from IRS Form 990, filed each year by tax-exempt
The documents show that the symphony took in contributions and grants totaling about $14.5 million in the 2008 fiscal year, $12 million in 2009, $14.7 million in 2010 and about $10.6 million in 2011.
Ticket sales declined from about $7.8 million in fiscal 2008 to $6 million in 2010, then rebounded to $7.3 million in 2011. The symphony also lost about $7.7 million on investments in 2008. It earned $6.8 million from investments in the following fiscal year and slightly less, $6.4 million, in 2010. In the 2011 fiscal year, the symphony earned about $1.4 million in investment income, but sold $16.9 million in securities for a gain of $814,000.
Meanwhile, the symphony’s total expenses exceeded revenues by $19.1 million in 2008 and $20.9 million in 2009. Things improved in fiscal 2010, when revenues exceeded expenses by about $12.7 million. But the symphony lost $11.7 million in fiscal 2011.
Over those years interest payments have risen steadily even as the symphony has paid down principal on the bond issue that funded the Schermerhorn.
The balance sheets note a decline in investments in publicly traded securities from 2008-2011. At the beginning of fiscal 2008, the symphony had $91.6 million in “publicly traded securities” as an asset on the balance sheet, but that number dropped to about $39 million at the end of fiscal 2011. (Amounts of up to $4.8 million in “other” investments are also listed on the form, apart from publicly traded securities.) The symphony disclosed in its Form 990 that in fiscal 2008 it took a $10.8 million loss when it netted $10.6 million on the sale of securities it purchased for $21.4 million. In fiscal 2009, it sold $8.3 million in securities for a gain of just over $5 million, and sold $27.8 million in securities for a $5.1 million gain in fiscal 2010.
Schedule F of the Form 990 for fiscal 2011 discloses $4.75 million in expenditures and investments in the region of “Central America and the Caribbean.” The investments (called “alternative investments” elsewhere in the document) were established Sept. 30, 2008. In the previous fiscal year, the symphony disclosed that $3.98 million had been invested in the same region to conduct program services. The filing for 2009 disclosed an investment in the same region but doesn’t disclose a dollar figure.
The Form 990 filed for fiscal 2010 shows the symphony paying about $3.3 million in total to three financial institutions — Regions Bank, SunTrust Bank and Pinnacle Financial Partners — to cover letter of credit fees, swap agreements and trustee fees. The amount isn’t broken down to show how much went to each type of financial service. The arrangements were noted as business transactions involving interested persons, meaning that an officer, board member or key employee of the company also had a relationship with the nonprofit that filed the form — the symphony in this case. The filing for 2011 discloses that the Symphony spent $982,379 for insurance and $177,174 for letter of credit fees in interested-person transactions with Pinnacle businesses.
Symphony publicist Laurie Davis said in an email on Wednesday, “Our negotiations with our lenders is still ongoing.” Symphony officials were unavailable to answer questions about the tax disclosures.