Walton Arts Center Board Suggests Governance Changes

FAYETTEVILLE -- After more than a year of discussion, attorneys for the city, University of Arkansas and Walton Family Foundation have come up with a proposal for how the Walton Arts Center should be governed in the years ahead.

Members of the Walton Arts Center Council and Walton Arts Center Foundation signed off on the proposal Monday.

Web Watch

Proposed Governance Changes

Go to the online version of this story at nwaonline.com to read documents related to the Walton Arts Center’s proposed governance changes.

At A Glance

Walton Arts Center Council

The Walton Arts Center Council currently has 20 members — five city of Fayetteville appointees, five University of Arkansas appointees and 10 members selected by the council at large.

Under proposed changes, the city’s and university’s 10 appointees would remain. Nine members would be selected by the Walton Family Foundation, a philanthropic organization run by the descendants of Sam and Helen Walton.

The Walton Arts Center’s current makeup is:

City Appointees

• Steve Clark — President and CEO, Fayetteville Chamber of Commerce

• Hershey Garner — Radiation Oncologist, Highlands Oncology Group

• Tina Hodne — Realtor, Coldwell Banker Harris McHaney & Faucette

• Barbara Taylor — Former Associate Vice Chancellor for Human Relations, University of Arkansas

• Bill Waite — Owner, Dickson Street Liquor

University Appointees

• Carolyn Henderson Allen — Dean, University Libraries, University of Arkansas

• David Gay — Economics Professor, University of Arkansas

• Mike Johnson — Associate Vice Chancellor, Facilities Management, University of Arkansas

• Judy Schwab — Associate Vice Chancellor, Administration, University of Arkansas

• Matt Trantham — Senior Associate Athletic Director for Internal Operations, University of Arkansas

At-large Appointees

• John Agwunobi — Senior Vice President and President of Health and Wellness, Walmart

• Bob Alexander — Retired art and antique business owner

• David Banks — Retired CEO, Beverly Enterprises

• Jeffrey Gearhart — Executive Vice President, General Counsel and Corporate Secretary, Walmart

• Greg Lee — Retired Chief Administrative Officer and President, Tyson Foods International

• Sara Lilygren — Senior Vice President, External Relations, Tyson Foods

• Arist Mastorides — Vice President, Global Walmart Team, Kimberly-Clark

• Jack Sinclair — Executive Vice President of Grocery Merchandise, Walmart

• Scott Tassani — Vice President/Team Leader, General Mills U.S. Walmart business

• Jerry Walton — Retired Executive Vice President of Finance and Administration and Chief Financial Officer, J.B. Hunt

Source: Walton Arts Center

The changes must be approved by the City Council and University of Arkansas Board of Trustees before taking effect.

The arts center's main governing body, the Walton Arts Center Council, was created in 1986 "to construct, operate, manage and maintain the Walton Arts Center as agent for the University of Arkansas and the city of Fayetteville," according to its articles of incorporation. The Walton Arts Center Foundation is responsible for managing the arts center's multimillion-dollar endowment and distributing money as needed.

In the mid-1980s, Fayetteville voters approved a $3.5 million sales-tax-backed bond issue for the arts center. Another $1 million came from the city's general fund. The university matched city taxpayers' $4.5 million investment using a donation from Sam and Helen Walton. Two-thirds of the $9 million paid for the land purchase and initial construction of the building at 495 W. Dickson St. The other $3 million established the center's endowment.

For years, the articles of incorporation, council bylaws and a lease agreement with the city and university only pertained to the Dickson Street property.

However, with the Walmart Arkansas Music Pavilion set to open next month in Rogers and with another performance center planned in Bentonville, arts center officials say new governance documents are needed to reflect a more regional makeup of the organization.

"The Walton Arts Center staff and the Walton Family Foundation were concerned that the city or university might someday try ... to hinder its planned expansion out of Fayetteville," City Attorney Kit Williams explained in a May 15 memo.

"Mayor (Lioneld) Jordan was willing to accommodate (their) desires ... if we received enforceable assurances and commitments to preserve the Dickson Street Walton Arts Center in a manner similar to its use of the last few years," Williams added. "In other words, we believed we should receive legal commitments that once a new and larger facility was constructed in Bentonville, the Walton Arts Center on Dickson Street would not be relegated to second-class status."

With the changes recommended Monday, the arts center's governing body would no longer be an "agent" of the city and university, with strict fiduciary duties to those two entities. The council would no longer just manage the arts center's Fayetteville campus, either. It would oversee construction and operation of any and all new facilities, including the Walmart AMP and a new Bentonville theater.

The proposed governance changes also include language meant to preserve programming at the Fayetteville arts center "in a manner that is generally commensurate with the quality and quantity of performances and activities occurring prior to 2013."

"It puts the onus on us as the board and as the management of the Walton Arts Center to ensure that we have the same type of quality programming in the future that we have had in the past," Greg Lee, chairman of the Walton Arts Center Council, said at Monday's meeting. "We have a great deal of comfort that's going to be the case. This is our cornerstone facility."

An earlier proposal would have kept the arts center council in charge of the Fayetteville facility, but would have created a separate board to oversee the entire arts center organization. Under that proposal, members of the new board would have been appointed by the current council.

City officials bristled at the idea.

"Mayor Jordan could not agree to this initial proposal, which would have removed most of the city's power and authority," Williams, the city attorney, said in his memo.

With the new proposal, the city will retain five appointees on the Walton Arts Center Council. The university will keep its five representatives, too. Instead of having 10 additional representatives appointed by the arts center council at large, however, nine representatives would be selected by the Walton Family Foundation.

According to a May 2013 "term sheet," the arts center's largest donor, "who contributes more than 20 percent of (the Walton Arts Center's) total annual support," wanted to resolve governance issues before it would consider giving more money for construction projects.

Arts center CEO Peter Lane said Monday that after the university's board and City Council approves the changes, the arts center will be able "to move (its) capital campaign into hyper drive."

Additionally, members of the arts center council agreed to pay the city $1.5 million, the same amount used to create the center's endowment. The money can be put toward a municipal parking deck, which, according to recent estimates, was nearly $2 million over-budget.

According to Tim Vogt, vice president of finance, the transaction would still leave the arts center's operational endowment -- one of five endowment funds -- with approximately $2.8 million.

A final provision would extend the arts center's lease with the city and university for another 25 years. The center's current lease is set to expire in March 2017. The city and university would continue to own the arts center property.

All but two members of the arts center council -- Steve Clark and Bill Waite -- voted in favor of the governance changes Monday.

Waite said following the meeting he didn't think the changes were necessary to ensure expansion of the arts center in Fayetteville.

"I'm not sure these governance changes right now are in the best interest of the city," Waite said. "I would like to see us further along in the process of raising money to renovate and expand this facility."

The university's Board of Trustees is set to review the proposed governance changes during a meeting Thursday in Hope.

No date has been set for City Council review, but Jordan said aldermen are likely to consider the proposal next month.

NW News on 05/20/2014

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