[Affiliate Review Committee on March 27, 2025.]
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>>> WELCOME, MEMBERS OF THE PUBLIC COMMITTEE TO THE CARMEL AFFILIATE REVIEW COMMITTEE FOR MARCH 27TH, 2025. SCHEDULED FROM 5:00 P.M. TO 7:00 P.M., HOPEFULLY MAKE IT OUT OF HERE BY 9:00 P.M. LOOKING FORWARD TO ROBUST DISCUSSION TONIGHT .
EXCITED ABOUT GETTING THE WORK UNDERWAY OF KIND OF REVIEWING, AGAIN, JUST TO PUT US INTO PERSPECTIVE, WHY WE ARE HERE , GOAL IS TO REVIEW THE AFFILIATES OF THE CITY AND ENSURE THAT WE ARE CREATING A SYSTEM OF BEST PRACTICES, STRUCTURES, WE HAVE A NEW MAYOR, NEW CITY COUNCIL, STARTING OUR OPERATIONS LAST YEAR, GOING INTO OUR SECOND YEAR . SO, THE SHARED UNDERSTANDING % OF WHAT WE'RE DOING, HOW THINGS CAN BE ACCOMPLISHED, AND WHAT IS UNDERWAY WITHIN THE CITY SEEMS APT . EXCITED, TONIGHT, TO DIG INTO THINGS ABOUT PROMOTE CARMEL, INC. AND ALL THINGS CARMEL . WITH THAT, THERE ARE NO OPENING DISCUSSION POINTS ANYBODY ON THE COMMITTEE WANTS TO MAKE, WE CAN TURN IT OVER TO
SPRINGER FOR AN OVERVIEW. >> THANKS. THERE WE GO. THANK YOU FOR HAVING ME THIS EVENING. AS YOU WILL RECALL FROM THE FIRST MEETING THAT WE HAD, THE FIRST CHARGE THAT WAS GIVEN TO THE MAYOR WAS TO PROVIDE A REPORT OF THE CORPORATE GOVERNANCE AND TAX STATUS OF EACH OF THE FIRST FOUR AFFILIATES , AND IN THE LAST MEETING, WE FOCUSED ON CARMEL , AND WE DO NOT PROVIDE THAT CORPORATE GOVERNANCE TAX OVERVIEW OF THE OTHER THREE NONPROFIT AFFILIATES. SINCE YOUR MEETING AGENDA IS FOCUSED ON CARMEL TODAY, I'M GOING TO DO THAT CORPORATE GOVERNANCE TAX OVERVIEW, AND THEN ALSO GIVE YOU THE RESULTS OF WHAT WE FOUND WHEN WE DID THE FISCAL AND LEGAL REVIEW. WHAT YOU ARE GETTING THIS EVENING IS MORE IN-DEPTH FROM CARMEL AND YOU RECEIVED, BECAUSE YOU ARE ALSO GETTING THE OUTCOMES WHAT WE FOUND WHEN WE DID THE REVIEW. THE FIRST THING I WANT TO POINT OUT IS PROMOTE CARMEL, INC. IS A LEGAL ENTITY.
IT IS A NONPROFIT CORPORATION THAT WAS INCORPORATED FEBRUARY 12 OF 2020, AND YOU WILL HEAR ME SAY, PROMOTE CARMEL INTERCHANGEABLY WITH ALL THINGS CARMEL , AND I WANT TO EXPEND THE DIFFERENCE. PROMOTE CARMEL, INC. , A LEGAL NONPROFIT THAT DOES THINGS INCLUDING RUNNING THE ALL THINGS CARMEL STORE.
MANY TIMES, WE ARE REFERRING TO IT AT ALL THINGS CARMEL, BECAUSE FROM OUR COMMUNITY'S EFFECTIVE, THAT IS THE MOST VISIBLE ACTIVITY AND FUNCTION OF PROMOTE CARMEL. REMOTE CARMEL THEN APPLIED TO THE IRS AND RECEIVED ITS FEDERAL IRS DETERMINATION LETTER JULY 9TH -- 29TH -- OF 2022, AND WHEN IT APPLIED TO THE IRS, AS WE DISCUSSED LAST TIME, YOU ALWAYS ASKED THE IRS FOR TWO THINGS. FIRST OF ALL, M.I.A. 501(C)(3) , AND THE IRS SAID, YES, THE SECOND IS IS PROMOTE CARMEL A PUBLIC CHARITY, AND THE ANSWER WAS YES, IT IS A 592. THAT IS THE TYPE OF ORGANIZATION THAT IS ESSENTIALLY A PUBLIC CHARITY BECAUSE IT IS SELLING A SERVICE OR A GOOD, AND IT IS RECEIVING FEES IN RETURN.SO, UNLIKE OUR CONVERSATION LAST MEETING , THIS IS A DIFFERENT TYPE OF CHARITY. THIS TYPE OF CHARITY IS INTENDED TO LIVE ON FEE FOR SERVICE , AND A GREAT EXAMPLE OF THAT WOULD BE A MUSEUM OF ART, OR AN ORGANIZATION THAT IS A CHARITY AND FUNDED BY FEES PEOPLE PAY WHEN THEY GO. SO, AS WITH MOST 501(C)(3) ORGANIZATIONS, THERE ARE SOME GUARDRAILS THAT EVERY CHARITY IS REQUIRED TO FOLLOW . THE FIRST IS A PROHIBITION AGAINST PRIVATE GARMENT -- PROMOTE CARMEL MAY NOT ALLOW BENEFITS TO INURE TO THE BENEFIT OF ANY PRIVATE INDIVIDUAL. HAS TO BE BOTH ORGANIZED AND OPERATED FOR CHARITABLE PURPOSES. SO, WHEN YOU LOOK AT THESE THREE REQUIREMENTS, THEY ESSENTIALLY MEAN THAT IT HAS TO BE FOCUSED ONLY ON CHARITABLE ACTIVITIES AND CANNOT BE RUN OR OPERATED IN A WAY THAT BENEFITS ANY INDIVIDUAL , AND IF THAT INDIVIDUAL IS A RELATED PARTY, DIRECTOR, OFFICER OR FAMILY MEMBER, OBVIOUSLY, THAT ELEVATES THE SCRUTINY THEY SHOULD HAVE, BECAUSE THAT CAN RESULT IN A
CONFLICT OF INTEREST. SO, >> QUICK SPECIAL QUESTIONS.
WONDERING, FOR THE INCEPTION OF THIS, ANY CITY ACTIONS TAKEN FOR PROCESSES THAT OCCURRED BEFORE THE FILING TO BECOME A NONPROFIT
HERE ? >> ONE THING I NOTICED AS A COMMON THEME ACROSS ALL OF THESE ENTITIES IS THAT THE CITY'S LEGAL DEPARTMENT WAS VERY INVOLVED IN THE FORMATION OF THE ENTITIES THEY SERVED AS THE INCORPORATOR FOR HER THEY SERVED AS THE REGISTERED AGENT. A LOT OF TIMES, CITY HALL WAS THE ADDRESS FOR THE ORGANIZATION, AND THAT WAS ONE OF THE
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RECOMMENDATIONS WE HAVE MADE TO THE MAYOR'S OFFICE, THAT W■E START TO DECOUPLE THAT. IF YOU'RE GOING TO CREATE A NONPROFIT AFFILIATE, ONE OF THE GOALS IS RISK, TO MITIGATE RISK, AND TO DO THAT, YOU NEED TO MOVE IT OUT AND MAKE IT INDEPENDENT.SO, YOU WILL SEE THAT AS WE MOVE FORWARD WITH THESE MEETINGS, ONE OF THE THINGS THAT MAYOR DID EARLY IT WAS SAY TO SOME OF THE AFFILIATES, YOU NEED TO GET LEGAL COUNCIL AND ENGAGE LEGAL COUNCIL. THAT IS THE BEST EXAMPLE I CAN FIND, AND JUST IN GENERAL, YOU KNOW, OUR OBSERVATION WAS THAT THERE WAS A RUNNING CONVERSATION COMMENTARY BACK AND FORTH BETWEEN THE CITY, STAFF, AND PROMOTE CARMEL EMPLOYEES, AND THEY WERE GETTING THEIR DIRECTION FROM CITY STAFF .
>> I ASKED THE QUESTION THERE, TOO, CAN I SEE IF THERE IS A RESOLUTION OR ORDINANCE THAT CREATES THE IMPETUS TO INITIATE ONE OF THESE REVIEWS. OBVIOUSLY, DIFFERENT PATHS FOR THINGS TO COME ABOUT WITH DIFFERENT EVENTS OR THE PUBLIC COMMENT TO SAY, WE SHOULD DO SOMETHING AND HOW DO WE MAKE THAT OCCUR . I'M WONDERING, AS WE LOOK AT IT FROM A BEST PRACTICES STANDPOINT, ENSURING THAT IF THERE IS AN AFFILIATE THAT IS SPINNING UP BECAUSE OF SOME ACTION, WE UNDERSTAND WHAT THOSE PARAMETERS ARE. WHETHER IT BE, AGAIN, APPROVAL BY CITY ORDINANCE OR STRUCTURE FROM APPROPRIATION, OR OTHER SYSTEM, THIS ONE SEEMS APTLY KIND OF TIME TO TALK ABOUT KIND OF THAT INSTITUTING THING , BECAUSE IF IT WAS BUILT WITHIN THE CITY BY CITY STAFF, WONDERING IF THERE COULD HAVE BEEN A BEST PRACTICE OR CHECKS AND BALANCE BEFORE THE POINT OF THIS BEING THAT OUT, WHERE THE CONVERSATION COULD HAVE BEEN HAD, OR AS WE GO THROUGH THE REST OF THE ANALYSIS TODAY, WHERE AN APPROPRIATION OF THE GRANT CAME THROUGH, OR OTHER PLACES WHERE WE MIGHT BE ABLE TO IMPLEMENT OR RECOMMEND PRACTICES THAT COULD PUT US IN A POSITION TO ALLEVIATE SOME OF THESE CONCERNS?
>> GREAT QUESTION. I DON'T KNOW THE ANSWER ABOUT THE ORDINANCE , SAMANTHA ISN'T WITH US THIS EVENING, BUT IT WAS FUNDED WITH A GRANT PRETTY IMMEDIATELY UPON BEING CREATED. SO, I DO BELIEVE THAT ZACH IS GOING TO BE HERE TO ANSWER ANY QUESTIONS WE HAVE AT THE END ABOUT FINANCES, BUT THERE WAS A GRANT, AND THERE WERE CONTINUAL GRANTS IN EACH OF THOSE THAT HAD TO GO TO THE CITY COUNCIL FOR APPROVAL, BUT TO YOUR POINT, YOUR QUESTION IS A GOOD ONE, WHICH IS IF THERE IS GOING TO BE A CITY AFFILIATE, BY CITY AFFILIATE, MEAN AN ORGANIZATION RELATED TO THE CITY BY GOVERNANCE -- THERE IS A NEXUS REQUIRED -- THEY ARE INTERRELATED BY GOVERNANCE, SO THAT REQUIRE AN ORDINANCE, I THINK IS YOUR QUESTION. IT IS A GOOD ONE.
>> WANTED TO FOLLOW UP ON THE LAST POINT YOU MADE, WHEN WE ARE TALKING ABOUT THE OVERSIGHT OF A 501(C)(3) OR 509 82, THEY ARE BEING A HEIGHTENED SCRUTINY OR STANDARD FOR REVIEW OF INTERNET OR RELATIONSHIPS BETWEEN PEOPLE, WHICH PARTY IS BEST SITUATED TO HAVE THAT OVERSIGHT , AND HOW, AGAIN, BEST PRACTICES FROM THE NONPROFIT'S SPACE CAN WE, AS A CITY, HELP ENSURE THOSE THINGS
WOULD HAPPEN? >> IT ALWAYS HAS TO OCCUR AT THE 501(C)(3) SIDE OF THINGS, BECAUSE THE RULES ARE DIFFERENT.
THE CITY IS A GOVERNMENTAL ENTITY, NOT SUBJECT TO THESE LAWS. ANY 501(C)(3), FIRST OF ALL, IS SUBJECT TO TWO LAYERS OF CONFLICT OF INTEREST RULES UNDER THE INDIANA NONPROFIT STATUTE, UNDER THE CORPORATE LAW OF THE STATE OF INDIANA WITH CONFLICT OF INTEREST RULES THAT APPLY. REQUIRES A CONFLICT OF INTEREST POLICY THAT SHOULD, YOU KNOW, MITIGATE SOME OF THESE ISSUES IF IT IS FOLLOWED APPROPRIATELY, AND SECONDLY, EVERY 501(C)(3) IS SUBJECT TO FEDERAL TAX EXEMPT RULES THAT ARE A MIRROR OF STATE, AND THE BOARDS OF DIRECTORS SHOULD BE RESPONSIBLE.
THERE ARE DEFINITELY THINGS THAT THE CITY -- IF THE CITY HAD A GOOD HYGIENE CHECKLIST FOR NONPROFITS -- WHAT DOES THAT GOOD HYGIENE CHECKLIST ARE YOU? MEETING ANNUALLY, ARE YOU ELECTING YOUR BOARD OR OFFICERS? ARE YOU KEEPING MINUTES? DO YOU HAVE A CONFLICT OF INTEREST POLICY? ARE YOU PREPARING YOUR TAX RETURNS? THERE IS A CHECKLIST COMING OUT OF THIS WE CAN CREATE THAT WOULD BE A GOOD PRACTICE , THAT THEN BECOMES A SITUATION WHERE, WHEN YOU PROVIDE FUNDING, THAT THE ORGANIZATION HAS TO REPORT BACK , AND IN ADDITION, THIS IS WHAT WE DID WITH YOUR GRANT, AND THIS IS OUR CORPORATE HYGIENE, THESE ARE THE THINGS WE DID THIS YEAR TO MAKE SURE WE ARE IN
COMPLIANCE. >> THIS MIGHT BE A QUESTION FOR ALL ADMINISTRATION HERE, ON THIS ONE, DID PROMOTE CARNAL HAVE A CONFLICT OF INTEREST POLICY, OR ÚDID THEY FOLLOW SOME OF THE BET -- OBVIOUSLY, WE HAD A PACKET OF STUFF. WE DIDN'T SEE ONE IN
THERE. >> I DON'T THINK THAT WE HAVE EVERYTHING, AND I DEFINITELY HAVE NOT SEEN , I DON'T BELIEVE, A CONTRACT FOR A CONFLICT OF INTEREST. YES?
>> I THINK IT WAS INCLUDED IN THE CORPORATE ORGANIZATION ONE.
>> WAS IT? OKAY . >> IN THE BYLAWS OR ONE OF THOSE
DOCUMENTS. >> I THINK IT WAS IN THE BYLAWS AND THE ARTICLES OF THE CORPORATION.
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>> YEAH. A GENERAL CONFLICT OF INTEREST STATEMENT, AND YOU ARE ASKING THE RIGHT QUESTIONS. IT REALLY IS, WHEN THERE IS A GOVERNANCE RELATIONSHIP LIKE THIS, YOU ARE ACCOUNTABLE TO EACH OTHER IN CERTAIN WAYS, AND I THINK THESE AFFILIATES NEED TO BE ACCOUNTABLE TO THE CITY IN TWO WAYS. FIRST OF ALL, FINANCIALLY , LIKE HOW DID YOU USE THE GRANT FUNDS OR OTHER RESOURCES OF THE CITY, HOW DID YOU USE THEM, AND SECONDLY, FROM A GOVERNANCE PERSPECTIVE, ARE YOU FULFILLING YOUR RESPONSIBILITIES IN A WAY THAT REFLECTS WELL ON THE CITY, THE
CITY'S INVESTMENT IN YOU? YES? >> ONE SLIDE IN, WE HAVE GOT THE QUESTIONS OR COMMENTS, BUT THAT IS GOOD. I THINK WE HAVE ALL REVIEWED IT. IT WAS VERY HELPFUL. WE HAD A PACKET FROM REBECCA AHEAD OF TIME TO KIND OF THINK WE'RE ALL AGREE ON SOME - SORT OF A CHECKLIST THAT WE HOLD ALL THESE AFFILIATES TO FILL OUT FAITHFULLY, AND THEN UNACCOUNTABLY, THAT SOMEONE SIGNS IT , AND IF THEY SIGN IT, THEY ACTUALLY DIDN'T DO THINGS ON THE CHECKLIST WHERE IT NEEDS TO BE CONSEQUENCES ASSOCIATED WITH THAT . IT INCLUDES, YOU KNOW, HOW ARE YOU MEETING YOUR MISSION, BUT YOU MADE ANOTHER INTERESTING COMMENT, WHAT IS THE SCRIPT OR THE BEST PRACTICE FOR THE NEW AFFILIATES, AND I'M NOT SURE ANY OF THEM WILL BE STOOD UP , BUT AS I SEE THIS ONE , AND I'M SURE THERE ARE SEVERAL LIKE THIS , IT IS INTERESTING, BECAUSE THEY HAVE SOME ACCOUNTABILITY TO THE CITY, BUT THEY SHOULD NOT BE THE CITY. THIS ORGANIZATION IS BASICALLY THE CITY, YOU HAVE THE CITY SPOKESMAN RUNNING AT, YOU HAVE A CITY ECONOMIC DIRECTOR DIRECTING FUNDS BEING MOVED AROUND . IT WAS NOT INDEPENDENT AS IT SHOULD HAVE BEEN , IN ADDITION TO, AS YOU MENTIONED, FROM A LIABILITY STANDPOINT, SHOULD HAVE HAD INDEPENDENT COUNCIL. SO, THERE HAS TO BE ACCOUNTABILITY . BACK TO THE CITY, BUT IT ALSO NEEDS TO BE INDEPENDENT AND NOT SIMPLY AN ARM OF THE CITY , OR WHY ISN'T IT JUST ROLLED IN? I WOULD ARGUE, WHY DID WE SET UP THIS ORGANIZATION IF IT WAS GOING TO BE RUN LIKE THE ECONOMIC DEVELOPMENT CORPORATION? IT WAS REDUNDANT, IF THAT MAKES SENSE?
>> YES. IN THE MEETING IN OUR LAST MEETING, WE TALKED ABOUT GHOST EMPLOYMENT AND WE TALKED ABOUT WHAT THAT MEANS WHEN CITY EMPLOYEES WORK FOR AFFILIATES, AND IN THE GRANT AGREEMENT BETWEEN PROMOTE CARNAL AND THE CITY, THERE WAS A STATEMENT IN THERE THAT CITY EMPLOYEES WOULD BE AVAILABLE, INCLUDING STAFFING ALL THINGS CARMEL STORE , AND THIS WAS IN THE FIRST GRANT AGREEMENT. THAT DEMONSTRATES THE CULTURE WAS THERE. OUR CITY EMPLOYEES ARE HERE TO RUN THIS STORE, AND THAT IS MY POINT ABOUT THE FORMALITY. YOU HAVE THE CITY, IT IS FOCUSED ON ESSENTIAL GOVERNMENTAL FUNCTIONS, AND YOU HAVE A PRIVATE NONPROFIT AFFILIATE WITH A CHARITABLE MISSION THAT IT IS RESPONSIBLE FOR CARRYING OUT. SO, YOU KNOW, IN A PERFECT WORLD, THE CITY WOULD APPOINT, THE MAYOR WOULD APPOINT THE BOARD MEMBERS, AND THEY WOULD PROVIDE THE OVERSIGHT TO THE CITY EMPLOYEES, SORRY, TO THE CHARITIES ' EMPLOYEES TO MAKE SURE THEY ARE FULFILLING THESE FUNCTIONS. THAT IS NOT WHAT WE SAW. WHAT WE SAW WAS THE CITY WAS CONTINUING -- CITY OFFICIALS -- CONTINUING TO INSTRUCT THE DAY-TO-DAY ACTIVITIES IN
FUNDING. >> WHEN I WAS LOOKING THROUGH THE GOVERNING DOCUMENTS , THROUGH THE PARTS OF THE CORPORATION, ALSO, THEIR BYLAWS, IT DID NOT SPECIFICALLY STATE THAT THERE WOULD BE A CEO OR DIRECTOR. GOING FORWARD, I THINK IF WE ARE GOING TO MOVE FORWARD WITH AFFILIATES, THAT WE HAVE CLEAR DIRECTION TO ASSUAGE THE ISSUES TO WISH DR. HANNON OF HIS FORMER COUNSELOR -- I MEAN -- HAVING SOMETHING LIKE THAT IN THE LANGUAGE WOULD BE HELPFUL TOO, BECAUSE GOING THROUGH THESE DOCUMENTS, I COULDN'T FIND WHO, SPECIFICALLY, WAS IN CHARGE OF THE ACTUAL CORPORATION . TO RYAN'S AND TIM'S POINT, YOU COULDN'T DIFFERENTIATE. HAVING SOME SORT OF LANGUAGE IN THERE THAT, SPECIFICALLY, ACKNOWLEDGES THAT THERE IS A CEO, PRESIDENT, WHATEVER THAT LANGUAGE MAY BE, I THINK WOULD BE INCREDIBLY
HELPFUL AS WELL . >> YES. SO, IN ANY NONPROFIT CORPORATION, THERE IS USUALLY TWO SETS OF OFFICERS. ONE IS VOLUNTARY OFFICERS WHO ARE USUALLY THE CHAIR OR VICE CHAIR OF A SECRETARY OF THE TREASURER THEY PROVIDE OVERSIGT AND ACCOUNTABILITY, THEN THERE IS THE CORPORATE OFFICERS, PEOPLE ACTUALLY RUNNING THE DAY-TO-DAY, AND WITH RESPECT TO CARMEL, THAT WAS SUE MCFEELY, TITLE WAS EXECUTIVE DIRECTOR, SO, AT SOME
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WON, THE PROMOTE CARMEL BOARD APPOINTED HER AS THE EXECUTIVE DIRECTOR AND GAVE HER THE TITLE AND THOSE DAY-TO-DAY RESPONSIBILITIES . THAT IS PRETTY NORMAL, BECAUSE AS AN EXECUTIVE DIRECTOR, THAT IS NOT A GOVERNANCE OFFICE. NORMALLY, WHEN SEE THE ARTICLES AND BYLAWS, BUT TO YOUR POINT, NEEDS TO BE CLARITY AND THERE NEEDS TO BE TRANSPARENCY ABOUT WHO HAS WHAT AUTHORITY. SO, I TYPICALLY RECOMMEND A DELEGATION OF AUTHORITY MATRIX , SO THAT EVERYBODY INVOLVED THOSE WHO HAS AUTHORITY AND WHAT LEVEL TO DO WHAT. IT IS USUALLY ESCALATING, AN EXECUTIVE DIRECTOR CAN DO THIS ALONE IF THIS HAPPENS, THE EXECUTIVE DIRECTOR HAS ONE OFFICER. THERE IS THAT ESCALATING DELEGATION OF AUTHORITY. WE THINK OF BEST PRACTICES, YOU SHOULD BE ABLE TO ANSWER THE QUESTION WITH RESPECT TO ANYONE, WHAT AUTHORITY DID THEY HAVE, AND COULD THEY OPERATE ALONE, OR WERE THEIR DECISIONS SUBJECT TO --INAUDIBLE ] >> ONE MORE THOUGHT ON THIS TO ROUND OUT MY THRESHOLD QUESTION, THE IDEA OF THE AUTHORITY OF WHAT DID THE EXECUTIVE BRANCH HAVE FROM AN AUTHORITY BASIS, YOU KNOW, THE ORDINANCE REGULAR -- RESOLUTION -- THE LEGAL , REGULAR COURSE OF BUSINESS -- KIND OF STAND THIS UP. I ASK YOU NOT TO SAY THAT IT WASN'T CLEAR, BUT WONDERING WHERE THIS CAME FROM IN THIS INSTANCE AND OTHERS FOR THIS REGULATION BEING A GOVERNMENT OPERATION. COMMANDERS. WHEN WE TALK ABOUT INAUDIBLE ], HE GIVES ME PAUSE FROM A LEGAL PERSPECTIVE, TRYING TO THINK THROUGH THIS ONE , IN ITS CAPACITY, AS A SPIN OUT OF THE GOVERNMENT. THERE MIGHT NOT HAVE BEEN AUTHORITY ON THE FRONT END TO DO IT, OR HE MIGHT HAVE BEEN, IT WAS PART OF THE BUDGET, BUT HE GIVES US DIRECTION ON HOW TO CONTROL, MITIGATE, AND/OR SET UP FUTURE MAYORS, CURRENT MAYOR, NOW PREVIOUS MAYOR, BUT EVERYBODY ELSE WITH A SUCCESSFUL MECHANISM TO MAKE SURE THAT THERE IS THIS OVERSIGHT BOARD. I THINK THAT QUESTION MAY BE FOR CITY LEGAL, MAYBE WE GO BACK TO KIND OF, AND BOARD MEETINGS AND OUR CITY COUNCIL MEETINGS, THE INITIALS FOR APPROPRIATIONS, HOW DID WE COME TO A POINT WHERE THIS WAS STOOD UP , AND THEN I TAKE THAT TO A BROADER APPROACH , AND WITH TO GET THERE WHEN WE TALK ABOUT THE LIST, THE IDEA OF GRANTS THROUGH THE ARTS COMMISSION, CREATED BY WORKERS, SO THAT LIGHT RESOLUTION, APPROPRIATED. IT HAS A SUBSET OF CHECKS AND BALANCES THAT ALLOW FOR UNDERSTANDING OF WHAT THOSE RELATIONSHIPS ARE, IT ALLEVIATES THAT PROCESS , WHERE THIS ONE APPEARS ON ALL KIND OF IT'S FACE TO HAVE JUST BEEN AN IDEA THAT WAS STOOD UP AND A NONPROFIT WAS CREATED THE DISTANCE FROM THE CITY SOMETHING THAT WAS CITY OPERATIONS THAT PUTS US IN THE PERSPECTIVE WE
ARE IN TODAY. >> I THINK YOU ARE MAKING A VERY GOOD POINT, AND ONE OF THE LETTERS IN THE EXHIBIT PACKET WAS A LETTER FROM DAN AND SUE MCNEELY TO THE BOARD, AND ONE OF THE THINGS THAT THAT LETTER DESCRIBED WAS THAT THEY HAD FISCAL PROBLEMS IN 2023, YOU KNOW, THEY USED THESE DONOR DOLLARS TO BAIL OUT THE JAZZ FEST AND FOR LEGISLATIVE AFFAIRS, ET CETERA THEN, WE ASKED THE CITY COUNCIL FOR FUNDING, AND IT WAS DENIED. TO ME, THAT IS REALLY THE ISSUE FOR ALL OF YOU TO THINK THROUGH, BEAUSE THE CITY COUNCIL DENIED FUNDING FOR THAT , AND THE OUTCOME OF THAT IS WHAT YOU HAVE IN FRONT OF YOU TODAY. SOME OF THESE EXPENSES THE CITY IS GOING TO HAVE TO FUND THAT DISSOLUTION ARE THE THINGS THAT CAME TO THE CITY COUNCIL AND FUNDING WAS DENIED. THESE THINGS, YOU KNOW, THEY'RE BUBBLING BACK UP TO YOU RIGHT NOW, BECAUSE THEY NEVER -- PROMOTE CARMEL NEVER WORKED ITSELF OUT OF THE FINANCIAL CRISIS IT HAD IN 2023. WHEN THE MAYOR STEPPED IN AND PROMOTE CARMEL BOARD MADE THE DECISION TO DISSOLVE AND WIND DOWN THE STORES , THOSE LIABILITIES WERE STILL THERE, THE LIABILITIES A CALL TO STAN AND SUE TO SEND THE LETTERS, WE HAVE THESE ISSUES LONGER TABLE WITH THESE LIABILITIES. THEY ARE STILL
THERE. YES. >> AND, WE'LL CERTAINLY GET TO WHAT THE OUTSTANDING LIABILITIES ARE . AT THIS POINT, BACK TO COUNSELOR POWERS' QUESTION -- I LOOKED THROUGH THIS, AND I CERTAINLY COULD HAVE MISSED IT, YOU KNOW, BUT I SAW SUE MCNEELY WAS THE EXECUTIVE DIRECTOR . I SAW TIM GRIFFIN'S NAME ON THE IRS FORM, OF COURSE, DAN MCFEELY SEEMS TO BE THE BOARD CHAIR.
WHAT WERE THE ACTUAL TITLES OF THESE PEOPLE? BECAUSE, I AM NOT CLEAR. I WAS ON COUNCIL FOR SOME TIME, BUT WE HAD VERY LITTLE INSIGHT INTO WHAT WAS GOING ON AT PROMOTE CARMEL. WHAT WAS DAN MCFEELY'S TITLE , AND THAT WAS TIM GRIFFIN'S TITLE?
>> THAT WAS A REALLY GOOD QUESTION. I WILL TELL YOU WHAT I
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HAVE LEARNED . I DON'T KNOW IF THESE ARE FINAL ANSWERS YOU KNOW, I WILL LEAVE IT UP TO ANYBODY ELSE TWO-WAY IN, BUT I ASKED THAT QUESTION, BECAUSE WHEN I SAW THAT LETTER, MY QUESTION WAS, HOW DID HE HAVE THE AUTHORITY TO WRITE THIS LETTER ON PROMOTE CARMEL'S BEHALF AND SEND IT TO THE BOARD , AND I KNOW THAT, DURING 2020 THROUGH 2024, DAN MCFEELY'S COMPANY HAD A CONSULTING CONTRACT TO PROVIDE MARKETING SUPPORT TO THE MAYOR'S OFFICE AND THE CITY, AND THE MARKETING DEPARTMENT WAS INTRICATELY INVOLVED IN MANAGING THE ALL THINGS CARMEL STORE, SO, DEVIN FEHELY WITH HIS HAND ON NOSE A CONTRACTOR TO THE CITY WAS PROVIDING OVERSIGHT TO PROMOTE CARMEL, HIS WIFE WAS THE EXECUTIVE DIRECTOR , AND SO, HE DIDN'T HAVE ANY CAPACITY AS A DIRECTOR OR OFFICER. THERE WERE THREE DIRECTORS OF PROMOTE CARMEL, AND HE WAS NOT ONE OF THEM. WHEN HE WROTE THAT LETTER, I DON'T THINK HE HAD ANY FORMAL CAPACITY TO DO IT, BUT HE ALSO WAS THE PRESIDENT OF CARMEL DURING TWO OF THE YEARS -- SO, YOU KNOW, TO ME, THIS IS ONE OF THE THINGS THAT WE SAID IN THE SLIDE DECK, I THINK, YOU KNOW, WE JUST NEED TO UNDERSTAND WHO HAS THE AUTHORITY FOR EACH ORGANIZATION, AND WHAT WAS THEIR QUERY, WHAT IS THE CAPACITY, YOU KNOW, WHY ARE THEY ASKING, BECAUSE IN HIS LETTER TO THE PROMOTE CARMEL BOARD, HE WAS EXPLAINING THE JAZZ FESTIVAL BAIL OUT, THE TERM THAT HE USED , BUT THAT OCCURRED DURING THE TIME WHEN HE WAS PROSECUTED , SO, I JUST THINK WE NEED TO MAYBE STEP BACK , AND GOOD HYGIENE WOULD SAY THAT, FOR EACH OF THESE ORGANIZATIONS, WE KNOW WHO IS THE DIRECTOR, WHO IS AN OFFICER AND WHO HAS AUTHORITY TO ACT, AND IF WE HAVE SOMEBODY THAT IS OPERATING IN MORE THAN ONE SPACE, IMMEDIATELY, WE HAVE TO HAVE A CONFLICT OF INTEREST PROCESS TO MITIGATE THAT CONFLICT , AND, YOU KNOW, FOR MY CLIENTS, I REFER TO CONFLICT OF INTEREST AND CONFLICTS OF LOYALTY, AND IF YOU WERE TO SEE FIGURES FOR STANDARDS OF INTEREST POLICIES, TOPIC OF INTEREST IS A FINANCIAL INTEREST, MEANING, I AM BEING PAID HERE AND I'M BEING PAID THERE. CONFLICT OF LOYALTY IS I HAVE A RESPONSIBILITY, FIDUCIARY DUTY TO THIS NONPROFIT AND FIDUCIARY DUTY TO THIS NONPROFIT. THEY ARE IN CONFLICT WITH EACH OTHER. WHEN YOU SEE PROMOTE CARMEL USING DONOR RESTRICTED DOLLARS FOR A BAILOUT OF THE JAZZ FEST, THAT IS WHERE YOU ARE GETTING INTO THECONFLICT OF LOYALTY. >> DON'T WANT TO GET TOO FAR AHEAD IF YOU WANT TO DISCUSS THIS LATER ON, I DO HAVE A CONCERN ABOUT THE DEDICATED $50,000 SPECIFICALLY SUPPOSED TO BE FOR THE JAPANESE GARDEN THAT WAS THEN USED TO BAIL OUT THE JAZZ FESTIVAL, ACCORDING TO THE EMAIL -- EXCUSE ME -- THE LETTER FROM DAN MCFEELY. SO, WHEN WE GET TO THAT POINT, I WOULD REALLY LIKE TO KNOW -- THAT WAS SUPPOSED TO BE IN FUNDS -- INAUDIBLE ] WHERE THAT MONEY SITS AND HOW IT WAS REPLENISHED
IF IT WAS REPLENISHED. >> WE WILL DEFINITELY TALK ABOUT THAT. YOU KNOW, ZACH WILL TALK ABOUT THAT YOU KNOW, THAT, YOU KNOW, WHEN DONORS MAKE A CHARITABLE RESTRICTION OF THAT PURPOSE OF THAT MAGNITUDE, YOU MAY ONLY USE IT AS THIS PURPOSE.
THIS GRANT AGREEMENT WITH ONE STEP FURTHER AND SAID, YOU HAVE AN OBLIGATION TO PUT THIS IN THE DESIGNATED FUND AND RESTRICT IT SOLELY FOR THIS PURPOSE. SO, IF PROMOTE CARMEL DID NOT GO BACK TO THE DONOR AND SPECIFICALLY ASK TO USE THOSE DOLLARS, YOU KNOW, FOR ANY OTHER PURPOSE, THAT IS A VIOLATION OF DONOR INTENT AND A VIOLATION OF THE GRANT AGREEMENT. YOU KNOW, IT IS MY UNDERSTANDING THAT THERE WERE NOT THE DOLLARS THERE TO REPLENISH THOSE FUNDS, SO, THAT IS ONE OF THE LIABILITIES THAT IS ON THE TABLE FOR THE CITY , YOU KNOW, TO TAKE CARE OF IN THIS DISSOLUTION, BECAUSE WHEN A NONPROFIT DISSOLVES, IT CAN BE SOLVENT WHEN IT DISSOLVES, OR IT CAN BE INSOLVENT WHEN IT DISSOLVES , AND MY ASSESSMENT IS THIS ORGANIZATION, ESSENTIALLY, WITHOUT THE SUPPORT, WOULD BE INSOLVENT. THEY CANNOT COVER ITS LIABILITIES. IT DOES NOT HAVE THE ASSETS TO COVER THE LIABILITIES THAT IT NEEDS TO APPROPRIATELY DISSOLVE ITSELF.
WITHIN THE CITY, TO BE ABLE TO COVER THOSE LIABILITIES. SO, WE JUMPED RIGHT INTO IT, AND THAT IS GREAT , BECAUSE IT IS YOUR MEETING AND YOU GET TO DO THAT . PLEASE STOP ME WHENEVER YOU WANT . ONE OF THE FIRST THINGS THAT WE NOTICED WHEN WE STARTED LOOKING AT THE DOCUMENTS -- I NOTICED A FIGURE RANGE, THERE
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WERE AT LEAST THREE DIFFERENT TAX PACIFICATION'S FOR PROMOTE CARMEL IN DIFFERENT DOCUMENTS, WHICH DEMONSTRATED TO US, EVEN AS EARLY AS WHEN IT WAS FORMED, IT DID NOT UNDERSTAND THE TYPE OF PUBLIC CHARITY IT WAS. SO, THE IRS GRANTED STATUS AS A 500 92 MEANS THAT IT IS A FEE FOR SERVICE, SELLING WIDGETS, BUT THEN IT STARTED FILING TAX RETURNS, SAYING, IT WAS A WONDER 70-86, AN ORGANIZATION DRIVEN BY PHILANTHROPY. I DON'T KNOW ABOUT THAT. WEATHER, IS IT DRIVEN BY STUFF IT IS SELLING -- YOU KNOW -- BUT THE THIRD THING WE NOTICED WAS THEN, IN ITS BYLAWS, IT INCLUDED SUPPORTING ORGANIZATION LANGUAGE, LIKE, IT CALLED THE CITY OF CARMEL AND SAID IT WAS A SUPPORTED ORGANIZATION AND IT WAS NOT IN ANY RESPECT A SUPPORTING ORGANIZATION. THOSE THREE CLASS PACIFICATION'S REQUIRE DIFFERENT CLASSIFICATIONS. MY ASSESSMENT IS CITY LEGAL CREATED IT AND COPIED DOCUMENTS FROM ANOTHER ORGANIZATION, MAYBE CARAMEL CHRIS KENDALL MARK AND WERE BRINGING LANGUAGE IN FROM OTHER ENTITIES THAT DIDN'T NECESSARILY MATCH WHAT PROMOTE CARMEL WAS, SO, FROM OUR EARLIEST START TO REVIEW OF THE DOCUMENTS, WE COULD TELL THAT IT'S LEADERSHIP DIDN'T UNDERSTAND ITS TAX CLASSIFICATION OR WHAT RULES IT WAS REALLY OPERATING UNDER, AND JUST SO YOU KNOW, THAT IS NOT ABNORMAL . THIS IS A SMALL CHARITY, AND ITS REVENUES ARE FAIRLY LOW, AND IN THIS CLASS OF MATURITY, THERE IS TYPICALLY A LACK OF SOPHISTICATION, AND THAT WILL DEMONSTRATE IT SELF IN COMPLIANCE, BUT WHEN YOU GO BACK TO DEVELOPING THAT CHECKLIST OF WHAT IS GOOD HYGIENE, I THINK ONE OF THE THINGS YOU CAN DO IS MAKE SURE THAT IF THERE ARE OTHER NONPROFIT AFFILIATES, THAT YOU COACH THEM UP SO THAT THEY UNDERSTAND, YOU KNOW, AND THAT YOU MAKE THEM ACCOUNTABLE FOR UNDERSTANDING THESE THINGS.>> JUST A QUESTION HERE . OBVIOUSLY, WHEN THE NONPROFIT SPACE OR A NONPROFIT SPINS UP ON ITS OWN, OR WE HAVE GOT HYGIENE ISSUES, AND STRUCTURES AND FIGURE THEMSELVES OUT OVER TIME, WONDERING AGAIN, FROM A BEST THAT IS STANDPOINT, KNOWING THEY ARE AFFILIATED WITH THE CITY AND THAT, AT THE END OF THE DAY, IF THERE IS AN INSOLVENT , DISSOLUTION, YOU HAVE TO FIGURE OUT HOW TO COVER THE INSOLVENCIES , ARE THERE BEST PRACTICES OR STRUCTURES WE CAN HAVE IN PLACE? I KNOW WE WILL START TO DIG INTO THE ACTUAL STRUCTURE OF THIS ONE, BUT THINKING THROUGH FROM THAT LENS OF WHAT CHECKS AND BALANCES COULD WE HAVE STARTED EARLIER , AS A CITY, KNOWING THESE WERE THINGS WE WERE SPINNING UP, WHETHER IT BE, OBVIOUSLY, JUST A HYGIENE REPORT, COLLECTING THE RIGHT RESOURCES, UNDERSTANDING THE BOARD WAS MAYBE IN OVER ITS HEAD, AND THE FLIPSIDE, OBVIOUSLY, LEGAL , UNDERSTANDING OF WHAT WE ARE GETTING INTO, TRYING TO CREATE A MORE SOPHISTICATED FRAMEWORK MOVING FORWARD SO THAT WE CAN HELP ENSURE THESE THINGS DON'T RECUR. I SAY THAT, THE NOT AS A QUESTION, BUT MORE , AS WE GO THROUGH THE NEXT SLIDE, WOULD LOVE TO KIND OF THINK ABOUT IT FROM THAT LENS OF HOW ARE WE LEARNING FROM THESE THINGS AND PLACES THAT , IN YOUR EXPERTISE, YOU CAN SEE WILL BE COULD HAVE ANOTHER TOUCH POINT OR LACEWORK WE COULD HAVE SAID, YEAH, CITY SHOULD HAVE STEPPED IN HERE I WOULD BE ABLE TO SEE THIS? I
WOULD LOVE YOUR FEEDBACK . >> I THINK IF YOU THINK ABOUT GOOD HYGIENE AND ANNUAL COMPLIANCE, THERE SHOULD BE OBLIGATIONS ON BOTH SIDES. OBVIOUSLY, THE NONPROFITS SHOULD PROVIDE, YOU KNOW, THE FOLLOWING REPORTING TO THE CITY, BUT I THINK THE CITY SHOULD CREATE AN ANNUAL COMPLIANCE, LIKE, CHECKLIST OF WHAT IT SHOULD BE RECEIVING , AND ON WHAT SCHEDULE FROM THESE AFFILIATES. SO, THIS GRANT AGREEMENT SAID THAT THERE WAS QUARTERLY REQUIRED FINANCIAL REPORTING AND ANNUAL REQUIRED FINANCIAL REPORTING, AND THE RECORDS DO NOT APPEAR THAT THAT WAS BEING GIVEN. SO, MAYBE IF THE CITY, AT THE TIME, HADN'T GOTTEN THE REPORTING EARLIER, THEY WOULD HAVE SEEN, BUT AGAIN, THE GRANT CONTINUED, AND THOSE GRANTS WERE SUBSIDIES BECAUSE PROMOTE CARMEL WAS NOT CASH FLOWING. THERE IS A POLICY QUESTION THERE FOR THE CITY COUNCIL WITH RESPECT TO GRANTS, AND THAT IS , IS THIS GRANT ALIGNED WITH THE CITY'S OBJECTIVES, AND THEN, THERE IS A ROLE FOR THE CITY TO PLAY, IN TERMS OF MAKING SURE THAT IF A GRANTEE IS REQUIRED TO PROVIDE QUARTERLY AN ANNUAL REPORT, THAT THEY ARE DOING THAT. IT DID NOT
LOOK LIKE THAT WAS OCCURRING. >> MR. CHAIR, LAURA CAMPBELL, WHO IS THE CHAIR OF THE ARTS COMMISSION AND I HAD CONVERSATIONS ON THIS VERY THING WITH THE ARTS GRANT AS WELL. NO DEDICATED PERSON OR PEOPLE, IF YOU THINK ABOUT THIS , CAN BE 40 OR 50-RELATIONSHIPS, AND HOW CAN WE HAVE A GOVERNANCE REPORT CARD THAT IS NOT ONLY USED TO EVALUATE , USING THE TERM, HYGIENE, AND HYGIENE OF A NONPROFIT, BEFORE WE LOOK AT THE FISCAL REVIEW OF THE NONPROFIT, AND THEIR MISSION RELATED TO THE ARTS CULTURE , YOU KNOW, SHOULD THERE BE A GOVERNANCE REVIEW ON THE FRONT END, BUT ALSO, GOVERNANCE REVIEW ON THE BACK END TO MAKE SURE THEY ARE CONTINUING TO BE A GOOD SOLDIER,
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SO TO SPEAK, IN THE YEAR WITH THE ARTS GRANT IN THEIR POCKETS? THIS COMES ABOUT A GOOD TIME, BECAUSE WE TRIED TO FIGURE OUT HOW WE SHOULD EVALUATE OR REVISE ALREADY, WITH YOUR HELP, WE HAVE REVISED THE ARTS GRANT PROCESS ONCE OR TWICE, REALLY HAPPY MOVING FORWARD, BECAUSE WE SEE THIS AS A GAP.>> YES. >> I WOULD LIKE TO ADD, BECAUSE THESE ORGANIZATIONS CONTINUALLY CHANGE THEIR LEADERSHIP, THEIR BOARD MEMBERS, AND THEIR SPONSORS, IT IS ONGOING. THAT IS WHY I WANT TO SAY, EVEN THE YEAR FOLLOWING THE DONATION OR THE GRANT, HOW ARE WE MAKING SURE THAT THEY ARE USING THE DOLLARS
APPROPRIATELY. >> AND MAYBE JUST TO TACK ON TO THE MAYOR'S COMMENTS, THERE DOESN'T SEEM TO BE A CLEARINGHOUSE WITHIN THE CITY TO DO THIS . I UNDERSTAND THAT STAFFING IS TIGHT . HOWEVER, THESE ARE MATERIAL COSTS. IF YOU LOOK AT WHAT IS NOT ON THAT SPREADSHEET THAT WE SAID, WE SHOULD BE IS HOW MUCH DOLLARS SUPPRT FROM THE CITY TO THESE ORGANIZATIONS. THAT IS A BIG NUMBER DOWN HERE THAT WARRANTS HAVING -- WHETHER IT IS AN ADDITIONAL DUTY OR DEDICATED BODY -- TO GO THROUGH THIS ON AN ANNUAL BASIS TO MAKE SURE TAXPAYERS ARE GETTING WHAT THEY EXPECT, YOU KNOW, OUT OF THIS, AND I THINK THAT IS THE PROBLEM WITH ALL OF THESE FUNDS THAT HAVE BEEN SPUN UP. SOME MAY BE SPOT ON, DOING THEIR MISSION AND DOING GREAT THINGS, AND WE'RE MISSING THE OPPORTUNITY TO APPLAUD THEM, YOU KNOW, BUT THIS IS THE OTHER END OF THE SPECTRUM, AND HOW NOT TO DO THINGS, YOU KNOW, SO, YOU KNOW, I THINK, AT THE END OF THE DAY, FOR THESE ACCOMMODATIONS, WE ARE ALL WAITING, AND IT IS GOING TO TAKE A WHILE. THERE HAS TO BE ACCOUNTABILITY, BUT THERE ALSO HAS TO BE THE RESOURCES ON THE CITY SIDE TO MAKE SURE THAT THESE CHECKLISTS ARE COMPLETED, AND I WOULD PUT IT SOMEWHAT ANALOGOUS -- I KNOW WE DON'T DO A LOT OF TAX ABATEMENTS, RIGHT, BUT SEEING SORT OF A CHECKLIST THAT WE GO THROUGH TAX A BIT BUT IT'S A TAX ABATEMENT THAT SHOULD BE REQUIRED. IF THEY DON'T DO THAT, WE ARE SURE THEY ARE NOT GOING TO GET THE TAX GRANT NEXT YEAR BECAUSE THERE WILL BE CONSEQUENCES ASSOCIATED WITH THAT.
>> YEAH. SO, WOULD YOU LIKE ME TO GO THROUGH THE REST OF THE CORPORATE GOVERNANCE SLIDES, WOULD YOU LIKE ME TO GO DIRECTLY TO THE FINDINGS SLIDES? FINDING SLIDES?
>> NO -- THIS IS WHAT -- THIS IS EXACTLY WHY THE COMMITTEE WAS CREATED . THIS IS EXACTLY THE FORM THAT HE NEEDS TO HAPPEN, THE TRANSPARENCY, ACCOUNTABILITY THAT THE TAXPAYERS HAVE, AND AGAIN, WE DO THIS WORK ALL OVER THE NATION. YOU GUYS ARE, AS A GROUP, SETTING THE STANDARD FOR HOW A CITY WILL EVALUATE RELATIONSHIPS LIKE THIS ON A GOING-FORWARD BASIS. THIS IS A COMMON CHALLENGE, AND I THINK THE MAYOR, PLUS THE CITY COUNCIL, ARE BEING VERY PROACTIVE ABOUT IT. THIS IS NOT SURPRISING, BUT YOU ARE TAKING A VERY POSITIVE APPROACH TO IT.
>> I WANTED TO SAY, MERRILY, I ACTUALLY DO WANT YOU TO GO THROUGH THIS ALSO WANT TO MAKE SURE, IS THIS PACKET PUBLICLY AVAILABLE, OR CAN IT BE MADE PUBLICLY AVAILABLE?
>> YES. >> I THINK THAT IS THE OTHER PART, THE TRANSPARENCY HERE . I DON'T WANT TO SPEAK FOR EVERYONE, BUT I WAS SORT OF SHOCKED AND DISMAYED AND I WENT INTO THE DETAIL OF THIS. I THINK OTHER PEOPLE NEED TO FULLY UNDERSTAND, YOU KNOW, WHAT DID OR DID NOT HAPPEN WITH THIS
ENTITY. >> THIS IS ALL PUBLICLY AVAILABLE, AS ARE THE EXHIBITS. SO, IN THIS POWERPOINT SLIDE, FOR THOSE WATCHING AND SEEING, THERE ARE EXHIBITS, AND ALL OF THEM ARE PUBLICLY AVAILABLE. SO, IN PROMOTE CARMEL ARTICLES AND BYLAWS, SO, WHAT WAS IT CREATED TO DO? IT IS A PUBLIC BENEFIT CORPORATION , ORGANIZED AND OPERATED TO PERFORM CHARITABLE, RECREATIONAL, EDUCATIONAL AND PUBLIC PURPOSES OF THE CITY OF CARMEL AND IT WAS ESSENTIALLY CREATED TO PROMOTE THE CITY OF CARMEL WITH EVENTS TO SUSTAIN PRIDE IN THE COMMUNITY, TO ATTRACT AND RETAIN NEW RESIDENTS , AND IT WAS VERY DETAILED ABOUT THE FACT THAT IT WOULD OVERSEE THE ALL THINGS CARMEL STORE, WHICH WOULD ESSENTIALLY SERVE AS A VISITORS CENTER AND A GIFT SHOP ON MAIN STREET. AND SO, IT HAD , IF I CAN SAY, ECONOMIC DEVELOPMENT PURPOSE IN TERMS OF ATTRACTING RESIDENTS AND VISITORS, AND SERVING VISITORS THAT COME TO DOWNTOWN CARMEL.
>> QUESTION THERE, BEST PRACTICE -- I HAVE READ A LOT OF CHARITIES, AND THEY'RE VERY BROAD , AND OUR PURPOSE, KIND OF TO FIT THE MISSION. HAVE YOU SEEN, KIND OF IN THE GOVERNMENT SPACE OR IN THESE AFFILIATED REVIEWS WERE A NARROWING OF THAT SCOPE COULD BE BENEFICIAL, AND THEN, WEIGHING IN ON THIS ONE, PRETTY BROAD, COVERS A LOT OF DIFFERENT THINGS, ALMOST COMES TO THE MARKETING DEPARTMENT OF THE CITY, IN SOME CAPACITY, ITS
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MISSION, IT CAN DO ANYTHING, WONDERING, AS WE LOOK AT THAT OR THINK ABOUT MOVING FORWARD, IF THERE IS A WAY TO HONE IN AND NARROW THAT SCOPE ON THE FRONT END TOO?>> SO, I WORK WITH SOME CITIES THAT FORM AN AFFILIATE FOR EVERYTHING , AND THEY ARE NARROW, AND END UP WITH TOO MANY OF THEM. SO, I TEND TO RECOMMEND THAT MY CLIENTS BE BROADER IN THE PURPOSES, AND TRYTO HAVE LESS OF THESE NONPROFIT AFFILIATES, BECAUSE AS YOU CAN SEE, IT IS VERY TIME INTENSIVE, ON THEIR HAVE, BEHALF, AND ON YOURS, TO MANAGE THEM, SO, TO THE EXTENT THAT YOU ADD ON ADDITIONAL PURPOSES TO THEM, LIKE , MY ADVICE TO A CLIENT IS ALWAYS GOING TO BE TO FORM LESS OF THEM AND USE THEM MORE MEANINGFULLY. SO, THIS ONE , THEN, APPLIED TO THE IRS, AND ASKED FOR TAX EXEMPTION, AND IN THE 410, 23, IT REALLY, AGAIN, FOCUSED ON THAT ALL THINGS CARMEL STORE . IT SAID THAT IT WOULD SERVE AS A WELCOME CENTER FOR THE CITY, AND IT SPECIFICALLY NOTED THAT IT ANTICIPATES ANNUALLY RECEIVING A GRANT FROM THE CITY THAT WILL BE USED TO SUPPLEMENT THE OPERATION'S EXPENSES FOR THE STORE AND PROVIDE NEW FUNDING FOR PROMOTIONAL OPPORTUNITIES.
SO, PROMOTE CARMEL IS SAYING TO THE IRS WHEN IT WAS FORMED, THAT SUBSIDY WAS GOING TO BE NECESSARY FOREVER. THAT IS THE POLICY QUESTION. FOR THE CITY, IS THIS A GOOD USE OF TAXPAYER DOLLARS TO SUBSIDIZE WHAT WAS, ESSENTIALLY, A COMMERCIAL STORE THAT DID HAVE A VISITOR CENTER DEAL OF IT, BUT AT THE SAME TIME, ALSO , YOU KNOW, WAS IN THE CARMEL ART AND DESIGN , YOU KNOW, DISTRICT, AND IT WAS COMPETING WITH OTHER STORES THAT WERE AROUND AND THAT COULD HAVE SOLD THE SAME TYPES OF ITEMS THAT THE STORE WAS SELLING? THEN, HE NOTED THAT ANY REVENUES THAT EXCEEDED THESE WOULD BE INVESTED BACK INTO THE STORE AND INTO PROMOTING THE CITY. AND SO, THAT EMOTION CONCEPT , WHEN YOU GOT INTO THE INDIVIDUAL EXPENSES THAT WE'LL TALK ABOUT LATER, IT WAS PICKING UP EXPENSES OF THE MAYOR'S OFFICE TO PROMOTE IN THE CITY . THAT INCLUDED INTERNATIONAL TRAVEL.THAT INCLUDED ENTERTAINMENT, DINNERS, ALCOHOL, YOU KNOW, THE ALCOHOL IS NOT ALLOWED TO BE PAID FOR WITH CITY FUNDS. AND SO, YOU STARTED TO SEE THIS SITUATION WHERE, MAYOR'S OFFICE AS ENTERTAINING A GROUP, SOME OF THE EXPENSES COULD BE PAID OUT OF THE MAYOR'S OFFICE, SOME OF THEM COULD NOT. SO, THE STATE LAW GOVERNANCE STRUCTURE , YOU KNOW, AS PUBLICLY ANNOUNCE ON AUGUST 20TH OF 2024, THE CITY IS IN THE PROCESS OF DISSOLVING PROMOTE CARMEL. I CAN TELL YOU, AS OF TODAY, IT IS DISSOLVED, SECRETARY OF STATE, ARTICLES WERE FILED THIS WEEKEND THE SECRETARY OF STATE ACCEPTED THEM , AND SO, IN AUGUST, WHAT ACTUALLY OCCURRED WAS TO PROMOTE CARMEL ORDER DIRECTORS MADE A DECISION TO DISSOLVE THE ENTITY, WIND DOWN AND CLOSE THE STORE, THAT IT COULD NOT CASH FLOW, AND IT CANNOT CONTINUE TO RELY ON SUBSIDIES FROM THE CITY, AND SO, THAT IT WOULD CLOSE THE STORES.
UPON DISSOLUTION, PROMOTE CARMEL NET ASSETS WILL BE DISTRIBUTED TO THE CITY OR ANOTHER 501(C)(3) ENTITY, AND ZACH WILL BE ABLE TO ANSWER SPECIFIC RUSSIANS, BUT THE STORE WAS A STORE, AND IT HAD INVENTORY , AND A LOT OF IT, SO, WHAT ARE THE SPREADSHEETS THAT YOU SAW IN THE EXHIBITS WAS ALL OF THE INDIVIDUAL ITEMS' HATS OR KITCHENS, MUGS, T-SHIRTS OR WHATEVER THEY WERE. WHEN YOU DISSOLVE IT, YOU'RE NOT GOING TO GET BACK CASH. WHAT YOU GOT BACK WAS A LOT OF THE ITEMS THAT WERE IN THE ALL THINGS CARMEL STORE, BECAUSE THERE WAS NOT THAT CASH TO BE DELIVERED BACK TO THE CITY . THERE WERE THREE DIRECTORS APPOINTED SINCE IT WAS FORMED. THEY WERE APPOINTED BY THE MAYOR , AND SUBJECT TO REMOVAL WITH OR WITHOUT CAUSE BY THE MAYOR . YES?
>> QUESTION ON THE DISSOLUTION. WHEN YOU FILED THAT, DO YOU FILE WHERE IT GETS DISSOLVED TO? IS IT TO THE CITY?
>> YES. SO, THE ARTICLES OF DISSOLUTION SAID THAT HE COULD GO TO A NONPROFIT AND/OR THE CITY, BUT THE DISSOLUTION WILL
GO TO THE CITY. >> OKAY. I WILL SAVE OTHER QUESTIONS FOR ZACH IF WE HAVE TIME FOR THAT.
>> YEAH . >> WONDERING, WHEN WE TALK ABOUT THE BOARD OF DIRECTORS, I THINK THIS IS GOING TO BE, LIKE, A STRONG PLACE FOR US TO LOOK AT THE SHAPE OF THESE RELATIONSHIPS . WHO THEY ARE APPOINTING, NOT APPOINTING, OR RANDOM-BOARD APPOINTED, A BUNCH OF DIFFERENT KIND OF STRUCTURES THERE CAN BE SET UP. WONDERING, IN YOUR EXPERTISE, AGAIN, AS YOU HAVE SEEN THESE ALL OVER THE COUNTRY, ARE THERE DIFFERENT STRUCTURES? I THINK, BACK TO THIS SPECIFIC SCENARIO, WE HAD THIS CHECK AND
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BALANCE IN PLACE WITH THE MAYOR APPOINTING THESE NUMBERS, THEN THIS BOARD, FOR WHATEVER REASON, DIDN'T EXERT ITS CONTROL OVER THE ORGANIZATION, AND IT WAS RUN BY THE STAFF, WHICH WAS A STAFF OF THE CITY, ALL THOSE THINGS WE JUST TALKED ABOUT. WONDERING IF YOU SEE OTHER STRUCTURES OR ARE APPOINTED WITH APPROVAL BY CITY COUNCIL, OR IF THERE IS A DIFFERENT KIND OF OPERATING THING THAT WORKS BETTER THAN THIS, BECAUSE THIS OBVIOUSLY DIDN'T WORK THE WAY IT SHOULD HAVE.>> YEAH. AND I THINK IT DIDN'T WORK FROM THE OUTSET BECAUSE THE EXPECTATION WAS SENT IMMEDIATELY THAT THE DAY-TO-DAY ACCOUNTABILITY WOULD BE TO THE MAYOR'S OFFICE, AND NOT TO THE BOARD OF DIRECTORS, AND I THINK THAT SIGNAL LOOKED TO ME LIKE IT WAS SENT TO THE STAFF, TO THE CITY EMPLOYEES AND ALSO TO THE BOARD.SO, TYPICALLY, THIS IS AN EXECUTIVE BRANCH FUNCTION TO APPOINT THE BOARD MEMBERS AND TO BE ABLE TO MANAGE AND OVERSEE IT. AS ALL OF YOU HAVE SAID EARLIER, THERE IS A LARGE STAFFING COMPONENT TO THIS, AND THE CITY COUNCIL DOESN'T HAVE THE STAFF AND RESOURCES TO BE ABLE TO DO THAT. SO, THEY'RE GOING TO NEED TO RELY UPON CORPORATION COUNCIL'S OFFICE TO DO THAT. SO, TYPICALLY, WE SEE THAT THE MAYOR AND THE EXECUTIVE BRANCH EMPLOYEE -- BUT THE CITY COUNCIL IS VERY INVOLVED ON THE FUNDING AND THE FISCAL ISSUES ASSOCIATED WITH IT. BECAUSE HERE, THIS IS A FISCAL ISSUE. RIGHT? AND SO, THAT IS WHERE EVERY SINGLE YEAR IT WAS COMING BACK TO THE CITY COUNCIL, BUT I DON'T HAVE TRANSPARENCY INTO HOW MUCH EVALUATION WAS BEING DONE WHEN IT CAME UP EACH YEAR FOR THE NEXT YEAR'S FUNDING.
SO, -- >> THEN, KIND OF ONE FOLLOW-UP WE HAVE TALKED ABOUT LAST MEETING, WE TALKED ABOUT THE CLOSENESS IN PROXIMITY. I THINK THAT IS A REALLY BIG KIND OF OPEN-ENDED QUESTION HERE FROM A FRAMEWORK OF HOW WE ARE GOING TO SET UP A RECOMMENDATION , IF IT MAKES SENSE TO BE CLOSER TO THE CITY , HAVE MORE CONTROL IN SOME INSTANCES, BASED ON THE STRUCTURE OF AN ORGANIZATION, BUT IN THIS CASE, THE PROBLEM WAS THERE WAS TOO MUCH EXECUTIVE RANCH CONTROL OVER AN ENTITY THAT HAD LOST ITS WAY AND NO CHECK AND BALANCE IN THAT POWER.
HOW DO WE DELINEATE BETWEEN THOSE TWO? ULTIMATELY, MY INITIAL THOUGHT IN MY HEAD AS A CITY COUNCILMEMBER, I'LL NEVER APPROPRIATE MONEY TO AN AFFILIATE AGAIN WITHOUT A FULL REPORT OF RECOGNITION OF OTHER THINGS, WHICH WE CAN BUILD INTO THE EXTREME HYGIENE, BUT THE CONCEPT OF CONTROL, BUT IS TOO MUCH, WHAT IS NOT ENOUGH AND WHERE IS THE SWEET SPOT FOR INDEPENDENT, I THINK, IS GOING TO BE PARAMOUNT AS WE MOVE FORWARD IN THIS CASE, WONDERING , AGAIN, THIS WAS FULLY CONTROLLED, IT LOOKS LIKE , BY CITY OPERATIONS, WHICH MAY HAVE IMPLEMENTED OR HAD OTHER ISSUES ADDED TO WHAT THEY WERE DOING AND A NONPROFIT, BUT HOW DO WE KIND OF TOE THAT LINE ?
>> I WOULD SAY, FIRST OF ALL, GOVERNANCE, THE CITY SHOULD CONTROL THE GOVERNANCE IN THE WAY THAT WE HAVE SEEN, AND SHOULD MAKE THOSE APPOINTMENTS . I THINK THAT THE TYPE ONE SUPPORTING ORGANIZATION STATUS IS THE BEST WAY, BECAUSE YOU ARE TIED TO EACH OTHER , YOU HAVE A NEXUS OF TAX EXEMPTION TO EACH OTHER. THAT IS WHY IT IS USED ALL THE TIME. GOVERNANCE, ABSENTLY, THERE SHOULD BE CONTROL THERE. YOU KNOW, THE SECOND THING IS, I THINK THAT THE MAYOR'S OFFICE NEEDS TO EXPRESS PRAYER TO THE BOARD, AND USUALLY, THAT IS HANDLING, THESE ARE MY PRIORITIES FOR THIS ORGANIZATION, BUT THE DAY-TO-DAY MANAGEENT, THE OVERSIGHT OF THE CEO OR THE EXECUTIVE DIRECTOR, THAT NEEDS TO COME FROM A BOARD, SO, I THINK THAT WHAT THE MAYOR NEEDS TO DO , AS THE APPOINTING BODY, IS A PRIORITY. MY GOAL FOR THIS ORGANIZATION, INTO THE CITY THIS YEAR, ARE AS FOLLOWS . THE DAY-TO-DAY ORGANIZATION FOR IT SHOULD BE DONE BY THE VOLUNTEER BOARD MEMBERS APPOINTED. RIGHT NOW, I THINK WE ARE IN A -- THIS YEAR HAS BEEN ABOUT INVESTIGATING AND UNDERSTANDING, AND SO, YOU KNOW, THE MAYOR HAS APPOINTED SOME OF HER STAFF MEMBERS TO GO IN AND UNDERSTAND WITH THE FULL ASPORTATION THAT THEY WILL COME BACK OUT AND THESE WILL BE IMMUNITY BOARDS THAT ARE OVERSEEN BY COMMUNITY MEMBERS , AND THE OTHER THING I WOULD RECOMMEND IS, YOU HAVE A BIG TALENT POOL IN CARMEL. YOU HAVE A LOT OF SMART, TALENTED PEOPLE , BUT DIFFERENT ONES ON
DIFFERENT BOARDS. >> YOU KNOW, ULTIMATELY, YOU KNOW, THE MAYOR, WHETHER IT WAS MAYOR WHOEVER -- YOU KNOW -- HAS THE AUTHORITY TO SPIN THESE UP. COUNCIL HAS THE OBLIGATION TO DO OVERSIGHT , BUT I THINK PART OF IT IS THERE NEEDS TO BE , ON THE FRONT END, AGAIN, MAYBE HYGIENE IS NOT THE BEST, BUT A BEST PRACTICE WOULD BE THAT THE BOARD MEMBERS HAVE EXPERIENCE .
WHETHER IT IS DIRECTLY IN NOT-FOR-PROFITS OR RUNNING THEIR
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OWN ORGANIZATIONS, AND THESE ARE NOT PATRONAGE POSITIONS. AGAIN, I HAVE SEEN, IN MANY CASES, THESE ARE SIMPLY PATRONAGE POSITIONS FOR PEOPLE CLOSELY A CILIATED OFFICE AFFILIATED WITH THE CITY WHO WOULD DO EXACTLY AS YOU EXPECT THEM TO DO. IF IT WAS MY MONEY AND I'M GOING TO STAND UP AND OFFER FOR PROFIT OR DONATE, I WOULD LIKE TO KNOW THAT LEADERSHIP IS, WHAT THEIR EXPERIENCES, YOU KNOW, WALKING IN THE DOOR , CERTAINLY, SOME MISSION-BASED PEOPLE, YOU KNOW, THEY FEEL DEEPLY ABOUT IT, BUT YOU NEED TO HAVE THE PEOPLE WITH, YOU KNOW, GREEN EYE SHADE EXPERIENCE AND LEGAL EXPERIENCE, THINGS LIKE THAT TOO .SO, MAKING SURE, IF THE CITY DOES THIS AGAIN , THAT WE RUN IT LIKE A NORMAL BUSINESS IS, HAVE THE RIGHT PEOPLE IN A LEADERSIP ADDITION THAT KNOW WHAT THEY SHOULD KNOW ABOUT IT, THEN, ON THE BACK END, MUCH MORE ACCOUNTABILITY IN TERMS OF REPORTING . ONE OF THE QUESTIONS -- I MAY HAVE ASKED IT -- BUT I WILL ASK IT AGAIN -- YOU SAID, THERE WAS THREE BOARD MEMBERS, WHO WERE THEY? AGAIN, WHO WERE THE THREE BOARD MEMBERS?>> TIM GRIFFIN, LAUREN TAYLOR, AND REBECCA SCHEFFLER .
>> SO -- AS I LOOK AT THIS CONVERSATION, I WOULD TELL YOU -- EXCUSE ME -- I HAVE ANGST OVER , YOU KNOW, LOOKING BACKWARDS SO MUCH. YOU KNOW, I HAVE BEEN MANAGING NONPROFIT FINANCIAL COMPLEX FOR ABOUT 40 PLUS YEARS. 501(C)(3)'S, STATE SPONSORED ENTITIES , STATE AUTHORITIES, RAISING BILLIONS OF DOLLARS ON THEIR BEHALF, WHAT WE'RE LOOKING AT HERE IS A COMPLETELY BROKEN STRUCTURE , DIDN'T WORK, NEVER WORKED , AND I DON'T THINK WE SHOULD LEARN FROM IT -- WE CAN -- ACTUALLY KEEP MOVING FORWARD FROM THAT -- YOU KNOW, BUT, YOU KNOW, THIS IS NOT THE WAY A NONPROFIT SHOULD RUN IN THE FIRST PLACE. THAT GOVERNANCE STRUCTURE SHOULD RUN DIRECTLY AND SPEAK TO THE WILL OF THE CITY, IN THIS CASE , ALL THE WAY THROUGH TO THE , WHATEVER SERVICE ME BE PROVIDED. TO YOUR POINT, TIM, IT WAS PROVIDED. RIGHT? IT IS YOUR MONEY, AND , AS A TAXPAYER IN THE CITY , WE SHOULD SOLVE THIS FOR EVERYONE . IT SHOULD NEVER
HAPPEN AGAIN. >> I WANT TO ECHO THAT, BUT I ALSO WANT TO SAY THAT PART OF THE ISSUE HERE WAS THAT THERE WAS DIRECT CONTROL IN THE CITY. THE STRUGGLE WAS THE EXECUTIVE BRANCH USING THIS FOR ITS PURPOSES WITHOUT THERE BEING AN OVERSIGHT OR STRUCTURE THAT WAS TANGIBLE FOR US TO BE ABLE TO MAKE A JUDGMENT CALL OUR GOVERNANCE STRUCTURE. SO, I FULLY AGREE, I THINK THE KEY HERE IS LEARNING FROM WHAT IS SAID TO HAVE OCCURRED.NO EVEN JUDGMENT ON WHETHER OR NOT THESE THINGS COULD OR SHOULD HAVE HAPPENED, THEY DID .WE HAVE GOT TO FIGURE OUT NOW NEXT STEPS ON HOW TO ENSURE THEY DON'T HAPPEN AGAIN. NOT ONLY FOR ME CONSTITUENTS, BUT FOR EVERYBODY INVOLVED. THIS IS NOT A FUN THING FOR PEOPLE THAT NAMES ARE ON THESE DOCUMENTS, OR EVEN US IN THE ROOM TO HAVE TO SECURE AN DO THIS, BUT THE WORK OF THIS IS TO FIGURE OUT THE NEXT ITERATION, THE NEXT STEP, AND DON'T WANT IT TO BE LOST ON KIND OF THE STRUCTURE HERE, WE ARE TALKING OF A CITY OF CARMEL WHICH IS VERY COMPLEX, VERY WELL STRUCTURED, VERY POWERFUL, GOOD, WONDERFUL, AND IT DOES A LOT OF WONDERFUL THINGS, BUT WE'RE IN OUR FIRST KIND OF ADMINISTRATION CHANGE IN LITERALLY 30 YEARS , SO, THINGS THAT WERE DONE IN 1996 THAT ARE DIFFERENT TODAY , ARE DIFFERENT TODAY, AND THEY ARE COMPUTERS. THEY WERE NOT COMPUTERS THEN, I ASSUME, BUT WE'RE MOVING INTO A NEW ITERATION OF HOW TO GOVERN A CITY THAT HAS GROWN FROM 25,000 PEOPLE TO 100,000 PEOPLE IN THAT SAME TIME. SO, THERE IS SO MUCH TO LEARN , SO MANY WONDERFUL THINGS TO TOUT AND SAY HAS BEEN GREAT, THINGS ARE MOVING, THINGS THAT ARE GOING, OR WONDERFUL .
IT IS JUST GETTING THE FOUNDATIONAL UNDERSTANDING OF WHAT THESE THINGS ARE SO WE CAN PUT US IN THE NEXT USS IN THE BEST POSITIONS TO HAVE THE BEST CITY IN THE WORLD FOREVER.
>> MERELY, I WANT TO THANK YOU AND ECHO EVERYTHING YOU ALL ARE SAYING. MAJORLY, WANTED TO TOUCH ON SOMETHING YOU SAID THAT I THINK IS REALLY IMPORTANT, THAT OUR CONSTITUENCY NEEDS TO HEAR, THAT THE PEOPLE WHO DO SERVE ON THESE VOLUNTEER BOARDS, THEY'RE VERY IMPORTANT, VERY IMPORTANT , THEY GIVE THEIR TIME AND ENERGY, AND THEY SHOULD BE GIVEN KUDOS. I WANT TO THANK YOU FOR BRINGING
[00:50:04]
THAT UP, BECAUSE WE DO HAVE A VERY LARGE TALENT POOL IN OUR CITY, AND WE SHOULD GIVE THEM THANKS FOR ACTUALLY STEPPING UP TO THE PLATE AND DOING THEIR JOB, WHETHER OR NOT, YOU KNOW, IT WAS GOOD, BAD, OR INDIFFERENT. TO YOUR POINT, IT DOESN'T MATTER. WE NEED TO THANK THOSE INDIVIDUALS.THANK YOU FOR BRINGING THAT. I REALLY WANT TO THANK YOU FOR THAT>> SO, MAYOR TRANSITION PROCESS TO PUT TOGETHER SOME THOUGHTS ON HOW TO EVALUATE THESE NONPROFIT AFFILIATES, WHICH I PROVIDED, AND THEN, WHEN SHE CAME INTO OFFICE, SHE EXPRESSED TO HER STAFF AND US, AND LEGAL COUNCIL, THAT SHE WANTED TO DO A FISCAL AND LEGAL REVIEW OF EACH OF THESE ORGANIZATIONS TO MAKE SURE THAT THEY WERE FUNCTIONING APPROPRIATELY AND USING DOLLARS APPROPRIATELY, AND , SO, WHEN WE BEGIN TO TELL YOU WHAT WE FOUND WHEN WE STARTED TO REVIEW FISCAL DOCUMENTS, LEGAL DOCUMENTS, CORPORATE GOVERNANCE DOCUMENTS. FIRST OF ALL CAN PROMOTE CARMEL AND THE ALL THINGS CARMEL STORE OPERATED AT A LOSS EVERY YEAR SINCE ITS CREATION, AND IT RELIED UPON TAXPAYER SUBSIDIES TO KEEP ITS DOORS OPEN. THIS ORGANIZATION WOULD HAVE FAILED IN ANY YEAR HAD IT NOT RECEIVED THOSE TAXPAYER SUBSIDIES IN THE FORM OF A GRANT FROM THE CITY. THE RUNNING OF A GIFT STORE, THE MAYOR CONCLUDED, THE RUNNING OF THE GIFT STORE DOES NOT PRESENT AN ESSENTIAL CITY FUNCTION, YET IT IS SUBSIDIZED WITH CITY TAXPAYER DOLLARS , AND IN THIS CASE, IT DID NOT DEMONSTRATE A PATH TOWARDS FISCAL SUSTAINABILITY. THINGS WERE NOT GETTING BETTER OVER TIME, AND AT THE SAME TIME, THE ALL THINGS CARMEL STORE OCCUPIED TABLE SPACE ON MAIN STREET THAT COULD BE AVAILABLE FOR VIABLE COMMERCIAL BUSINESSES THAT WOULD ACTUALLY ADD TO CARMEL TAX BASE. IT WAS TAKING UP VALUABLE REAL ESTATE, AND THEY WOULD NOT CONTRIBUTE INTO THE TAX SPACE.
OTHER COMMERCIAL ENTERPRISES COULD AND THE ALL THINGS CARMEL STORE WAS COMPETING WITH OTHER COMMERCIAL VENDORS IN THE ARTS AND DESIGN DISTRICT. IN ESSENCE, THE CONCLUSION WAS THAT THE CITY'S SUBSIDIES TO PROMOTE CARMEL NEVER DID TAX FUNDS AWAY FROM CRITICAL, ESSENTIAL FUNCTIONS, AND TOWARD WHAT WAS ESSENTIALLY A COMMERCIAL ACTIVITY THAT WAS COMPETING WITH OTHER TAXPAYING BUSINESSES IN THE ARTS AND DESIGN DISTRICT.
>> JUST A QUESTION ON THOSE, OBVIOUSLY, DERIVED FROM A SENSE OF KIND OF FIGURING OUT HOW TO ANALYZE WHAT TO DO HERE, WONDERING, NONPROFITS AND AFFILIATES THEMSELVES , IF YOU LIKE YOU PROBABLY SHOULD FILL A POTION THAT MAY NOT BE COMMERCIALLY VIABLE, OR DOESN'T HAVE A PLACE IN THE MARKET, FROM THE SUBSET OF A PRIVATE ENTITY COMING IN TO DO IT. WONDERING, FROM YOUR KNOWLEDGE AND EXPERIENCE, DO YOU SEE OF THIS ON IS NOT A THRESHOLD QUESTION -- SUSTAINABILITY ITSELF --
>> GREAT QUESTION . I LOVE IT. SOME OF THESE THINGS, I AM A TAX ATTORNEY, SO I LOVE YOUR QUESTIONS. FIRST OF ALL, NONPROFITS ARE RESPONSIBLE TO BE FISCAL STEWARDS OF DOLLARS IN GIVEN INSTALLMENTS. SO, SOLVENCY IS ALWAYS A GOAL FOR EVERY 501(C)(3), EVEN THOUGH THEY ARE A NONPROFIT THEY MUST STILL BE SOLVENT . THE SECOND THING IS, IF THEY ARE RELIANT UPON GRANT FUNDING -- RIGHT OF THIS IF YOU ARE NOT SOLVENT AND YOU CAN'T PAY YOUR BILLS, YOU HAVE TO ASK FOR PHILANTHROPY FOR CHARITABLE ATTRIBUTIONS TO FILL THAT GAP, THEN YOU HAVE TO BE ABLE TO SAY TO YOUR FUNDERS, THIS IS A CHARITABLE PURPOSE, AND IT IS WORTH YOUR CHARITABLE DOLLARS, GIVE ME MONEY. I NEED YOUR CHARITABLE -- MANY, MANY ORGANIZATIONS, YOU KNOW, IF YOU LOOK FOR ANY SOCIAL SERVICE WRITER IN OUR COMMUNITY, THEY'RE NOT SOLVENT, RELIED ON THE COMMUNITY. THE QUESTION HERE IS, IS THE RUNNING OF THE ALL THINGS CARMEL STORE -- IS THAT A PURPOSE THAT SHOULD QUALIFY FOR A CHARITABLE GRANT OF TAXPAYER DOLLARS IN THE CITY? THAT IS THE POLICY AND STRATEGY QUESTION.
THAT IS WHERE I THINK THE MAYOR AND HER TEAM CONCLUDED THAT THIS IS NOT A SOCIAL SERVICE. WE ARE NOT HELPING THE HOMELESS. WE ARE NOT SOLVING PUBLIC SAFETY. YOU KNOW, THIS ISN'T A TRADITIONAL CHARITABLE ACTIVITY THAT RELATES DIRECTLY TO A CRITICAL, ESSENTIAL SERVICE ON BEHALF OF OF THE CITY. SO, THESE DOLLARS COULD HAVE BEEN DEPLOYED TO PUBLIC SAFETY OR ANY OF THE
OTHER CRITICAL ESSENTIALS . >> WHAT I JUST ASK, OBVIOUSLY, THERE ARE THINGS THAT THE CITY HAS TO DO THAT ARE HARD FOR THE CITY TO DO. THERE ARE THINGS THE CITY HAS TO DO BECAUSE THERE ARE THINGS THAT THE CITY HAS TO DO. THOSE ARE ESSENTIAL. WE DEEM ALL CITY OPERATIONS AS ESSENTIAL , WITHIN THE BUDGET. THIS FALLS DIRECTLY IN LINE WITH MARKETING, WHICH I WOULD NOT ARGUE IS NOT ESSENTIAL. IT IS ESSENTIAL. SO, ON THE RECORD, IT IS ESSENTIAL FOR THE CITY TO BE ABLE TO MARKET. THIS, THOUGH, IS AN
[00:55:03]
ABSOLUTE OF MARKETING. WE DON'T KNOW WHAT THE INITIAL INTENT BEHIND PROMOTE CARMEL WAS, AN ORDINANCE CREATED IT WITH A COUNCIL THAT SAID, WE ARE COMFORTABLE WITH A SOLVENT, NON-SELF-SUSTAINING FROM OUR APPROPRIATION OF MONEY, PIECE OF GOVERNMENT OPERATION THAT IS A DIFFERENT NARRATIVE IF THIS WAS WITHIN THE PURVIEW TO SAY, HEY, THIS IS NOT WHAT WE WANT TO DO FOR OUR MARKETING, WHICH IS ESSENTIAL, ALSO IN THE PURVIEW OF THE RIGHT STEP, AND TAKING THAT TO ITS ZENITH, THE CONCEPT OF SOLVENCY VS. SUSTAINABILITY, THEN WHAT SYSTEMS AND STRUCTURES SHOULD WE BE SETTING UP AS AFFILIATES VS. WHAT FALL WITHIN THE CORE, ESSENTIAL FUNCTIONS OF THE GOVERNMENT, I THINK MATTERS TOO. THIS, ON ITS FACE, AGAIN, SEEMS TO HAVE BEEN AN ATTEMPT TO CREATE PART OF A MARKETING PROCESS BY THE PREVIOUS ADMINISTRATION, AND THE IMAGE THAT THEY FELT WAS ESSENTIAL TO GET PEOPLE ON MAIN STREET, OR WHATEVER THAT WAS -- THE IDEA, THEN, THAT THE CITY COUNCIL APPROPRIATED MONEY TO IT FOR FIVE YEARS TO PAY FOR THAT SHOWS KIND OF A BUY-IN ON THAT. TO BRING IT BACK TO KIND OF THIS SLIDE, THESE ARE GREAT REASONS TO TURN OFF THE END OF PROMOTE CARMEL WITH THE EXECUTIVE AND THE POWER TO DO SO . I'M NOT CERTAIN THAT THEY ARE THRESHOLD QUESTIONS, OR WHETHER OR NOT WE SHOULD DO A NONPROFIT OR NOT, BECAUSE SUSTAINABILITY, AGAIN, BECOMES A QUESTION OF , YOU KNOW, IF IT WAS SUSTAINABLE, COULD MAKE A PROFIT, WOULD BE A THEORY THAT COULD DO IT. SO, TRYING TO KIND OF THREAD THATNEEDLE . >> I BELIEVE IT BECOMES AN ISSUE, PRIORITIZATION AND IMPACT. I THINK THE PUBLICATION OF IMPACT IS SOMETIMES VERY DIFFICULT, BUT OFTEN , ALSO, VERY IMPORTANT. THE IMPACT HERE WAS, WOULD SOMEONE BUY A BRAND OF COFFEE MUG AND GIVE IT AS A GIFT OR TAKE IT HOME AND WEAR A T-SHIRT AND HELP THE COMMUNITY? THERE IS IMPACT THERE, BUT PERHAPS NOT AS BROAD AS OTHER OPTIONS ON OUR TABLE. AS WE LOOK AT ALL OF THESE AFFILIATES AND FUTURE POTENTIAL OPTIONS FOR THOSE, I THINK THAT IMPACT, ABILITY TO PROVE THAT YOU ARE CREATING A CHARITABLE, OR FULFILLING A CHARITABLE PURPOSE, THAT MATTERS TO ME TAXPAYERS IN THIS COMMUNITY, HAS TO BE A
PRINCIPAL . >> ARE THERE OTHER -- IN THIS SITUATION -- OTHER PROVIDERS IN THE MARKETPLACE THAT COULD PROVIDE A SERVICE IN A WAY THAT DIDN'T NEED TO BE SUBSIDIZED? THE CITY HAS THE ABILITY TO PROVIDE ITS INTELLECTUAL PROPERTY, IT'S BRANDING, SO THAT THESE TYPES OF BRANDED ITEMS CAN BE SOLD IN ANY OF THE OTHER RETAIL SHOPS IN ART AND DESIGN DISTRICT. SO, THIS WAS NOT A SITUATION WHERE -- THERE WAS ALREADY A LARGE MARKET HERE FOR THIS .
>> YEAH. AND , I HAVE TO SAY, DECISION HAD BEEN MADE. IT HAS BEEN SHUT DOWN AS OF TODAY . SO, I DON'T THINK IT IS WORTH ANY DISCUSSION ON THAT. I THINK THE REMAINING ISSUES ON THAT, WHEN WE SPENT MOST ON THE FRONT END, HOW DO WE DO IT BETTER NEXT TIME, AND THAT IS WHAT WE ARE ALL WORKING TOWARDS. THIS IS A CAUTIONARY TALE. HAS A LOT OF GOOD INFORMATION THAT WILL HELP US, YOU KNOW, JUDGE EXISTING ORGANIZATIONS, AS WELL AS FUTURE ORGANIZATIONS. LIKELY WOULD ALSO ECHO WHAT COUNSELOR MINARD SAID THAT IS NOT ALIGNING ANYONE ELSE FOR NOT-FOR-PROFIT.
NOT-FOR-PROFIT HAVE TO BE CASH FLOW POSITIVE. EACH ONE IS A LITTLE BIT DIFFERENT, BUT I THINK THERE IS ALSO AN OBLIGATION -- IF WE HAVE AFFILIATES -- IF THEY NEED THAT TAINING AND DON'T UNDERSTAND THEIR OBLIGATIONS ON HOW TO PROPERLY RUN AN ORGANIZATION, WE NEED TO HELP THEM WITH THAT, OR POINT THEM IN THAT DIRECTION, SO EVEN IF MISTAKES ARE MADE THAT ARE UNINTENDED, THAT WERE AVOIDABLE, JUST A MATTER OF TRAINING FOR OVERSIGHT AND INSIGHT THAT, I THINK WE COULD DO THAT. THE OTHER REMAINING PIECE IS WHAT I WOULD LIKE TO JUMP TO, THE FINANCIALS, BECAUSE THE CONCERN PIECE AS I WROTE THIS IS, GREAT, WE BELIEVE THIS IS SHUT DOWN, BUT THERE IS A LOT OF LIABILITIES ON THE TABLE , ALTHOUGH, I WILL PREVIEW IT AND SAY, ONE OF THE REASONS IS SET UP A SEPARATE ORGANIZATION, BECAUSE THE CITY COULD SAY, I DON'T CARE IF WE HAVE, OH, $300,000 OR WHATEVER IT IS. WE CAN WALK AWAY FROM IT. THAT IS ALL UP TO THE CITY TO DO THAT, BUT AGAIN, KNOWING WHAT THOSE OBLIGATIONS ARE TO THE PENNY, I THINK, IS AN IMPORTANT PART OF THE CONVERSATION FOR THE REST OF THE MEETING .
>> SO, IN THIS SITUATION, ONE OF THE THINGS THAT WE LEARNED PRETTY EARLY IN THE PROCESS IS WE REACHED OUT TO THE CITY'S FINANCIAL CONSULTANT, AND THEY NOTED THAT PROMOTE CARMEL DID NOT HAVE AUDIT AND FINANCIAL STATEMENTS AND THE CONSULTANT ADVISED THAT THE INVENTORY VALUES AND RELATED COSTS OF SALES WERE UNRELIABLE DUE TO INSUFFICIENT RECORDS AND
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FINANCIAL CONTROLS OVER THE MERCHANDISE INVENTORY.PARTICULARLY, TO REPORT PURCHASES AND NEW CONSIGNED ITEMS AND THE FAILURE TO PERFORM PERIODIC INVENTORY COUNTS. THAT IS A LOT OF DETAIL, BUT ESSENTIALLY, WHAT THE CONSULTANT SAID WAS, WE WERE DOING THESE, AND WE'RE NOT GOING TO DO THEM ANYMORE, BECAUSE WE ARE UNCOMFORTABLE WITH THE FINANCIAL CONTROLS AND THE INVENTORY COUNTS. SO, THAT GIVES YOU A FLAVOR OF KIND OF WHAT THE CITY /STAFF WALKED INTO WHEN THE STORE WAS CLOSED, BECAUSE THEY HAD ALREADY BEEN GIVEN A WARNING FROM A FINANCIAL CONSULTANT THAT THE RECORDS WERE NOT THERE, WITH RESPECT TO WHAT INVENTORY WAS IN PLACE AND WHAT HAD BEEN
CONSIGNED TO THE STORE. >> A QUICK QUESTION ON THIS, WHO WAS THAT FINANCIAL --
>> IT IS COONROD. YEAH. SO, THAT WAS , YOU KNOW -- I HAD THAT CONVERSATION, AND THAT WAS -- YOU KNOW -- A HEADS UP TO ME, THAT IF THEY WERE UNCOMFORTABLE AND NO LONGER DOING THAT INVENTORY CONTROL, THAT WE HAD TO REALLY UNDERSTAND . BECAUSE, HONESTLY, YOU KNOW, WE WANT TO BE FAIR TO ALL OF THE ARTISANS WHO HAD CONSIGNED PRODUCTS AT THE ALL THINGS CARMEL STORE .
THE LARGEST PRIORITY WAS TO MAKE SURE , TO HONOR THE BUSINESS ARRANGEMENTS THAT HAVE BEEN MADE TO THE VENDORS WHO HAD CONSIGNED
ITEMS THERE FOR SALE. >> NOT TO BELABOR THE POINT, BUT SO , WHO WAS IN CHARGE OF -- JUST AS A MATTER OF INTEREST -- WHO WAS IN CHARGE OF KEEPING THOSE RECORDS IN ORDER FOR THE NEW ADMINISTRATION TO COME IN, AND THEN GIVE THE ARTIST -- BECAUSE IT WAS SUCH A CAUSTIC SUBJECT -- BECAUSE THE VENDORS WERE NOT RECEIVING THEIR ITEMS BACK , OR THEIR FINANCIAL RESTITUTION ACCORDING TO SOCIAL MEDIA, I JUST WANT TO KNOW, SPECIFICALLY, WHO WAS IN CHARGE OF KEEPING THOSE RECORDS, AND WHY THAT WAS SUCH A STRANGE SITUATION. I GUESS, IS THERE AN
ANSWER TO THAT QUESTION? >> PROMOTE CARMEL STAFF WAS RESPONSIBLE FOR KEEPING FINANCIAL RECORDS . FEELY WAS THE FINANCIAL DIRECTOR. ULTIMATELY, SHE WAS RESPONSIBLE FOR ALL OF THE BUSINESS RECORD-KEEPING THAT WOULD HAVE GONE ON IN THE ALL THINGS CARMEL STORE. WHEN THE STORE WAS CLOSED AND THE CITY STAFF WHEN IN THE NEXT DAY AND STARTED TO DO AN INVENTORY AND ON LATER SLIDES, THAT IF A LOT OF THE RECORDS WERE KEPT AT STAFF MEMBERS OF THREE HELP THE NOT AVAILABLE AT THE STORE AND SOME WERE NOT ELECTRONIC, SOME RECORDS WERE PAPER. SO, AND IF YOU LIQUIDATE A STORE, AND YOU GO INTO IT AND DON'T HAVE CLEAR RECORDS, I UNDERSTAND WHAT YOU ARE TALKING NOW, IN TERMS OF A FRUSTRATION THAT YOU CAN SEE ON SOCIAL MEDIA ABOUT A QUICK CLOSURE, AN IMMEDIATE CLOSURE AND THE IMPACT THAT THAT HAD, AND THAT IS A REAL IMPACT, AND THAT IS WHY , YOU KNOW, I NOTED THAT FROM THE MAYOR'S PERSPECTIVE, PRIMARY OBJECTIVE WAS, AS QUICKLY AS WE CAN, TO MAKE THESE VENDORS HOLD, BUT AS QUICKLY AS WE CAN, WAS DEPENDENT UPON SORTING THROUGH DOCUMENTS THAT WERE SPREAD ACROSS MULTIPLE SITES, SOME OF WHICH WERE IN WRITING AND SOME OF WHICH WERE ELECTRONIC, SOME WHICH FRANKLY WEREN'T AVAILABLE. SO, IN TERMS OF THE ANNUAL SUPPORT, THIS SLIDE WILL SHOW YOU THAT PROMOTE CARMEL GOT SIZABLE -- THESE ARE CASH GRANTS MADE TO REMOTE CARMEL BETWEEN 2020 AND 2024 . THE AGGREGATE CITY SUBSIDIES TO PROMOTE CARMEL WERE 1.2 MILLION DOLLARS OVER THESE 5 YEARS, AND THERE WAS AN ANNUAL PAYMENT THAT WAS DUE TO PROMOTE CARMEL AND THE CHARITABLE GRANT, $96,000 WAS 1/2 OF IT , PAID IN JANUARY, AND THE REMAINDER OF IT WAS HELD TO PAY LIABILITIES, BECAUSE THE DECISION WAS MADE TO DISSOLVE IT IN AUGUST AND THE SECOND PAYMENT WAS NOT MADE THAT PAYMENT BECAME KIND OF THE CORE OF WHAT THE CITY WOULD UTILIZE FOR SOME OF THESE DISSOLUTION COSTS. THE ESTIMATE OF THE ADDITIONAL TAXPAYER SUBSIDIES TO PAY DISSOLUTION LIABILITIES IS ONE TO 16,000, PLUS $30,000 TO REPAY THE REMAINDER OF THE $50,000 CHARITABLE GRANT WE DISCUSSED EARLIER . SO, THE TYPES OF EXPENSES -- THE TYPES OF EXPENSES THAT PROMOTE CARMEL HAD WHEN IT CLOSED ITS DOOR WORK , FIRST OF ALL, IN NEEDED TO BREAK LEASE . A PARTIAL GRANT
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REPAYMENT OF $10,000 WAS MADE TO START TO REPAY THE $50,000 CHARITABLE GRANT THAT HAD BEEN GIVEN . PAYMENTS TO VENDORS OF $19,775 AND OTHER MISCELLANEOUS EXPENSES, LIKE UTILITIES , AND THINGS LIKE THAT, AND SO, AT THIS POINT, THE OTHER KNOWN LIABILITY IS A REMAINDER OF $30,000 REMAINING ON THE GRANT THAT WAS NOT -- THE GRANT WAS GIVEN TO THE PLANT GARDEN, THAT DID NOT HAPPEN, AND THE FUNDS WERE USED TO BAIL OUT THE JAZZFESTIVAL. >> BEFORE WE GET INTO DETAILS, WONDERING -- THIS MIGHT BE FOR ZACH -- WHERE IN THE BUDGET ARE THESE KIND OF GRANTS OR GRANTS LIKE THIS APPROPRIATE, WHERE DID THEY COME FROM, HOW DO THEY GET PAID? DO THEY COME THROUGH THE CLAIMS PROCESS? JUST GIVE US KIND OF AN OVERVIEW THERE. IF THERE IS ANYTHING THAT WE CAN DO.
>> COULD YOU BE SPECIFIC ABOUT THE $50,000 GRANT OR WHERE THE
MONEY SITS NOW? >> CERTAINLY, AND THANK YOU, MR. CHAIRMAN, MEMBERS OF THE COMMITTEE. MR. CHAIRMAN, I KNOW YOU ARE A LITTLE BIT YOUNGER THAN ME, BUT 1996, THERE WERE COMPUTERS . I WAS PART OF THE TASK FORCE IN HIGH SCHOOL THAT BROUGHT INTERNET TO MY HIGH SCHOOLS. I REMEMBER THERE BEING COMPUTERS THERE -- SO, BUT YEAH, ZACH JACKSON, CFO CONTROLLER, CITY OF CARMEL -- TO CLARIFY A FEW THINGS HERE -- THE $50,000 DONATION APPEARS TO HAVE JUST BEEN DEPOSITED IN THE CHECKING ACCOUNT , LIKE, ANY OTHER REVENUE THEY RECEIVED, AND WE DID RECEIVE CONTACT FROM THE DONOR SOME TIME EARLIER THIS YEAR ASKING US TO GO AHEAD AND MOVE 10,000 OF THAT OVER TO NEW FIELDS. SO, AT HIS REQUEST, WE KIND OF CHECKED FROM CARMEL AND MOVED FORWARD. TECHNICALLY, WE STILL -- THERE IS A $40,000 LIABILITY THERE. I THINK THE REASON WE HAVE 30 ON HERE IS THAT WE HAVE, TODAY, $10,000 OF CASH IN THE CHECKING ACCOUNT LEFT, AND WE MIGHT HAVE 10,000 FOR THAT, MAYBE 40,000 LIABILITY, AND WE STILL HAVE THE OTHER 30,000. THAT ALSO REPRESENTS KIND OF WHAT WE KNOW TODAY . IF YOU WOULD HAVE ASKED ME LIKE TWO OR THREE WEEKS AGO -- TODAY, I'M SAYING 30,000.
TWO OR THREE WEEKS AGO, I WOULD HAVE SAID, IT IS 25,000. EVERY COUPLE OF WEEKS , SOMETHING POPS UP, HERE IS A NEW BILL. I CAN SAY, FOR SURE, THAT 30,000 RIGHT NOW WILL SOLVE EVERYTHING, BUT WHAT WE KNOW RIGHT NOW IS THAT 30,000 WILL SOLVE -- IN TERMS OF THE APPROPRIATION -- I BELIEVE THIS WAS AN APPROPRIATION TO MAC CURRENTLY LIVE IS NOT AS IF FISHER THE NAME OF THE DEPARTMENT PRIOR FOR IT BEING RENAMED AT THE END OF LAST YEAR, A LINE ITEM UNDER THERE I THINK WAS REFERRED TO AS LABELED AS PROMOTE CARMEL. COUNCIL WOULD HAVE SEEN THAT FOR THE CLAIMS KIND OF REVIEW PROCESS, BUT AGAIN, THAT PROBABLY WOULD HAVE BEEN, YOU KNOW, ONE NUMBER IN A SPREADSHEET WORTH OF TRANSACTIONS, BUT THAT IS HOW IT WOULD NOT BE RELEASED , WITHOUT SOME SORT OF CLAIM FORM , AND EVERY CLAIM THAT WE PAID, IF IT IS LITERALLY WRITING A CHECK, COUNCIL SEES THOSE FIRST BEFORE WE SEND OUT A CHECK. IF IT IS AN ELECTRONIC PAYMENT, WE CAN DO ACH PRIOR TO COMING TO COUNCIL. WE STILL HAVE TO NOTIFY COUNCIL, BUT WE CAN DO BEFORE , BUT WE DON'T DO A TON OF ACH
TRANSACTIONS. >> SO, ONE OF THE NEXT STEPS -- WE FILED THE ORDINANCE OF DISSOLUTION WITH THE SECRETARY OF STATE THIS WEEK. ONE REQUIREMENT THE APPROPRIATE FUNDINGS UNDER STATE LAW IS IF YOU NOTIFY A ORGANIZATION, THAT THIS IS DISSOLVING AND PUT EVERYBODY ON NOTICE, THAT IF THEY DO HAVE A CLAIM, THAT THEY HAVE A GIVEN PERIOD OF TIME TO SUBMIT IT . SO, THAT NOTICE WILL PROBABLY GO OUT IN THE NEXT WEEK, AND THERE MAY BE OTHER CLAIMS . THAT IS REQUIRED. WE WANT TO DO THAT. I THINK THE GOAL IS TO MAKE PEOPLE WHOLE .
SO, YOU MAY EXPECT THAT, WHEN THAT GOES OUT IN THE NEWSPAPER AND IS PUBLISHED, THAT YOU MAY GET AN OTHER ROUND OF CLAIMS.
>> A COMMENT AND A COUPLE OF QUESTIONS. I WAS ON COUNCIL, I THINK THE 196 COMING IN FRONT OF ME , BECAUSE THAT CAME UNDER -- I THINK THAT CAME OUT OF NANCY'S BUDGET -- AND I QUESTIONED A NUMBER OF TIMES, BECAUSE IT NEVER CHANGED, AND WE NEVER GOT ANY OTHER REPORTING ON IT -- MAYBE YOU TRACKED THAT ,
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SUBSTANTIALLY HIGHER -- YOU KNOW -- ONE OF THE QUESTIONS I HAVE ABOUT THAT GRANT , STARTING WITH THAT GRANT, THERE WAS AN MOU SIGNED BY THE EXECUTIVE DIRECTOR THAT ACKNOWLEDGED , THESE FUNDS WOULD ONLY BE USED FOR THIS PURPOSE. THEY WOULD BE PUT IN A SEPARATE BANK ACCOUNT THAT WOULD BEAR INTEREST UNTIL IT WAS USED.WHY WAS THAT NOT DONE, WHY DID THIS MONEY EVER GO TO MOUNT CARMEL, AND WANTED TO COME TO THE GENERAL LEDGER?
>> THAT GRANT WAS MADE TO PROMOTE CARMEL , MADE TO PROMOTE CARAMEL, AND THE GRANT SAID, PROMOTE, WOULD BE OBLIGATED TO KEEP IT IN -- DEMANDED $50,000 A YEAR?
>> YES, BUT THE MOU SPECIFICALLY , AT LEAST IMPLIED , IT WOULD BE A FIREWALL, NOT JUST FOR USE, BUT ALSO, BANKING STANDPOINT,
NOT INTO THE GENERAL ELECTION. >> ON PROMOTE CARMEL THEY DID NOT DO THAT , FOLLOW THE TERMS OF THE GRANT AGREEMENT.
>> OKAY. THEN, MADE THE DECISION TO TAP INTO THOSE FUNDS AGAINST THIS MOU, ANY CIVIL OR OTHER LIABILITIES ASSOCIATED WITH THIS DECISION THAT THE MOU THAT IT WAS IGNORED?
>> I DO NOT PERSONALLY HAVE THE KNOWLEDGE AS TO WHO MADE THE DECISION. THERE ARE NOT, FOR EXAMPLE, MINUTES DURING THIS TIME PERIOD . SO, I DO NOT KNOW WHO MADE THE DECISION TO DO IT.
THE DONOR HAS LEGAL RECOURSE, BECAUSE THIS WAS A CONTRACT, THIS WAS A GRANT AGREEMENT, AND AGAIN, THIS IS NOT THE CITY'S RISK, THIS IS PROMOTE CARAMEL RISK. THEY SIGNED A GRANT AGREEMENT, DID NOT FOLLOW IT OR PUT THE MONEY IN A SEGREGATED ACCOUNT, AND HE USED IT FOR A PURPOSE. IT VIOLATED DONORS.
THERE IS A BODY OF LAW IN INDIANA THAT GIVES THE DONOR STANDING TO BE ABLE TO GO TO COURT AND ENFORCE THE RIGHTS, BUT FOR THE CITY'S SAYING TO THE DONOR, WE WILL MAKE YOU WHOLE . YOU KNOW, BECAUSE THIS WAS AN OBLIGATION. YOU KNOW, IF YOU LOOK AT IT, THAT DONOR BELIEVED THAT HE WAS MAKING THIS GIFT THROUGH PROMOTE CARAMEL FOR THE BENEFIT OF THE CITY, FOR THE FIT OF THE PARKS DEPARTMENT, YOU KNOW, SO I THINK THERE IS AN ETHICAL AND MORAL OBLIGATION ON BEHALF OF OF THE CITY TO MAKE THAT DONOR HOLD, BUT IF THE CITY -- THIS IS NOT THE CITY'S LIABILITY, IF THE CITY DOES NOT STEP IN, THEN THE DONOR HAS LEGAL STANDING FOR THAT AGREEMENT.
>> AS PART OF THE ARTICLE'S ORGANIZATION, THE DIRECTORS HAVE
LIABILITY COVERAGE FOR THAT? >> I DO NOT KNOW IF THEY HAD DNO
INSURANCE. >> I HAVE TO DOUBLE CHECK ON THAT.
>> WE REQUIRE THEM TO GET SEPARATE COVERAGE.
>> I DON'T KNOW IF PROMOTE CARMEL HAD DNO INSURANCE FOR
THEIR DIRECTORS. >> I THINK I DID NOTICE IN ONE OF THE DOCUMENTS BURIED DEEP THAT IT DID SAY THERE WAS INSURANCE, WHETHER THAT WAS DNO INSURANCE OR INSURANCE -- I MEAN IT WOULD BE INSURANCE ON THE STORE BUT THERE WAS SOMETHING IN
THERE THAT SAID INSURANCE. >> BUT AGAIN, I'VE SAID CONSISTENTLY TO ZACH AND TO THE MAYOR, IF THE CITY MAKES THE DONOR HOLE, IT'S NOT DIRECTLY. THE CITY IS GOING TO HAVE TO MAKE A GRANT TO PROMOTE CARMEL TO ALLOW PROMOTE CARMEL TO MAKE THE DONOR BECAUSE THIS IS PROMOTE CARMEL'S RESPONSIBILITY, THEIR GRANT AGREEMENT AND THEIR LIABILITY.
>> THE DISSOLVED ENTITY? >> IT IS IN WIND DOWN SO IT HAS THE ABILITY TO GO THROUGH WIND DOWN AND RIGHT NOW IT HAS UNSATISFIED AVAILABILITY SO IT HAS AN OBLIGATION.
>> I THINK THIS IS PROBABLY THE FIFTH TIME, THE $50,000 APPROPRIATION BUDGET LAST CYCLE FOR THIS, IS THAT TO COVER THE AMOUNT THAT PROMOTE CARMEL RECEIVED DIRECTLY IN THE CITY'S
BUDGET? >> YES AND NO. TRADITIONALLY THERE HAS BEEN AN APPROPRIATION ITEM IN THE MAYOR'S OFFICE REFERRED TO AS THE CARMEL FUND FOR $50,000. I'M NOT SURE EXACTLY WHAT THE ORIGINAL INTENT WAS FOR THOSE DOLLARS BUT IT DOES SEEM LIKE THAT'S BEEN USED FOR THAT PURPOSE IN MORE RECENT HISTORY. AT THE END OF LAST YEAR, WE WOUL'VE BEEN ON TRACK TO REVERT THAT ENTIRE 50,000 FOR THIS PURPOSE. KNOWING THAT WE WERE GOING TO HAVE SOME LIABILITIES, I SET ASIDE 25,000
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TO POTENTIALLY ADDRESS AND ALSO, IN MY MIND, I EARMARKED 25,000 OF THIS YEAR'S APPROPRIATION OF THAT 50 SO IN MY MIND I HAVE 50,000 SET ASIDE IF WE NEEDED. TO MAKE ADDITIONAL GRANTS BUT IHOPE THAT CLARIFIES. >> IT DOES AND I JUST PULLED UP THE CHECK REGISTER. THERE WERE THREE PROMOTE CARMEL PAYMENTS, ONE IS THE 96TH, STRAIGHT TO PROMOTE CARMEL WHICH IS THE GRANT AGREEMENT THERE AND TWO FOR ALL THINGS CARMEL, 280.
>> I BELIEVE -- TELL ME THOSE NUMBERS AGAIN.
>> ONE IS A FLAT 50,000, THE OTHER IS FOR THE 6280. IN THE FIRST WAS 96,000 TO 80 WHICH I WOULD ASSUME THE 96,000, I WOULD ASSUME IN THE LEDGER IT'S FOR THE GRANT.
>> I WOULD NEED TO DOUBLE CHECK TO CONFIRM THAT IS VERY CLOSE TO THE GRAND TOTAL THAT PROBABLY WAS APPROPRIATED LAST YEAR IN THE BALLPARK OF 196,000. IT COULD'VE BEEN THAT SOME OF THOSE DOLLARS WERE LEFT ON APPEAL FROM PRIOR YEAR AND PAID OUT BUT I WOULD HAVE TO DOUBLE CHECK.
>> I'M ASKING AS WE LOOK FOR ALL THESE POINTS WHERE WE TOUCHED THE DATA ABOUT THESE THINGS IF THESE ARE BEING APPROPRIATED AND SPEND, WE UNDERSTAND WHERE IT'S MOVING OR WE UNDERSTAND WHERE THE COUNCIL HAS THE RIGHT TO ASK A QUESTION OR DISCUSS IT ALLOWS US TO COME UP WITH A CHECK AND BALANCE AT A DIFFERENT POINT IN TIME WHERE IF WE SEE SOMETHING WE COULD HOP IN AND ASK SPECIFICALLY WE ARE WORKING ON AN OVERARCHING REVIEW OF SPECIFIC THINGS THROUGH THAT ARE JUST KIND OF PART OF THE REGULAR BUDGET BUT MIGHT BE TIED TO AN AFFILIATE, THAT WOULD ALLOW US AT THOSE POINTS IN TIME TO BE ABLE TO ASK THOSE QUESTIONS OF HOW IS THAT GOING OR WHAT DOES THAT LOOK LIKE WHY WE MAKING THIS APPROPRIATION TO MAKE THAT CLAIMS MEETING ITSELF MAY BE A MORE VIABLE PLACE TO VET THESE THINGS TO.
>> AND I WANT TO BE VERY CLEAR. ESSENTIALLY IF THE CITY OF CARMEL DOES NOT USE TAXPAYER DOLLARS TO BAIL OUT THIS GRANT, THE GRANTEE HAS THE RIGHT TO COME BACK AND SUE -- EXCUSE ME, PROMOTE CARMEL. WHO IS PROMOTE CARMEL THEN?
>> PROMOTE CARMEL IS AN INSOLVENT NONPROFIT CORPORATION THAT WOULD THEN GO THROUGH BANKRUPTCY AND TRY TO FIGURE OUT WHERE ALL OF ITS ASSETS HAD GONE, THE BANKRUPTCY COURT CAN TRY TO PULL THE ASSETS BACK, YOU WOULD BE INTO A BANKRUPTCY CYCLE AND WE HAVE SEEN NONPROFIT AND GRUB SEES IN THE STATE OF INDIANA I THINK THOUGH SOMETIMES WE DON'T REALIZE THEY CAN GO BANKRUPT, THEY CAN GO INSOLVENT BUT THEY DO. SO HERE THE GRANT AGREEMENT THAT THE DONOR RECEIVED WAS CLEAR THAT THESE DOLLARS WERE RESTRICTED AND DAN MCFEELY'S LETTER SAYS THAT AT THE -- THAT HE WAS DIRECTED TO USE THEM FOR THE JAZZ FEST BAIL OUT. SOMEONE TOLD HIM TO USE THEM FOR ANOTHER PURPOSE. WE DON'T KNOW WHO MADE THAT DIRECTION AND WE DON'T KNOW WHO APPROVED IT BUT ULTIMATELY THIS $50,000 WENT TO JAZZ FEST AND THE DONOR IS INNOCENT. RIGHT? THE DONOR, IN GOOD FAITH, GAVE $50,000. THOSE DOLLARS AREN'T THERE SO THE DONOR DEFINITELY HAS A CAUSE OF ACTION AGAINST PROMOTE CARMEL IF THE DONOR IS
NOT -- >> YEAH, AGAIN, IT SEEMS LIKE WE ARE BEATING A DEAD HORSE BUT THIS IS VERY IMPORTANT WHAT HAPPENED OBVIOUSLY WE NEED TO KNOW BUT JUST TO SUMMARIZE THE CITY HAS NO OBLIGATION BECAUSE OF THE WAY THE ORGANIZATION WAS SET UP TO FUND ANY OF THESE LIABILITIES THAT ARE 116 OR WAS IT MORE? WAS IT 116+ THE 25 TO 30,000?
>> IT'S HARD TO THINK ABOUT IN THOSE TERMS. WE HAVE SINCE PAID 116, SINCE THE STORE WAS PHYSICALLY CLOSED, WE HAVE PAID BILLS TOTALING THE 117,000 BUT WE ALSO HAVE 10,000 IN CASH IN THE BANK RIGHT NOW AND WE HAVE A $30,000 LIABILITY IF THAT HELPS.
>> SO AGAIN THE CITY HAS NO OBLIGATION HOWEVER THE CITY IS GOING TO MAKE VENDORS IN THIS WHOLE WHICH IS THE RIGHT THING TO DO FROM A PR STANDPOINT BUT I ALSO WANT TO MAKE SURE THAT THIS IS TAXPAYER DOLLARS. THIS IS NOT THE CITY'S LARGEST BAILING OUT THIS ORGANIZATION. THESE ARE TAXPAYER DOLLARS THAT ARE PAYING
[01:20:05]
THESE DEBTS. >> AND FROM THE VERY FIRST DAY THAT THE MAYOR CAME INTO OFFICE, SHE SAID THAT SHE WANTED THIS TO BE TRANSPARENT. SHE WANTED THEM TO BE A GOOD PHYSICAL STEWARD OF TAXPAYER DOLLARS AND SHE WANTED TO BE TRANSPARENT WITH RESPECT TO WHERE THOSE DOLLARS WERE USED AND SO THANKFULLY THIS COMMITTEE HAS THE CITY COUNCIL TOGETHER WITH THE MAYOR'S OFFICE BRINGING TRANSPARENCY TO HOW THESE DOLLARS ARE USED. ONE OF THE THINGS THAT ZACH SHOWED TO ME BECAUSE I'M MAY BE A TAX ATTORNEY BUT I'M NOT A NUMBERS PERSON BECAUSE MY CLIENTS ALL PAY ZERO DOLLARS SO I AM THE ZERO TAX ATTORNEY BUT AGAIN, PROMOTE CARMEL HAD AN ANNUAL GRANT PAYMENT OF 96,000÷2. SO WHEN CARMEL WAS CLOSED, THE OTHER HALF OF THAT GRANT PAYMENT WAS STILL THERE. AND INSTEAD OF USING IT TO RUN ALL THINGS CARMEL, THAT OTHER $96,000 WAS USED TO START TO PAY THE LIABILITIES SO ROUGHLY $150,000 OF LIABILITIES AND THE SECOND HALF OF THE GRANT PAYMENT WAS 96,000 SO I THINK APPROXIMATELY $54,000 NECESSARY OVER AND ABOVE THE GRANT FUNDING THAT HAD BEEN
COMMITTED. IS THAT RIGHT? >> I DO WANT TO STATE THERE IS AN ISSUE WITH LIABILITY. OBVIOUSLY WE ARE PAYING BILLS THAT WERE ACCRUED BY A CITY AFFILIATE THAT WAS FULLY CITY FUNDED, CITY SUSTAINED, CITY SOLVENT SO THERE IS A TAXPAYER INTENT BEHIND THE TAXPAYER DOLLARS THAT WENT TO PURCHASE THE GOODS IN THAT STORE TO BEGIN WITH SO WE ARE MAKING WHOLE AN OBLIGATION OF THE PREVIOUS ADMINISTRATION TO DO SOMETHING THAT THEY DEEMED IN THE INTEREST OF THE CITY SO THERE IS NOT AN EXTRA LIABILITY, THERE IS, THOUGH, I MEAN, A QUESTION OF LEGAL FACT AND LEGAL IMPRESSION OF WHETHER OR NOT THE CITY'S CONTROL OF THIS ENTITY IN THIS INSTANCE REGARDLESS OF KNOWING WHO OR HOW PEOPLE DISCUSS THINGS WERE DIRECTED TO DO THAT THE CITY HAS SOME CULPABILITY OR POTENTIAL CULPABILITY IN THIS PROCESS BECAUSE OF THE RELATIONSHIP BETWEEN THESE TWO THINGS WHICH TO THE AFFILIATE REVIEW STRUCTURE, THE REASON THIS COMMITTEE HAS PULLED TOGETHER IS TO GET ON THE SAME PAGE ABOUT DOING THINGS BETTER MOVING FORWARD BECAUSE ULTIMATELY, THE GOAL IS TO ALLEVIATE POTENTIAL CONCERNS OR POTENTIAL ISSUES LIKE THIS FOUR OR FIVE YEARS FROM NOW TOMORROW.
ONE OF THE THINGS THAT THIS ONE HIGHLIGHTS IS THE TAKING IN OF OUTSIDE DOLLARS WHICH THIS 50,000 IS VERY IMPORTANT. WE ARE TODAY AND WILL BE TOMORROW IN RECEIPT OF REQUESTS FROM INDIVIDUALS TO TAKE IN CASH AND HOW THE CITY DOES THAT WHETHER IT BE THROUGH AN AFFILIATE OR THROUGH A NONPROFIT OR THROUGH SOME OTHER ENTITY FOR SPECIFIC PURPOSES, MATTERS, WE NEED TO ENSURE THAT NOT ONLY IS IT PROTECTED IF THERE'S AN AGREEMENT THAT'S ENTERED INTO BUT THAT IT CREATES A STRUCTURE WHERE PEOPLE UNDERSTAND WHAT THEIR GOVERNMENT IS DOING.
FLIPSIDE HERE WITH 50,000 SENT TO DO A SPECIFIC TREEPLANTING MISSION THAT GETS PIVOTED TO SOMETHING ELSE. I'M WONDERING, ARE THERE OTHER GRANTS THAT WENT DIRECTLY TO PROMOTE CARMEL THAT WE DON'T KNOW ABOUT AND ARE THERE OTHERS COMING IN TODAY AND NOT SAYING THEY ARE BEING DONE WRONG OR INAPPROPRIATELY IN ANY OTHER INCIDENTS OTHER THAN THE SPECIFIC ONE FOR THIS SPECIFIC REASON WHICH WILL BE MADE WHOLE BY THE CITY. BUT I THINK THERE ARE SOME CHECKS AND BALANCES AROUND THAT PROCESS BECAUSE THIS MONEY, THE REVENUE WE GENERATE IS TAX DOLLARS . I MEAN IF THERE ARE OTHER MONIES COMING IN THE EXECUTIVE BRANCH'S REAL ROLE IS TO ADMINISTER GOVERNMENT, THE GOVERNMENT THAT'S BEEN GIVEN TO THEM BY THE LEGISLATIVE AND PHYSICAL BODY. SO, WONDERING IF, OBVIOUSLY NONPROFIT HAS ITS RIGHTS IT'S INDEPENDENT TO TAKE A GRANT FOR PURPOSE AND PUT IT INTO A NEW PERSPECTIVE BUT IF THIS GRANT WERE TO SHOW UP AT THE CITY TODAY, HOW ARE WE ON BOARDING THAT? WHAT CHECKS AND BALANCES DO WE HAVE IN PLACE TO MAKE SURE WE ARE APPROVING THAT AS AN ESSENTIAL GOVERNMENT FUNCTION AND HOW ARE WE REAPPROPRIATED THAT AND YOU DON'T HAVE TO ANSWER THAT. THAT MIGHT BE A QUESTION FOR DASHA
>> REALLY QUICK PHILANTHROPY ANSWER AND THAT IS THAT I REPRESENT DONORS A LOT AND MOST DONORS HAVE A GENERAL ROLE THAT THEY DO NOT FUND GOVERNMENTAL ENTITIES BECAUSE THEY DON'T BELIEVE THAT PHILANTHROPY SHOULD UNDERWRITE GOVERNMENT SO IF THEY ARE GOING TO MAKE A GRANT LIKE THIS THEY WILL USUALLY ALWAYS DIRECTED TO AN AFFILIATE AND SO YOU SHOULD HAVE AN AFFILIATE THAT IS THERE AND ABLE TO ACCEPT PHILANTHROPY. MAY BE ABLE TO SPEAK A LITTLE BIT TO THAT. WHEN YOU ARE GOVERNMENTAL OR QUASI-GOVERNMENT THEY WANT TO SEE. AND SO IT DOESN'T SURPRISE ME THAT THIS DONOR WOULD CHOOSE AND WE DON'T KNOW, DID THE
[01:25:01]
DONOR REMOTE CARMEL OR DID CARMEL PICK THE DONOR, WE DON'TKNOW THE ANSWER TO THAT. >> OR DID THE CITY. WHAT IS OUR AFFILIATE 501(C)(3) THAT ACCEPTS THESE DONATIONS PRESENTLY. IF WE GOT THAT TODAY, DO WE HAVE ONE OR IS THERE NOT ONE?
>> I DON'T KNOW HOW MUCH PHILANTHROPY YOU GET.
>> WE HAD SEVERAL HUNDRED THOUSAND DOLLARS LAST YEAR THAT CAME INTO OUR GIFT FUNDS. SO IT'S A GOOD THING TO LOOK AT AND DISCUSS AND SEE, DO WE WANT TO CONTINUE EXACTLY HOW WE'VE BEEN DOING IT OR DO THE SAME THING BUT DOCUMENT IT BETTER OR DIFFERENTLY OR DO YOU WANT TO BLOW IT UP AND START ALL OVER WITH HOW WE ARE DOING IT? GOOD DISCUSSION FOR THE FUTURE.
>> WHAT I WAS GOING TO SUGGEST WAS AS I READ THROUGH THESE DOCUMENTS PROBABLY WHAT I SAW AS THE GREATEST FLAW WAS THE BYLAWS ARE TERRIBLE. THEY DON'T SPEAK TO ANY KIND OF CONTROL AND ANY KIND OF LINEAR RESPONSIBILITY UP AT THE HILL. DOESN'T REQUIRE AN AUDIT OR FINANCIAL RESPONSIBILITY AND I DON'T KNOW -- WE DON'T KNOW THAT THEY EVEN HAD MEETINGS. SO THOSE ARE THE GUARDRAILS AND IF THE BYLAWS WERE, YOU KNOW, A LITTLE TOUGHER, A LITTLE MORE DASHA YEAH, EXACTLY. HAD SOME TEETH IN THEM AND IT REPORTED TO SOMEONE SPECIFICALLY OR BETTER YET DIVIDED REPORT TO COUNCIL AND MAYOR, YOU'VE GOT AT LEAST SOME CONTROLS IN PLACE THAT COULD WORK BEFORE YOU GET THIS FAR DOWN THE ROAD AND YOU CAN'T FIND YOUR WAY BACK THROUGH THE
RIVER, SO TO SPEAK. >> YEAH, NONPROFIT 501(C)(3) IS HIGHLY REGULATED AND DIFFERENT THAN GOVERNMENTAL LOSS OF THE CORPORATION COUNSEL'S ROLE IN THEIR DAY TO DAY JOB DOESN'T NECESSARILY INTERSECT WITH NONPROFIT 501(C)(3). BUT THEY WERE DOING A LOT OF THE FORMATION OF THE ENTITIES AND I WILL TELL YOU, CORPORATION COUNSEL'S CAME TO ME AND THE FIRST CONVERSATION I HAD WITH THEM IN THE BEGINNING OF LAST YEAR AND SAID WE ARE UNCOMFORTABLE DOING THIS WOULD YOU PLEASE ASK THE MAYOR, WE DON'T WANT TO DO THIS ANYMORE.
THEY DIDN'T FEEL COMFORTABLE DOING IT, THEY DIDN'T FEEL LIKE IT SET WITHIN THEIR AREA OF COMPETENCE AND SO, I THINK WHEN WE TALK ABOUT -- YOU WILL SEE ONE OF THE THINGS THE MAYOR SAID EARLY ON LAST YEAR IS WE WANT YOU TO GET YOUR OWN LEGAL COUNSEL AND WE WANT YOU TO GET YOUR OWN ACCOUNTING COUNSEL AND THE REASON WHY IS WE WANT YOU TO BE INDEPENDENT AND BE ADVISED BY COMPETENT ADVISERS AND SO CARMEL CANDLE MARK HAD BEEN RELYING ON CITY COUNCIL BUT WHEN THE MAYOR CAME AND SHE ASKED THEM TO GET THEIR OWN COUNSEL AND THEY DID READ THESE ARE THE TYPES OF THINGS THAT YOU HAVE A SMALLER NONPROFIT IT IS HARD TO OPERATE IN A HIGHLY REGULATED AREA. YOU HAVE TO HAVE THE EXPERTISE OR CONSULTANTS THAT YOU CAN RELY UPON AND SO I DO CREDIT THE CORPORATION COUNSEL'S OFFICE AND IMMEDIATELY IN MY FIRST MEETING SAYING COULD YOU PLEASE SAY WE DON'T WANT TO DO THIS ANYMORE BECAUSE THEY HAD BEEN ASKED QUITE A LOT OF LEGAL ADVICE IN THE AREAS THAT WERE OUTSIDE OF THEIR CORE
COMPETENCIES. >> ONE FINAL POINT ON THIS.
THERE IS A SPACE IF YOU WILL BETWEEN PURE GOVERNMENT AND FEWER PRIVATE SECTOR AND I'M SURE THE MAYOR CAN COMMENT ON ALL KINDS OF THINGS THAT THE CITY GOVERNMENT CAN'T DO THAT THEY HAVE TO OUTSOURCE IN ONE WAY OR ANOTHER AND IT'S NOT -- IT'S EITHER NOT PROFITABLE ENOUGH OR APPROPRIATE FOR PRIVATE ENTITY. SO THERE IS THIS SPACE IN BETWEEN AND I'M A BIG BELIEVER IN IT. I PUT MY WHOLE CAREER IN THIS SPACE, NOT IN THE SHADOWS, MIND YOU BUT BETWEEN THOSE TWO SPACES AND I CAN SPEAK VERY CLEARLY TO HOW OUR MISSION, AND MARYLAND CAN TOO HOW WHEN WE ARE NEEDED AND IF WE WEREN'T THERE, PEOPLE WOULD RECEIVE SERVICES, SO NOT THE KIND OF SERVICES THAT ARE SPECIFIC TO THEIR PROBLEM. SO I AM A BIG BELIEVER IN THESE KINDS OF COMMITTEES AND THE WORK THAT THEY CAN DO BUT AS SHE SAID, THE GOVERNANCE HAS TO BE VERY TIGHT. VERY, VERY TIGHT AND THAT'S
REALLY THE ONLY WAY TO DO IT. >> I WAS JUST GOING TO MAKE A POINT FOR THE RECORD TO, THE IDEA OF RETAINING COUNSEL TO ENSURE WE GET THROUGH THIS THAT IS ABLE TO DO THAT, THAT IS WHY YOU ARE IN THE ROOM IT RETAINED BY THE CITY TO BE OUR COUNSEL, THE CITY'S COUNSEL FOR THESE PURPOSES SO YOU REPRESENT THE CITIES, ZACH DOES THE MAYOR DOES, WE ALL DO FROM THAT PERSPECTIVE SO HAVING COUNSEL TO BE ON THE OTHER SIDE OF THE RELATIONSHIP ARE THINGS THAT ARE SEPARATE. WE LOOK AT THE WAY THAT THESE WERE SET UP AND YOU LOOK AT THE WAY THAT THEY SET UP
[01:30:04]
THE NONPROFITS, THEY WERE THE PEOPLE THAT SET UP THE CITY AND YOU START TO MUDDY THE WATER, NOT IN THAT GRAY AREA BETWEEN THE TWO BUT YOU ARE WORKING IN THE LIGHT AND THE DARK AT THE SAME TIME WHERE IT'S A NONPROFIT BY A CITY ENTITY, THERE WAS JUST NO DIFFERENTIATION BETWEEN THEM. SO I APPRECIATE THAT FULLY. I THINK IT IS THE BRIGHT SPOT KIND OF IN THE TWO THAT WE TALKED ABOUT SO FAR WHERE WE NEED TO FIGURE OUT WHAT THOSE BEST PRACTICES ARE WHERE, AGAIN, THIS ONE WAS SO TIED TO CITY OPERATIONS AND CITY STRUCTURE THAT IT NEVER GOT OUT FROM UNDER THAT SCOPE IN A WAY THAT IT BECAME SEPARATE ENOUGH TO EVEN ASK FOR A GRANT FROM THE CITY TO BE SUSTAINABLE ON ITS OWN. IT NEVER GOT TO A POINT WHERE IT WAS ANYTHING OTHER THANA MARKETING FUNCTION CITY. >> IT WAS A MARKETING FUNCTION OF THE CITY MANAGED BY THE MARKETING STAFF OF THE CITY. SO YOU CAN SEE WHY THE BOARD WAS DISENGAGED BECAUSE THEY WERE RECEIVING DAY TO DAY DIRECTION FROM THE MAYOR'S ADMINISTRATION.
THE OLD MAYORS AT LUSTRATION. THERE WAS A LOT OF ACCOUNTABILITY, THERE JUST WASN'T.
>> THAT'S THE JUXTAPOSITION THERE. I'M EXCITED TO DIG INTO THE OTHER TWO WE HAVE ON THE LIST OF THE FULL LIST IN THE FUTURE, BUT THE CONCEPT OF TYING OTHER ORGANIZATIONS CLOSER TO THE CITY GETTING CLOSER TO THAT GRAY AREA AND FOR CONTROL, EXERTION DOMINANCE IS CONCERNING BECAUSE WE ARE WORKING TOWARD SOMETHING. NOT KNOWING WHAT, FROM BOTH OF THESE PERSPECTIVES THAT SAME THING IN THE MIDDLE IS GOING TO BE IS THE WORK OF THIS COMMITTEE TO WORK RECOMMENDATION OF THAT BUT IT'S A TWO SIDED COIN IT SEEMS WHERE WE WANT FULL EXERTION AND OVERSIGHT FOR THE INSURANCE THAT THINGS ARE OCCURRING APPROPRIATELY ON ONE END AND ON THE FLIP AND WE HAVE ONE THAT WE HAD SUCH CONTROL, A LACK OF CHECKS AND BALANCES FROM ANYBODY OUTSIDE OF THE EXECUTIVE BRANCH'S AUTHORITY, THEY PUT IN A POSITION WHERE IT WAS SPENDING MONEY ON TRIPS. SO WE ARE DEALING WITH AN ISSUE OF SUCH DISPARATE FUNCTIONS AND DISPARATE ORGANIZATIONS THAT TRY TO FIND THAT MIDDLE GROUND AND THEN WHAT MIGHT NOT BE A ONE SIZE FITS ALL BUT A PROCESS BY WHICH WE CAN SAY HERE IS HOW THE CITY SHOULD INTERACT WITH THINGS OF THIS NATURE. IT BECOMES OUR
GAME. SO. >> MR. CHAIR, CAN WE TAKE A
[01:40:18]
>> IN AN ABUNDANCE OF TRYING TO PROTECT ALL OUR TIME FOR THE
[01:40:21]
EVENING I WOULD LIKE TO COME BACK TO PROCESS. I DON'T REMEMBER WHERE WE WERE WHEN WE STOPPED OTHER THAN PROBABLY A DIATRIBE BY ME . IF YOU WANT TO KICK US OFF.>> I DID WANT TO SAY SOMETHING WHILE I'M THINKING ABOUT IT. I DID WANT TO PIVOT IT TO THE AFFIRMATIVE. I THINK IT IS LAUDABLE THAT CORPORATE COUNSEL, THESE NEW CORPORATE COUNSEL STEPPED UP AND SAID HEY, WE ARE UNCOMFORTABLE WITH THIS AND FEEL IT WOULD BE BETTER IF THEY HAD THEIR OWN REPRESENTATIONS. I THINK THAT IS ACTUALLY A VERY GOOD THING ABOUT THIS AND I'LL SAY ONCE AGAIN, ULTIMATELY, I ALREADY CAN SEE DEVELOPING AS CAN RYAN AND OTHER PEOPLE HOW THIS IS GOING TO GET BETTER GOING FORWARD IN A SYSTEMATIC FASHION. I THINK EVERY TIME WE HAVE THESE SESSIONS, THERE'S MORE THINGS TO ADD TO OUR LIST OF HOW WE COULD DO IT BETTER BECAUSE THAT'S REALLY THE
REASON. >> ABSOLUTELY. SO, IN TERMS OF CHRONOLOGY, THE CITY WAS FINALIZING THE FISCAL AND LEGAL REVIEW IN AUGUST, THE STORE WAS CLOSED IN AUGUST AND DURING THAT SAME TIME DAN MCFEELY, ON BEHALF OF PROMOTE CARMEL , SENT A LETTER TO THE PROMOTE CARMEL BOARD AND THE LETTER CAME FROM DAN AND IT WAS SIGNED BY DAN AND -- AND I HAVE A COUPLE OF THE SLIDES AND I JUST WANT TO SHARE AND THEN OPEN UP FOR QUESTIONS BECAUSE IT REALLY DID START TO ANSWER SOME OF THE QUESTIONS THAT I THINK THE CITY, STAFF, AND LEGAL COUNSEL HAD WHEN WE WERE REVIEWING THE DOCUMENTS. FIRST OF ALL, THE LETTER AND I WANT TO POINT OUT THAT THESE STATEMENTS" ARE DIRECTLY OUT OF THE LETTER AND ALL OF YOU RECEIVED IT, IT WAS AN EXHIBIT IN YOUR PACKET BUT THE FIRST THING IS, GOING BACK UP, YOU WILL NOTICE DURING THE ANNUAL SUPPORT IN 2023 IT JUMPED FROM 100 FROM THE CITY TO PROMOTE CARMEL, IT JUMPED FROM 196,000 TO 430,000 IN 2023. SO WHEN YOU LOOK AT THE LETTER, THE LETTER SAYS DURING 2023, THE ADMINISTRATION ASKED PROMOTE CARMEL TO ASSUME NEW RESPONSIBILITIES AND DAN LAID OUT IN THE LETTER WHAT THOSE NEW RESPONSIBILITIES WERE. SUPPORT ACTIVITIES RELATED TO CARMEL SISTER CITIES ORGANIZATIONS, FUNDING FOR TRAVEL EXPENSES TO AND FROM LATVIA, VISITING MUSICIANS FROM CORE TONE A AND MOST ALCOHOL-RELATED EXPENSES FOR THESE VISITORS. TOWARD THE END OF 2023 WE WERE ALSO ASKED TO FINANCIALLY ASSIST, BECAUSE WE WERE ASKED TO FINALLY ASSIST THE -- WHICH LOST A SUBSTANTIAL AMOUNT OF MONEY AND WAS UNABLE TO PAY ITS BILLS. WE DON'T KNOW WHO THE WII WAS. THE LETTER ASKED WE WERE ASKED TO FINANCIALLY ASSIST THE JAZZ FEST. WE DON'T KNOW BY WHOM. ANOTHER REQUEST WAS TO FINANCE AND WORK WITH A LOCAL AUTHOR ON A COOKBOOK AND ALSO TO FINANCE THE HISTORY OF THE CARMEL SYMPHONY ORCHESTRA ON ITS 50TH ANNIVERSARY CELEBRATION. SO, PROMOTE CARMEL WAS IN FINANCIAL DISTRESS AT THAT POINT AND UNABLE TO PAY ITS VENDORS SO THE LETTER GOES ON AND SAYS DIRECTLY IN JULY, OUR BANK ACCOUNT WAS SO LOW WE WERE NOT ABLE TO SEND CHECKS TO OUR VENDORS WHO WERE ON CONSIGNMENT. THIS HAS NOT CHANGED SINCE AUGUST. SO, TO YOUR POINT ABOUT SOCIAL MEDIA, BY THE TIME THE STORE WAS CLOSED, THE LETTER ACKNOWLEDGED THAT THE VENDORS HAD NOT BEEN PAID IN THE LAST COUPLE OF MONTHS. SO IT WASN'T NECESSARILY THE CLOSURE OF THE STORE THAT COST THE FISCAL DISTRESS, THAT STARTED TO OCCUR COUPLE MONTHS EARLIER WHEN THE
VENDORS WERE NOT BEING PAID. >> WE LOOK AT THEM IN STRUCTURE, WE GO BACK TO THE BEGINNING WHERE WE TALK ABOUT THE PURPOSE AND MISSION OF 501 C3 ARE. THIS GETS TO THE QUESTION OF THE BROADNESS. IN THEORY, ALL OF THOSE THINGS COULD FIT WITHIN THAT FROM YOUR LEGAL ANALYSIS, HOW BROAD DO WE LOOK? WOULD A GRANT TO JAZZ FEST, ANOTHER AFFILIATED ENTITY OF THE CITY AND STRUCTURE THAT IS BEING APPROPRIATED OTHER MONEY COUNT WITHIN THE MISSION OF THIS BASED ON YOUR READING OF THE DOCUMENTS
THAT SET UP PROMOTE CARMEL? >> I THINK IT'S A REALLY FUZZY AREA BECAUSE 501(C)(3) ORGANIZATIONS ARE ALLOWED TO MAKE GRANTS TO OTHER 501(C)(3) ORGANIZATIONS AND THE IRS DESCRIBES A WIDE OPEN FIELD FOR YOU TO DO THAT BECAUSE IT'S AN CHARITABLE POSITION TO ANOTHER CHARITABLE ORGANIZATION. PROMOTE
[01:45:01]
CARMEL DESCRIBED ITS PURPOSES PRETTY BROADLY IN TERMS OF PROMOTING THE CITY OF CARMEL SO YOU COULD MAKE AN ARGUMENT THAT JAZZ FEST WAS PROMOTING THE CITY OF CARMEL SO I DON'T HAVE ANY NONPROFIT OR 501(C)(3) CONCERNS WITH WHAT IT WAS DOING. I HAVE CONCERNS WITH THE MONEY IT USED TO DO IT WITH AND WHETHER THE AWARD HAD BEEN ADVISED THAT IT WAS DOING IT. THE BOARD SHOULD HAVE KNOWN IF THERE WAS $50,000 MOVED, THE BOARD SHOULD'VE KNOWN IT AND KNOWN WHERE THOSE DOLLARS WERE COMING FROM AND WHERE THEYWERE GOING TO AND WHY. YES? >> I'M NOT SURE IT'S A MATTER OF CAN THEY DO IT OR SHOULD THEY HAVE DONE IT AND THEN BACK TO REPORTING. THESE ARE, IT WOULD SEEM COMMON SENSE BUT IT WOULD BE GOOD IF THEY WERE WRITTEN INTO THEIR -- SHOULD'VE BEEN WRITTEN INTO THEIR BYLAWS AS A REPORTABLE OFFENSE WOULD INCLUDE, THIS, THIS, AND THAT. SO I WOULD ASK THAT THE COUNSELORS HERE, DID YOU EVER GET ANY REPORTING OF THESE ACTIVITIES AS THEY WERE OCCURRING AND I'M GUESSING THE ANSWER IS NO. SO, AGAIN, THINKING IN A FORWARD-LOOKING FASHION, IT'S COMMON SENSE THAT THESE THINGS WOULD BE , THE BOARD WOULD BE ADVISED AND THE BOARD WOULD REPORT TO THE CITY WHO IS WHOLLY SUBSIDIZING THIS BUT THAT MEANS PERHAPS YOU CAN FIND A LITTLE BIT BETTER SO THERE ISN'T ANY GRAY AREA TO DO THAT. IT'S JUST RIDICULOUS THAT THESE THINGS WERE OCCURRING WITHOUT THE KNOWLEDGE NOT JUST OF THE GENERAL PUBLIC BUT OF CITY COUNCIL AND I'M NOT SURE ABOUT THE MAYOR'S OFFICE.
>> I WOULD REALLY CALL YOUR ATTENTION BACK TO EXHIBIT D AND THAT LETTER BECAUSE THE TIMING AND THE CHRONOLOGY MATTERS SO 2023 THE FUNDING IS INCREASING FROM 196 TO 430 FROM THE CITY, DOLLARS ARE GOING TO JAZZ FEST FOR THE BAILOUT AND DAN MCFEELY'S LETTER SAID IN 2023 ANTICIPATING THE ADDITIONAL EXPENSES THE PREVIOUS DIRECTOR OF THE COMMUNITY RELATIONS AND ECONOMIC DEVELOPMENT DEPARTMENT OF THE CITY ASKED FOR ADDITIONAL FUNDING FOR A PROMOTE CARMEL GRANT AND ASKED THE CITY COUNCIL FOR ADDITIONAL FUNDING. THAT EXTRA FUNDING WOULD HAVE HELPED PAY FOR THE EXPENSES ON THE PUBLISHING OF THE TWO BOOKS AND THE DEFICIT FACED AFTER THE BAILING OUT OF JAZZ FEST. THE CITY COUNCIL TURNED DOWN THAT REQUEST AND REMOVED IT FROM THE
DEPARTMENT BUDGET. YEAH. >> I HAVE A COUPLE QUESTIONS, ACTUALLY. FIRST OF ALL, I SIT ON THE CARMEL CITY THE -- SYMPHONY ORCHESTRA AND I HAD NO IDEA THAT PROMOTE CARMEL WAS GOING TO PAY FOR A BOOK TO DO THE 50TH ANNIVERSARY FOR THE SYMPHONY AND ACCORDING TO THE EMAIL, IT LOOKS AS IF THEY PAID AN AUTHOR SOME, I DON'T KNOW WHAT THE AMOUNT WAS, I COULDN'T FIND IT ANYWHERE. WAS IT? IT WASN'T DETERMINED. I COULDN'T DETERMINE IT FROM THE LETTER THAT DAN SENT AND I COULDN'T FIND ANY OF THE -- I LOOKED BUT I COULDN'T FIND IT BUT WHO IS THE AUTHOR OF THIS BOOK? DOES ANYBODY KNOW? I WOULD LIKE TO BE ABLE TO REPORT BACK TO MY BOARD EMBERS THAT WE DO HAVE AN AUTHOR AND HE OR SHE MAY OR MAY NOT BE FINISHING THIS BOOK.
>> WE WILL GO BACK AND CHECK FOR YOU.
>> THANK YOU, I APPRECIATE THAT. >> YOU WOULD'VE SEEN IT COME
THROUGH. >> THANK YU. I WILL LOOK FOR
IT. >> I ALSO KNOW AN ADDITIONAL REQUEST FOR FUNDS FOR THE PROMOTE CARMEL, I BELIEVE THAT WAS ALSO PRESENTED TO CITY COUNCIL AT THE TIME AND I THINK YOU BOTH COULD HELP ME REMEMBER THIS BUT IT WAS TO OPEN A SECOND STORE. IT WAS NOT TO COVER ALL THESE EXPENSES. WE ARE NOT SURE ABOUT THE SECOND ONE IN EXISTENCE RIGHT NOW SO NO WE ARE NOT GOING TO PROVIDE YOU WITH ADDITIONAL DOLLARS SO READING HIS FEEDBACK ON THAT WAS SLIGHTLY SURPRISING
>> THAT'S KIND OF MY QUESTION IS WE DENIED THAT BECAUSE THEY WANTED TO DOUBLE THE FUNDING THAT THE OSTENSIBLE REASON WAS THEY WANTED TO OPEN A SECOND STORE AND I THINK THE ANSWER WAS SOMETHING -- BUT MY QUESION IS, I DON'T REMEMBER ON COUNSEL IN 2023 APPROVING $430,000 FOR ALL THINGS CARMEL, WHERE DID THOSE FUNDS COME FROM? THEY WEREN'T A LINE ITEM THAT WE SAW AT LEAST THAT I RECALL SEEING, DID THEY COME FROM ECONOMIC DEVELOPMENT OR WHERE DID THOSE ELEMENTS COME FROM?
>> I CONTACTED, I TALKED TO ZACH, I CONTACTED -- AND ASKED TO PULL ANIMATION FOR THAT PARTICULAR GRANT BUT I SENT IT
[01:50:02]
TO RYAN. I WILL SEND IT TO YOU AS WELL BUT IT WAS A LOT OF DIFFERENT THINGS AND THAT WAS ONE OF THE OTHER QUESTIONS BECAUSE ACCORDING TO THEIR 990 AND THEIR P&L STATEMENT, THESE NUMBERS DON'T MATCH EITHER. SO, THAT IS TO YOUR POINT, GOVERNING, GOING FORWARD, THAT SPECIFICALLY COME A WHEN IT COMES TO REPORTING BACK TO THE BOARD AND THEN TO WHOEVER IS APPROPRIATING THE MONEY, THAT IS INCREDIBLY IMPORTANT, NOT KNOWING IF THE MONEY WAS APPROPRIATED THROUGH, HOW IS ITAPPROPRIATED, PERIOD. >> I JUST WANT TO ALSO MAKE A POINT, WE DID NOT GO BACK AND DO A FORENSIC REVIEW. I FELT LIKE THAT WAS THROWING GOOD MONEY AFTER BAD. WE SEE THE ISSUES. WE SEE THE GOVERNANCE PROBLEMS. WE SEE A LACK OF OVERSIGHT HERE SO WE DID NOT GO BACK AND SPEND $50-$100,000 WE ARE ALREADY SPENDING -- DOLLARS WITH AN EXPERT AND NONPROFIT LAW. I DIDN'T FEEL LIKE GOING BACK AND LOOKING FOR EVERY PENNY, WHERE IT WENT AND THAT VALUABLE TIME BECAUSE THERE WAS -- TAKING MORE TAXPAYER DOLLARS SHUTTING IT DOWN SO. I JUST WANT TO MAKE THAT POINT IN CASE YOU WERE WONDERING.
>> THANK YOU, MAYOR AND I APPRECIATE YOU SAYING THAT. I'M KIND OF LIKE A DOG TO A BONE AS TIM TALKED ABOUT. WHEN I WANT ANSWERS I HAVE TO GO LOOK FOR THEM SO THANK YOU.
>> MR. CHAIR IT WOULD BE APPROPRIATE TO SEND THAT TO YOU, YOU COULD SEND IT OUT TO EVERYBODY.
>> AND I WOULD ASK MAYBE IF THERE'S A WAY TO KIND OF SEE HOW IT LOOKED IN THE BUDGET IN YOUR SIDE, NO FORENSIC, JUST YOU, PULLING WHAT WE CAN SEE IN THE ACTUAL.
>> SOMEONE PUT $430,000, THAT MUST'VE COME FROM SOMEWHERE.
I'M JUST TRYING TO FIGURE OUT WHERE BECAUSE I DON'T KNOW --
GIVING THOSE DOLLARS. >> WE CAN CERTAINLY LOOK AT THAT AND AS THREE CURRENT COUNSELORS HERE KNOW IF THE CITY COUNCIL AND THE MAYOR'S OFFICE AND ZACH'S OFFICE HAVE WORKED CLOSELY TOGETHER TO SAY HOW WE ARE ALSO CHANGING DOING TRANSFERS. UNDERSTANDING WHERE DOLLARS WENT. AT THE END OF THE YEAR THERE WAS ALWAYS A LOT OF CLEANUP FOR DEPARTMENTS IT WAS ALWAYS SILLY SEASON IN DECEMBER WHERE THERE'S A LOT OF TRANSFERS BETWEEN THESE DIFFERENT ACCOUNTS AND DEPARTMENTS TO MAKE THE DEPARTMENT WHOLE. I'M SURE THE COUNSEL APPROVED IT WITH WHATEVER EXPLANATION WAS GIVEN SO THIS IS SOMETHING WE'VE CHANGED MOVING FORWARD SO I WANT TO KNOW THAT FOR EVERYBODY AS WELL.
>> EVEN ON OUR BUDGET CYCLE LAST TIME WHEN WE TALKED ABOUT GRANTS OR EVENTS OR STRUCTURES WE GOT A BREAKDOWN OF WHERE THOSE THINGS ARE SO ONE OF THE THINGS THAT I PERSONALLY AM THINKING THROUGH THIS AS WE LOOK AT THE BUDGET CYCLE ENSURING WE ARE ALL ON THE SAME PAGE FROM A CITY PERSPECTIVE AND THE COUNSEL PERSPECTIVE IS THAT MAYBE THESE THINGS BECOME LINE ITEMS IN THE BUDGET SO WE KNOW WHAT THEY'RE ALLOCATED TO AND IT BECOMES A REQUEST AND AN ANSWER BECAUSE WE'RE TYING THEM TO THESE SPECIFIC -- WHICH MAKES IT SO WE CAN'T TRANSFER TO SOMETHING ELSE, THE IDEA OF THIS 400,000 BEING IN 50 DIFFERENT BUCKETS AND BEING TRANSFERRED UNDER THE THRESHOLD INTO ONE IS TERRIFYING. AN OVERSIGHT ENTITY BUT SOMETHING WE ABSOLUTELY IN THE LAST DIGIT CYCLE AS A CITY TALKED ABOUT ALREADY AND DID
THAT TO BEGIN WITH LAST YEAR. >> I LOVE THAT COMMENT. SILLY SEASON. BUT I THINK THE THING THAT WAS DENIED IS, I'M SURE THAT IF THIS ADDITIONAL 300 AND WHATEVER THOUSAND DOLLARS CAME IN FRONT OF YOU, SOMEONE MIGHT'VE ASKED THE QUESTION IF THEY WEREN'T GOING TO BE FORTHCOMING ABOUT WHAT THE HECK IS THIS? SO I THINK FINDING BETTER WAYS AS WE TALKED ABOUT TO EVEN TRACK DOLLARS BECAUSE I WAS KIND OF BLOWN AWAY AS A FORMER COUNSELOR, THAT I NEVER SAW THOSE DOLLARS. WHICH AGAIN SHOULD HAVE RAISED SOME ALARM BELLS IF WE HAD BEEN ABLE TO SEE
IT. >> SO WE TALKED A BIT ABOUT THE $50,000 GRANT. FOR THE RECORD I WANT US TO SHARE WHAT DAN SAID TO THE PROMOTE CARMEL BOARD ABOUT IT. HE SAID THAT UNDER THE DIRECTION OF THE PREVIOUS MAYOR, PROMOTE CARMEL WAS ASKED TO WORK WITH THE PARKS DEPARTMENT TO ACCEPT AND RETAIN A $50,000 DONATION FROM A LOCAL RESIDENT FOR A FUTURE CHINESE PEONY GARDEN THAT HAD BEEN PLANTED NEAR CARMEL ELEMENTARY. THAT MONEY WAS NEEDED TO HELP WITH THE JAZZ FEST BAILOUT WITH A PROMISE TO RESTORE IT THE FOLLOWING YEAR. I DON'T KNOW -- WE DON'T KNOW WHO ASKED THEM TO DO THAT AND IT WAS NOT RESTORED THE FOLLOWING YEARS. THAT IS THE LIABILITY THAT THE CITY IS CONTEMPLATING MAKING NOW. THE 2022 CHARITABLE GRANT AGREEMENT FOR THE PEONY GARDEN WHICH -- SAID AND I QUOTE THE SOLE INTENT OF THE DONATION IS FOR THE PURPOSE OF PURCHASING ASIAN --
[01:55:06]
PEONIES, RELATED PLANTINGS AND GARDEN FIXTURES TO BE PLACED IN THE CHINESE GARDEN WHICH IS TO BE BUILT IN THE CORNER OF CENTRAL CARMEL INDIANA. THE RECIPIENT PROMOTE CARMEL WILL IMMEDIATELY PLACE THE DONATION IN AN INTEREST-BEARING FDIC ACCOUNT AND WILL NOTE IN PERMANENT RECORD THE DONATION IS ONLY TO BE USED FOR THE PURPOSE DESCRIBED WITHIN THIS LETTER.AND THAT DID NOT HAPPEN. AND THAT IS A PRETTY NORMAL THING TO OPEN A RESTRICTED BANK ACCOUNT FOR PURPOSES OF PUTTING A
CHARITABLE GRANT INTO IT. >> THE HEAD SCRATCHER FOR ME ON THIS IS WHY IT JUST DIDN'T GO TO THE PARKS DEPARTMENT. AND I SAY THAT, MY WIFE AND I FUNDED ONE OF THE AEDS AND WE CHECKED WITH THE PARKS DEPARTMENT THAT THEY WERE ABLE TO PUT IN A BANK ACCOUNT AND USE FOR THAT PURPOSE IS SO I JUST DON'T UNDERSTAND FOR THE LIFE OF ME HOW THIS EVEN GOT STARTED WITHOUT THE FUNDS GOING DIRECTLY TO THE PARKS DEPARTMENT WHO HAS BANK ACCOUNTS AND ACCOUNTANTS AND OBVIOUSLY WOULD BE A BETTER STORE THAN IT WOULD'VE TURNED OUT BETTER. SO AGAIN WE MAY NEVER ANSWER THAT BUT IT'S ONE OF MY PERSONAL POINTS OF FRUSTRATION.
>> IT IS A QUESTION, YEAH, THAT WE ALSO HAD. SO, THE LEGAL INPUT THAT -- GAVE TO THE CITY WITH RESPECT TO THIS $15,000 GRANT WAS THAT PROMOTE CARMEL'S USE OF THE DONORS RESTRICTED CHARITABLE CONTRIBUTION FOR THE JAZZ FEST BAILOUT VIOLATED THE TERMS OF THE CHARITABLE GRANT AGREEMENT GIVING RISE TO POTENTIAL LIABILITY FOR VIOLATION OF THE DONORS INTENT.
THAT LIABILITY IS TO PROMOTE CARMEL, NOT THE CITY. WE ALSO NOTED IN LOOKING AT TAX RETURNS THAT DAN MCFEELY WHO AUTHORED THE LETTER AND WAS SPEAKING ON BEHALF OF PROMOTE CARMEL WAS THE PRESIDENT OF THE CARMEL JAZZ FESTIVAL DURING THE PERIOD THAT THE CHARITABLE GRANT WAS USE TO PAY THE EXPENSES OF JAZZ FEST.
AND IN ADDITION, WE NOTED THAT HE ALSO HAD OVERLAP AND THAT HE WAS A CONTRACTOR TO THE MARKETING DEPARTMENT FROM 2020 TO 2024 SO WHEN THE CITY WAS OVERSEEING THE DAY-TO-DAY ARRANGEMENTS AND THE DAY-TO-DAY ACTIVITIES OF PROMOTE CARMEL FROM THE MARKETING DEPARTMENT, AT THE CITY, DAN WAS A CONTRACTOR TO THE CITY AND HIS WIFE WAS THE EXECUTIVE DIRECTOR.
AT PROMOTE CARMEL. SO OBVIOUSLY, THAT RAISED ISSUES THAT NORMALLY SHOULD HAVE BEEN MITIGATED UNDER A POLICY. AS TO HIS ROLES WITH MULTIPLE HATS FOR MULTIPLE PERIODS. I THINK WE ALSO WANTED TO POINT OUT TO YOU THAT PROMOTE CARMEL ESSENTIALLY BEGAN TO PAY ENTERTAINMENT EXPENSES OF THE MAYOR'S OFFICE. AND I UNDERSTAND FROM SAMANTHA CORPORATION THAT THE CITY HAS A POLICY THAT IT DOES NOT PAY FOR ALCOHOL WITH CITY FUNDS SO REMOTE CARMEL AS YOU SAW IN YOUR EXHIBITS WOULD BE SENT RECEIPTS FOR THOSE TYPES OF EXPENSES BUT THEY ALSO INCLUDED TRAVEL REIMBURSEMENT SO THERE'S A $15,000 TRAVEL REIMBURSEMENT HERE FOR A TRIP, MAYORS RECEPTIONS, AND THINGS OF THOSE KIND. SO YOU HAVE ALL THE BACKUP FOR THESE EXPENSES IN YOUR EXHIBITS. AT THIS POINT, THE ARTICLES THAT HAVE BEEN FILED WITH THE INDIANA SECRETARY OF STATE THIS WEEK SO THE DISSOLUTION IS IN PROCESS, THERE WILL BE SOME OTHER AGENCY NOTIFICATIONS THAT HAPPENED DURING THE WIND DOWN PROCESS AND AS I NOTED EARLIER, IT WILL BE PUBLISHED IN THE NEWSPAPER SO THERE COULD BE OTHER VENDORS. THERE COULD BE OTHERS THAT BECOME AWARE BECAUSE OF THIS HEARING TONIGHT AND MAYBE BECAUSE OF OUR PUBLICATION IN A NEWSPAPER AND MAKE ADDITIONAL CLAIMS THAT PROMOTE CARMEL WILL NEED TO HANDLE. AND THAT
CONCLUDES MY REPORT. >> WE DO HAVE SOME QUESTIONS MORE FOR STAFF AND MAYBE SOME BEST PRACTICES WHEN WE ARE LOOKING AT THOSE EXPENSES THERE AT THE END, WHICH, NOT SURE IF THEY WERE ALL THE WAY THROUGH OR THESE OTHER ONES THAT COME THROUGH PAYING OUT TO CLOSE OUT THE BOOKS BUT FIGURING OUT HOW -- IN THE BUDGET PROCESS WE PUT TRAVEL BUDGETS IN, THERE'S A STRUCTURE WERE THINGS THAT THE CITY HAS BEEN APPROVED AS KIND OF OFFICIAL BUSINESS TO DO THE APPROPRIATION PROCESS THAT OCCURS AND TRANSFERS AND THINGS THAT WE NEED TO DO MORE BUT THE IDEA OF THESE AFFILIATES BECOMING SLUSH FUNDS IS THE
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WORD. USING IT FOR PURPOSES OTHER THAN THE DIRECT MEANING OF THAT IS ONE OF THE HARMS THAT WE ARE TRYING TO MITIGATE IN PERPETUITY. HOW ARE WE KIND OF HANDLING THAT. ARE THERE THINGS NOW THAT ARE PAYING FOR TRAVEL THAT ARE NOT WITHIN THE BUDGET? IF THERE ARE, ARE WE COMFORTABLE WITH THAT AND WAYS THE CITY CAN MAKE SURE WE APPROPRIATE THAT APPROPRIATELY OR DO WE SEE THAT AS A GRANT COMING IN TO BE USED FOR OFFICIAL PURPOSES? AND I'M NOT SAYING TRAVEL THAT'SNOT OFFICIAL, I'M SEVERING -- SAYING TRAVEL THAT IS OFFICIAL BUSINESS STRUCTURED ON CITY TIME, CITY DIME, CITY PEOPLE ARE GOING. HOW DO WE ENSURE THAT THIS END OF TIMES BEHAVIOR IS IN A PERPETUAL BEHAVIOR AND THAT WE HAVE OVERSIGHT IF THOSE THINGS ARE MOVING.>> AND IF I CAN, TO CLARIFY WE ARE TALKING ABOUT FOR OUR AFFILIATES, HOW THEY SPEND THEIR MONEY.
>> THIS AFFILIATES SPENT THIS MONEY FOR CITY STAFF. THESE ARE CITY INDIVIDUALS THAT RECEIVE COMPENSATION IN THE FORM OF TRAVEL AND CHRISTMAS PARTIES WHICH SOUNDS VERY FUN. BUT LIKE WE COVERED EXPENSES THAT WERE RELATED TO CITY PEOPLE AND CITY THINGS FOR CITY PURPOSES WITH NON-CITY MONEY FROM AFFILIATES SO JUST WONDERING IF WE LOOK AT THAT FROM A CHECK AND BALANCE STANDPOINT THE BIG CONCERN IS THE SLUSH FUND MENTALITY OF THE IDEA, THIS IS NOT STATE MONEY, THIS IS NOT CITY MONEY, THIS IS MONEY THAT IS BEEN RAISED FROM ANOTHER SOURCE OR STRUCTURE TO DO DIFFERENT THING. HOW DO WE ENSURE THAT THOSE -- THIS LOOPHOLE IS CLOSED KNOWN ABOUT, REPORTED AND APPROVED IN SOME CAPACITY OR THE PUBLIC KNOWS THAT IT IS OCCURRING.
>> IF I COULD JUMP IN BEFORE ZACH GIVES AN ANSWER, IT IS VERY NORMAL FOR GOVERNMENTAL ENTITIES LIKE THE CITY OR THE STATE TO HAVE AN ECONOMIC DEVELOPMENT NONPROFIT CORPORATION THAT PAYS FOR THINGS THAT THE CITY CANNOT PAY FOR. AND IEDC IS A GREAT EXAMPLE AND 11 THE GOVERNOR OF INDIANA WHEN HE DOES IN THE FUTURE TAKE A TRIP THEY ALWAYS SAY THIS WAS FUNDED BY PHILANTHROPY SO YES THESE TRIPS LOOK WONDERFUL AND THEY ARE OVERSEAS BUT THOSE ARE NEVER -- I DON'T BELIEVE THOSE ARE EVER STATE DOLLARS THAT ARE PAYING FOR THE IEC TRIPS. SO THE FACT THAT PROMOTE CARMEL WAS PAYING FOR THINGS LIKE ALCOHOL AND TRAVEL, THAT IS NOT ABNORMAL AND I WOULD ARGUE AS A TAXPAYER THAT'S A GOOD THING BECAUSE MAYBE THAT'S NOT AN ESSENTIAL.
THE PROBLEM HERE WAS IT WAS ALWAYS OPERATING AT A LOSS AND SO THE SUBSIDY PAID FOR SOMETHING WITH TAXPAYER DOLLARS THAT WASN'T PERMITTED TO BE PAID FOR UNDER THE CITY'S BUDGET. SO, IF PROMOTE CARMEL HAD GONE OUT AND GOTTEN CHARITABLE PHILANTHROPY TO HAVE PAID FOR THOSE TRIPS OR PAID FOR THAT ALCOHOL I DON'T THINK ANYONE WOULD HAVE ANY CONCERNS.
IT WAS THE ANNUAL SUBSIDY BECAUSE WHAT THAT MEANT WAS CITY DOLLARS WERE COMING IN TO PAY FOR THINGS THAT WERE NOT PERMITTED TO BE PAID FOR. SO I THINK THERE'S A BIG DISTINCTION NOT AROUND THE ACTIVITY AND WHETHER IT WAS APPROPRIATE BUT
WHICH FUNDS SHOULD BE USED. >> AND WHICH AFFILIATE. YEAH, I WORK FOR IEDC AND UNDERSTAND THE IDEA. THAT'S ONE THAT STRUCTURED , YOU WILL SEE IT PROBABLY ANOTHER NEW STORIES, MAYBE NOT THE BEST WAY EITHER WHICH IS GOOD CONTEXT TO BE IN BUT IT WORKS AND I'M NOT SAYING THAT THIS IS -- IS THIS THE RIGHT AFFILIATE TO BE DOING THIS WORK, OBVIOUSLY WITH THE WINDING DOWN IT IS NOT THE AFFILIATE. BUT ENSURING THAT WE UNDERSTAND KIND OF THAT ADMISSION AND THE TIE AND THAT IT IS AN APPROPRIATE AFFILIATE TO DO THAT FLAVOR TO PAY FOR THOSE SERVICES AND COLLECT THOSE FUNDS TO PAY FOR OFFICIAL CITY BUSINESSES AS OPPOSED TO OFFICIAL CITY BUSINESS. IT GETS TO THE BROADER QUESTION OF THE IDEA OF THAT IS OUTSIDE OF STATE, CITY, SORRY, OUTSIDE OF CITY PURVIEW FOR WHAT THIS IS GOING THROUGH AND GETS TO THE FOUNDATIONAL DOCUMENTS AND STRUCTURES FOR THESE NONPROFITS AND AFFILIATES TO BE STRUCTURED IN A WAY THAT THEY SHOULD BE SUPPORTING THE THINGS THAT NEED TO BE. I THINK WHAT STICKS OUT IN THIS IS THAT THIS IS PROMOTE CARMEL. THE GOAL HERE WAS TO SET UP A SCORE AND TO SELL COASTERS WITH COOL GUYS ON THEM, COOL GALS ON THEM IN THE STORE WHICH I HAVE SOME IN MY HOUSE, FOREVER. IT WASN'T TO GO ON TRIPS. THE SISTER CITY INITIATIVE WAS I THINK SET UP TO DO THAT. HOW DO WE RECONCILE THAT PROCESS? I GUESS MY FOLLOW-UP QUESTION THERE IS FROM
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A CITY PERSPECTIVE AS WE LOOK AT THE BOOKS, WITH THIS ONE CLOSED, WITH THIS PROCESS DONE , HOW DO WE ENSURE THAT WE ARE USING THESE AFFILIATES THE RIGHT WAY AND NOT PUTTING THEM IN THE SAME POSITION WHERE THEY MIGHT BE MAKING EXPENSES THAT THEY SHOULDN'T HAVE AND ARE WE USING ANY AFFILIATES THIS WAY PRESENTLY FROM A TRANSPARENCY PERSPECTIVE TO KNOW HOW AND WHAT THE CITY IS DOING THAT'S PROBABLY MORE TO ZACH AND THEMAYOR. >> BEFORE YOU ANSWER THAT QUESTION THOUGH, RYAN, I HAVE TO TELL YOU, I BOUGHT A REAL HOUSEWIVES OF CARMEL INDIANA FROM THE GIFT SHOP SO THERE WERE
REALLY COOL THINGS THERE. >> MR. CHAIRMAN, I HAVE A PROCESS QUESTION THAT I THINK RELATES TO WHAT YOU WERE TALKING ABOUT THERE. IN THOSE ORGANIZATIONS, ARE THERE BYLAWS BROAD RANGING AND WIDE-OPEN AS THIS AND IF THERE ARE WHAT WOULD BE THE PROCESS TO AMEND THOSE BYLAWS? OR CHANGE THEM SO THAT THEY ARE TIGHTER. I AGREE WITH YOU, THERE'S PROBABLY A GOOD PURPOSE FOR SOME OF THESE ENTITIES. THEY ARE USEFUL AND HELPFUL, MADAME MAYOR, BUT I'M JUST NOT FAMILIAR WITH WHAT THE PROCESS IS AND IF THERE IS A PROCESS, ONE OF THE THINGS WE COULD DO , I'M A BIG FAN OF STOPPING THE BLEEDING AND ONE OF THE THINGS YOU CAN DEFINITELY DO WOULD BE TO QUICKLY CLOSE THOSE HOLES, AMEND THE BYLAWS AND TIGHTEN THAT UP. ALSO PROVIDE FOR BIFURCATED REPORTING RESPONSIBILITIES AND ALL THAT KIND OF REVIEW SO OBVIOUSLY THIS IS SO SMALL AN AUDIT DOESN'T MAKE SENSE BUT REPORTING REQUIREMENT?
>> AND I GUESS, TO KIND OF ROUND OUT THE QUESTION, AGAIN, RAMBLING BUT THAT'S THE IDEA, THE REQUEST IN THE FIRST MEETING WAS WHAT OTHER AFFILIATES ARE OUT THERE, WHAT AFFILIATE LIKE THAT MAY ALSO BE IN THIS SO WE CAN COME BACK WITH THESE BEST PRACTICES AND DO THAT HYGIENE GAME OF CLEANSING THINGS AND ENSURING THAT THE BYLAWS ARE GOOD OR WHAT THE RECOMMENDATIONS ARE PLACED THAT WE UNDERSTAND THAT IF THERE'S A TRIP TO GERMANY THAT THE GERMAN SISTER CITY IS HELPING COVER THAT BECAUSE IT'S AN ADMISSION THAT THE RIGHT THINGS ARE IN PLACE SO THAT WE CAN ENSURE THAT THESE OPERATIVE RELATIONSHIPS ARE NECESSARY FROM A PERSPECTIVE IN SOME CASES BUT ALSO TO DO THE BUSINESS THAT THE CITY WANTS ARE SET UP TO DO THAT RIGHT. SO THE END GOAL IS FULLY THAT. I THINK THIS QUESTION THAT I JUST ASKED TO ZACH, WHAT ARE WE -- WHAT OTHER ONES ARE WE USING FOR THESE PURPOSES WERE CITY STAFF IS BEING -- USING THEM AS A -- THAT'S WHERE I THINK WE LOOK AT THAT LIST AND WE START TO HASH OUT WHAT AND HOW, EVEN IF IT DOESN'T END UP BEING COMPREHENSIVE IT CREATES A BEST PRACTICE IN YOUR MIND AS YOU GUYS ARE BUILDING THEN YOUR EXECUTIVE FUNCTIONS AROUND THINGS WHEN YOU SEE SOMETHING YOU ARE LIKE THIS KIND OF FITS THAT, WE SHOULD PROBABLY CHECK JUST CHECKING THE BALANCES THERE AND SHAPE THINGS BETTER EVEN AS THEY COME TO FRUITION BECAUSE 70,000 LINES OF A SPREADSHEET YOU CAN'T GO THROUGH IN A DAY AND GO OVER WITH A FINE TOOTH COMB. YOU COULD BUT ULTIMATELY THEY WILL COME UP WHEN THEY COME UP AND YOU'LL BE ABLE TO ADDRESS AND ASSESS IN THAT TIMEFRAME TOO BUT I DO WONDER WITH THE TRAVEL AND THE TRIPS THEMSELVES, THE QUESTION HERE WAS THIS IS 2023, LAME-DUCK BEHAVIOR, NOT NECESSARILY A LAWFUL CAPACITY AND WOULD NEVER MAKE A CLAIM OF THAT BUT THE OUTGOING MAYOR HAD A DIFFERENT SET OF PRIORITIES IN THE TIME THAT FIT WITHIN THE SCOPE OF THIS PROPHET THAT DIDN'T HAVE THE CHECK AND BALANCE AND THERE WAS NO OTHER PERSON TO SAY HEY, WAIT A SECOND, DON'T SPEND THAT MONEY THAT WAY. SO REALLY TRYING TO THINK THROUGH AS WE STILL SPEND MONEY LIKE THIS FROM THESE SOURCES EVEN IN TIMES OF POSTERITY WHEN WE'VE GOT BUDGET CYCLES MOVING IN THINGS LIKE HOW DO WE ENSURE THAT WE ARE NOT FALLING INTO THE SAME PIT OR INTO THE SAME PIT PRESENTLY AND THAT IS REALLY BACK TO GETTING THE FULL LIST OF UNDERSTANDING WHAT WE ARE DOING JUST BEING COGNIZANT AND TRANSPARENT WITH WHERE WE ARE WITH THESE THINGS. WHAT IS OCCURRING WITHIN THESE AFFILIATES MATTERS. CLEARY
>> WERE MOVING THAT DIRECTION FOR OUR AFFILIATES RIGHT NOW.
I'M NOT SURE THAT WE ARE GETTING FINANCIAL REPORTS FROM ALL OF OUR AFFILIATES AND I'M NOT SURE HISTORICALLY WHAT
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SCRUTINY WAS APPLIED TO THOSE TWO TEES OUT, LOOKING AT THOSE SKEPTICALLY , TRYING TO QUESTION EVERYTHING OR THE BOX HAS BEEN CHECKED. WE GOT THEIR ANNUAL REPORT. THERE IS CLEARLY OPPORTUNITIES WE ARE TAKING TO MAKE SRE THAT WE ARE USING OURTAXPAYER DOLLARS WISELY. >> I'M SORRY, MAY I, MR. CHAIR, I THINK THAT THE ARTS COMMISSION IS A REALLY GOOD EXAMPLE OF A GOOD PROCESS IN ORDER TO LOOK THROUGH ALL OF OUR -- I DON'T KNOW WHAT TO CALL THEM, GRANTEES. THANK YOU. I THINK THAT A PROCESS LIKE THAT, THAT YOU HAVE ALREADY IMPLEMETED WITH THE ARTS GRANT, WHICH IS FANTASTIC , IN MY OPINION, I WATCHED A COUPLE MEETINGS, I THINK IT IS GOOD THE WAY YOU STRUCTURED IT AND THE WAY IT IS DONE IS A VERY GOOD PROCESS AND I THINK THAT IS SOMETHING TO REALLY LOOK AT AS WELL GOING
FORWARD. >> I WANT TO SAY FOR THE RECORD, I'M NOT USING THIS WITH ANY OTHER AFFILIATE . TO BE CLEAR. I WENT TO FRANCE TO VISIT OUR SISTER CITY, THAT CAME OUT OF MY POCKET, CHIEF OF STAFF WENT TO FRANCE AT A DIFFERENT TIME, SHE PAID FOR IT OUT OF POCKET. THIS HAS NOT BEEN A TACTIC THAT WE USED. DOES HAVE EXPENSES AS YOU WOULD EXPECT WITH MARIA GOING TO GERMANY TO SELECT AND PARTNER WITH VENDORS IMPORTANT TO THE SUCCESS OF OUR MARKET HERE. IT ALIGNS PERFECTLY WITH THE MISSION. TO SAY THAT WE KNOW WHAT EVERY SINGLE AFFILIATE IS DOING, WE ARE NOT AT THAT LEVEL YET. WE STARTED WITH PROMOTING KARMA -- CARMEL AND ALL THINGS CARMEL . BECAUSE OF THE SIZE OF THE MARKET, THAT WAS A SECOND ONE AND WE HAD THEM TEED UP, ON TOP OF EVERYTHING ELSE WE DO, HAVING DEDICATED PEOPLE TO DO THIS . WE EITHER PAY FOR OUTSIDE HELP ON TOP OF EVERYTHING ELSE.
SLOWLY BUT SURELY PLODDING THROUGH THESE.
>> AS SOMEBODY THAT USED TO DO AIRCRAFT CRASH INVESTIGATIONS AND I SPENT 13 YEARS ON THE AUDIT COMMITTEE, YOU ARE NOT GOING TO CATCH EVERYTHING, NOT GOING TO PREVENT EVERY ACCIDENT.
HOWEVER, THERE IS A LEVEL OF DETAIL AND LEVEL OF HYGIENE WITH GOVERNANCE THAT NEEDS TO BE DONE IT EACH ONE OF THESE AFFILIATES AND THERE HAS TO BE PERFORMANCE ON THE CITY SIDE IN TERMS OF OVERSIGHT . HOW YOU DO THAT OVER TIME, WE WILL GET THERE IS YOU START TO PRIORITIZE BASED UPON RISK. AFTER GOING THROUGH THESE, THEN ON AN ANNUAL BASIS, THERE SHOULD BE AUDITS DONE BASED UPON THE RISK, BASED UPON THE MISSION OF THE ORGANIZATION, STRUCTURE OF THE ORGANIZATION THAT FUNDS GOING TO IT THAT I THINK PERFORMS BOTH CATCHING SOME OF THESE ERRORS AND PUTTING OTHER ORGANIZATIONS ON NOTICE THAT WE ARE DOING AUTO PROCESS. I'M VERY CONFIDENT THAT THESE GROSS ERRORS WE ARE SEEING WILL BE TAKEN CARE OF. I WILL SAY ONE MORE TIME, I THINK THAT MANY OF THESE ORGANIZATIONS ARE GOOD ORGANIZATIONS THAT ARE MISSION-BASED THAT DO NOT HAVE THE TOOLS AND NOT TOLD WHAT THEY SHOULD BE ACCOUNTABLE TO DO. AS FRUSTRATING AS IT IS TO SEE AND ORIGINAL LINE ITEMS THAT MAKE ME VERY ANGRY, I GET WHERE THAT IS COMING FROM, I DO BELIEVE THERE IS A WELL-KNOWN PROCESS THAT WE CAN APPLY THAT WILL MAKE THIS BETTER ACROSS THE BOARD. USING REASONABLE METHODS, YOU DON'T HAVE TO AUDIT EVERY SINGLE PENNY THAT RUNS THROUGH AN ORGANIZATION, PUTTING IN PLACE AUTO PROCESSES OF DOLLARS ABOVE A CERTAIN AMOUNT OR THEY HAVE A CERTAIN MISSION AUDITING TO THAT MISSION. BASED UPON THE SMART PEOPLE IN THE ROOM, I'M VERY CONFIDENT THAT WE WILL GET THERE AT THAT END OF THE DAY IN THIS PROCESS.
>> AND REQUIRING AN AUDIT, I DON'T THINK THIS ORGANIZATION HAD ADDED THE FINANCIALS. I THINK THAT SOME OF THESE THINGS WOULD HAVE BEEN CAUGHT IN AN AUDIT. YOU ARE ACCOUNTABLE TO YOUR AUDITOR EVERY YEAR, THEY WILL CATCH SOME OF THESE THINGS.
MAYBE ONE OF THE THINGS IN YOUR CHECKLIST IS, IF THE CITY IS INVESTING OVER X DOLLARS A YEAR, THE GRANT NEEDS TO BE AUDITED SO THAT YOU DO, THEN THE BURDEN IS NOT ON THE CITY STAFF, IT IS ON THE AUDITOR AND YOU'RE GETTING THOSE REGULAR REPORTS.
>> WHAT WERE TALKING ABOUT ON THE BREAK IS, THE REPORT ISN'T, THE CEO OR THE DIRECTOR, IT STILL KILLS ME THAT DAN WAS WRITING THESE LETTERS AND DID NOT HAVE TITLE OR POSITION AS
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FAR AS I KNOW. WHAT WE WOULD EXPECT THE CITY IS PROVIDING, PICK A NUMBER, 100,000, 250,000, SOMEBODY FROM THAT ORGANIZATION, THE TAX ACCOUNTANT OR THE LEGAL ADVISER IS THE ONE ACTUALLY PRESENTING COUNCIL THAT PROVIDES ANOTHER ADDITIONAL LAYER OF VERACITY TO THE INFORMATION THAT IS OUT THERE.>> I WOULD SAY AT THIS POINT FOR THIS ORGANIZATION FROM THE CITY'S PERSPECTIVE , IT IS IN WIND DOWN. THIS IS THE PUBLIC REPORT OF WHAT THE MAYOR'S OFFICE AND STAFFING CONSULTANTS FOUND OVER THE LAST YEAR. IN TERMS OF MY PERSPECTIVE, THERE ARE OPEN ISSUES OTHER THAN THE FACT AS ZACH NOTED EARLIER, THERE COULD BE ADDITIONAL LIABILITIES THAT COME TO
FRUITION. >> THANK YOU. I THINK THAT THE SHOWS FROM A TIMING PERSPECTIVE HOW MUCH EFFORT AND ENERGY WE PUT INTO QUESTION ASKING. I APPRECIATE GETTING THIS AT THE FOREHAND THAT ALLOWED ALL OF US TO BE PREPARED TO COME WITH GOOD QUESTIONS. I WANT TO REITERATE AT THE END OF THIS, WE ARE CONTEXT GATHERING . FROM THE PERSPECTIVE OF WHAT WE LEARNED TONIGHT, THE ROLE OF THIS IS TO GET TO THE END WHERE WE HAVE A RECOMMENDATION OF HOW BEST TO RELATE TO AFFILIATES OF THE CITY MOVING FORWARD. THAT WILL NECESSARILY INCLUDE CHANGES AT THE CITY LEVEL, IT CHANGES AT THE CITY COUNCIL, CHANGES OF THE EXECUTIVE, WORKING TOGETHER. SOME THINGS THAT WE WILL COMMUNICATE TO AFFILIATES TO DO BETTER OR BE ABLE TO REPORT TO US SO THAT WE CAN DO BETTER ON OUR END. I SEE THIS, OBVIOUSLY IT COMES TO A POINT WHERE WE ARE REVIEWING THINGS, DEFINED ISSUES , THE ISSUES WHERE FINDING OF BUREAUCRACY, THINGS THAT NEED TO BE PRESENTED AND STRUCTURED IN A WAY WE KNOW WHAT DECISIONS WE ARE MAKING ON BOTH ENDS. IF WE CAN CREATE A STRUCTURE THAT ALLOWS US AS A CITY TO BETTER EQUIP THOSE ENTITIES COMING AND SAYING THAT WE SHOULD DO SOMETHING AMAZING IN CARMEL , HERE ARE THE STEPS. IT PUTS PEOPLE IN PLACE TO ACHIEVE THE SUCCESS THEY'RE GOING FOR, THE AFFILIATES THEMSELVES WHEN INTERACTING WITH THE CITY THAT WILL MAKE EVERYTHING BETTER. I SAY THAT IN THE CONTEXT THAT IF YOU WATCH THIS AND WATCH FROM A SPECIFIC PERSPECTIVE, GOVERNMENT PEOPLE ARE LIKE , OH MAN, THEY WERE REALLY RUDE TO THE GOVERNMENT OR THE AFFILIATES WERE LIKE, OH MAN, THERE ARE REALLY DIGGING IN. THE GOAL IS FULLY OBJECTIVE FACT GATHERING TO SEE HOW WE COULD WORK BETTER, WHAT ELSE WE COULD DO. THE GOAL, AS WE MOVE FORWARD, TO LOOK AT POSITIVE EXAMPLES. OTHER THINGS THAT HAVE WORKED REALLY WELL, TAKING THOSE INTO CONSIDERATION, WE HAVE SEEN WHAT THAT DOES, MAKE THOSE WORK TOO. THOSE ARE MY CLOSING REMARKS ON THIS
FRONT. >> I'M CURIOUS, MR. CHAIRMAN, WHAT ARE OUR NEXT STEPS? IN OTHER WORDS, HOW DO WE ACCUMULATE EVERYONE, REPORT, PRESENTING A REPORT, HOW IS THAT
PROCESS GOING TO WORK ? >> I THINK IT IS STILL MOVING.
THE SET OF THE GO BY THE COMMITTEE BY RESOLUTION IS TO COME UP WITH A RECOMMENDATION AND A REPORT. I THINK THAT AS WE GET MORE OF THE FOUNDATION, THERE ARE SOME THINGS TAKING SEED THAT COME WITH THAT IDEA AND MENTALITY OF HOW WE BUILD SOMETHING THAT BECOMES THE BEST PRACTICE IS TO DO THIS. AND IT BECOMES CEMENT TO FIGHT -- CEMENTIFIED, BETTER IDEA OF WHAT THE REPORT WILL BE. THE NEXT STEP SPECIFICALLY BASED ON THE AGENDA, I THINK A GOOD EXPERIMENT IS THE LIST OF AFFILIATES. I KNOW IN THE FRONT AND WE TALKED ABOUT FOUR SPECIFIC ONES GETTING INTO THIS, FOUR OF THE BIGGEST AND HAVE THE BIGGEST BROADEST IMPACT FOR DIFFERENT PARTS OF THE CITY.
VERY GOOD TO GO THROUGH AS WE HAVE SEEN TONIGHT TO KIND OF LEARN WHAT WE CAN THERE AND GET FEEDBACK ON HOW THEY WORK. I DO THINK THAT A REVIEW OF MORE AFFILIATES AND MAYBE SMALLER CAPACITIES, OBVIOUSLY NOT IS FULLY FLUSHED OUT BECAUSE SOME OF THEM ARE SMALLER RELATIONSHIPS THAT CAN REALLY HIGHLIGHT PLACES AND STRUCTURES AND OVERSIGHT MECHANISMS LIKE AN ARTS COUNCIL THAT HELPS REVIEW GRANTS AND REVIEWS THEM MANUALLY TO ENSURE THAT METRICS ARE BEING MET . THOSE THINGS ARE ABLE TO BE TAKEN INTO CONSIDERATION AS WE ARE BUILDING ULTIMATE -- I KNOW THAT THE MAYOR SHARED WITH US, BASED ON WORK OF CITY STAFF, SHORTLIST OF AFFILIATE CHARITABLE ORGANIZATIONS WITH THE CITY THAT RECEIVED DIRECT PAYMENTS, SOME OF THOSE ARE ART GRANTEES, SOME OF THEM ARE SISTER CITY ORGANIZATIONS.
[02:20:01]
OTHERS ARE ONES THAT RUN EVENTS OR ONES THAT WE TALKED ABOUT ALREADY, ON THE RECORD. I, LOOKING AT THIS LIST, I FEEL GOOD ABOUT THE ONES THAT ARE LISTED AND I THINK I GOT TO THE CONVERSATION OF, ARE THERE OTHERS THAT WOULD BE WORTHWHILE TO EVEN NAME AS WE LOOK AT IT, MIGHT NOT BE ONES THAT ARE TOP OF MIND BUT ONES THAT ARE MOVING, WOULD ASK THE COMMITTEE TO THINK ABOUT IT TOO AND WHAT DO WE WANT TO LEARN, WHAT WOULD BE HELPFUL FOR US BUILDING THAT RECOMMENDATION PROCESS TO ENSURE WE ARE PUTTING TOGETHER THE RIGHT WAY?>> I THINK THAT WE NEED TO CLARIFY, ONE, I WANT TO HAVE A STATEMENT HERE, VERIFICATION QUESTION OUT, CHALLENGE AND POINT ALL OF THESE FORWARD MORE THAN DIFFICULT FOR THE LEGAL DEPARTMENT. THERE IS NO RECORDS IN ONE PLACE. SOME OF THESE SECRETARY OF STATE WEBSITE BUT CANNOT BE FOUND ON THE IRS.
BYLAWS ARE DIFFICULT TO CHASE. IT HAS BEEN A LITTLE BIT, A LOT CHALLENGING FOR OUR STAFF. IF THERE IS SOMETHING ON HERE YOU DON'T CARE ABOUT, LET US KNOW, SOMETHING YOU WANT ADDED, LET US KNOW. I THINK AT SOME POINT, WHAT DO YOU WANT TO KNOW BECAUSE OUR LEGAL BUDGET WILL NOT ENTERTAIN THE COMPREHENSIVE NATURE REVIEW THAT WE ARE GOING TO GO THROUGH , WHEN WE REPORT BACK TO COUNCIL AND ASK FOR INITIAL PREPARATION, WE WOULD DO THAT, IF NOT, HOW TO SCALE IT DOWN. THAT DOES NOT HAVE TO BE ANSWERED TONIGHT, I WANT TO THROW THAT OUT THERE .
>> IF I CAN JUST SAY, I SAW THE LIST LAST NIGHT, CORPORATE COUNCIL CREATED IT, I RECEIVED THE LIST MASS -- LAST NIGHT, IN 30 MINUTES I HELPED ONLINE AS A NONPROFIT 501(C)(3) LAWYER, MANY OF THESE, MY OBSERVATION 30 MINUTES IN, THEY WERE CREATED BY CORPORATION COUNCIL 'S OFFICE BECAUSE THAT WAS THE MANDATE THEY WERE GIVEN BY THE PRIOR ADMINISTRATION. DOUG HANEY OR JOHN OVERLAND OR OR ONE OF THEM WOULD CREATE AS A LAWYER, AS THE INCORPORATOR , BUT WHEN I WENT TO THEIR TAX RETURNS, THERE IS A QUESTION ON THERE THAT SAYS, ARE YOU RELATED TO ANY OTHER ORGANIZATION? AND THEY SAID, NO. THERE IS A SCHEDULE R IF YOU'RE RELATED TO AN ORGANIZATION AND THEY SAID, NO. THAT TELLS ME AS A TAX LAWYER, THIS ORGANIZATION, CORPORATION COUNCIL PHYSICALLY TO ARTICLES AND BYLAWS, FROM THE DAY THEY WERE FORMED, THEY WERE SAYING THAT THEY WERE NOT RELATED TO THE CITY. THAT IS MY POINT ABOUT ALL OF THIS, IT IS A GREAT IDEA TO TAKE A LOOK WHEN YOU'RE CREATING YOUR BUDGET ABOUT THE GRANTS THAT YOU ARE MAKING. I WOULD NOT ASSUME JUST BECAUSE CORPORATION COUNCIL CREATED AN ENTITY THAT IT WAS EVER INTENDED TO BE RELATED, MEANING IT IS AN AFFILIATE . AS I WAS LOOKING THROUGH THEM, I COULD SEE IN 30 MINUTES OF THEIR TAX RETURNSDEMONSTRATED, THEY ARE JUST 501(C)(3), IF YOU LOOK AROUND CARMEL , THERE ARE 300 OF
THOSE. >> FOR ME , SPECIFICALLY, THIS IS A HYGIENE ISSUE. THE CITY CORPORATION COUNCIL SPITTING OUT NONPROFITS WITH CITY RESOURCES , AGAIN, WE HAVE TALKED ABOUT, I DON'T KNOW THAT THIS GOES TO EMPLOYMENT, THIS GETS CLOSER THAN ANYTHING WE HAVE TALKED ABOUT SO FAR IN MY BRAIN, THE CONCEPT OF NOT KNOWING WHAT WE HAVE SPUN OUT, TIED TO MISSION, I THINK THAT DOING THAT WORK IS PARAMOUNT. I WOULD PREFER NOT TO PAY EXTERNAL ATTORNEYS. I THINK THAT THIS IS SOMETHING THE CITY LEGAL STUFF NEEDS TO GET GRIPS ON BECAUSE AT THE END, THAT LIST , THE UNDERSTAND WHERE THINGS ARE, THEY ARE STILL PERFORMING THEIR MISSION, THEY NEED TO BE RUN DOWN, THEY NEED TO RECEIVE DOCUMENTATION COMING THROUGH, IT WILL BE THE WORK OF THAT DEPARTMENT. I AGREE, I DON'T THINK THIS IS A TODAY ANSWER OR NEXT WEEK, I SEE THIS , AS WE MOVE THEIR PROCESS, UNDERSTANDING WHAT ALL THESE THINGS ARE MATTERS. WE COULD GO THROUGH LINE BY LINE, PROBABLY THE CLAIMS VOUCHER AND FIND A
BUNCH. >> I DON'T THINK THESE ORGANIZATIONS, I THINK THAT CORPORATION COUNCIL'S OFFICE HAS SET OF ARTICLES AND BYLAWS AND THEY WERE GIVING THOSE AWAY FOR FREE. I DON'T THINK THAT THE CITY APPOINTS THE DIRECTORS.
I DON'T THINK THAT THERE IS A RELATIONSHIP THERE.
>> IT MIGHT SUGGEST , TRYING TO CALL THROUGH IT, CLEARLY THE ORGANIZATIONS WE ARE REVIEWING HAVE A DIRECT, LEGAL AFFILIATION AND ARE RECEIVING OR HAVE RECEIVED FUNDS. IF YOU CAN HELP US SORT THROUGH THOSE ONES, IF THAT LIST IS PRETTY BIG, START RANK ORDERING THEM BASED ON THE NUMBER OF FUNDS THEY ARE GETTING OR POTENTIAL RISK ASSOCIATED WITH IT. I THINK A LOT OF THESE COULD BE KICKED TO THE SIDE IF CORPORATE COUNCIL SPUN THEM UP , YET WE HAVE NO FUTURE OBLIGATION TO THEM, I'M NOT SURE WE NEED TO DO THAT OTHER THAN TO TELL CORPORATE COUNCIL NOT TO SPIN UP
[02:25:06]
ORGANIZATIONS. HOPEFULLY THIS WILL GET SMALLER , TO YOUR QUESTION OR POINT, MAYOR FINKAM. AFTER A DAY, WHICH ONE SHOULD WE PURVIEW OR BE LOOKING AT IF WE NEED TO SORT THROUGH THEM, I THINK IT IS A MATTER OF HOW MANY DOLLARS THEY ARE RECEIVING AND/OR ANY SPECIAL RISK? I SEE CARMEL JAZZ FESTIVAL ON HERE, THAT CONCERNS ME, IF THEY NEED A BAILOUT, WE SHOULD KNOW WHAT IS GOING ON WITH THAT ORGANIZATION. THE OTHER ONES I'M NOT FAMILIARWITH. >> I GUESS THAT YOU ARE TALKING
ABOUT THRESHOLDS. >> YEAH. AS SHE WAS SAYING OR WE WERE HEARING, IF THEY WERE SPUN OUT BUT THERE WAS NO ONGOING RELATIONSHIP WITH THE CITY, I DON'T SEE THE VALUE OF US DRILLING DOWN ONTO THEM IF WE HAVE ONGOING RELATIONSHIP AS DEFINED BY YOU HAVE GONE THROUGH AND IT SPINS MY HEAD UP, 507C WHATEVER , AND RECEIVING FUNDS, THOSE ARE THE TWO THRESHOLDS TO START WITH, IT IS STILL A LONG LIST, WE COULD SORT THROUGH THEM BASED ON THE FUNDS OR POTENTIAL RISK.
>> MR. CHAIR, HOW ABOUT THE NEXT MEETING, WE TAKE A SECOND CRACK , PRESENT THIS TO YOU IN ANOTHER WAY WITH SOME DEGREE OF AMORTIZATION. LOVE THE PRIORITIZATION, HATE IT, WHATEVER CAN ADJUST FROM THERE, DOES THAT SOUND REASONABLE?
>> YES. IT MIGHT BE INTERESTING TO LOOK AT IF WE COULD ADD TWO MORE COLUMNS. ONE, IF THEY RECEIVE FUNDING DIRECTLY AND/OR
-- >> THAT IS WHAT I WAS GOING TO DO. FUNDING WOULD BE THE PRIORITY.
>> YEAH, THAT SOUNDS GREAT. >> NEXT ON THE AGENDA IS RECOGNITION OF PERSONS WHO WISH TO ADDRESS THE COMMITTEE AND BLUE CARD PROCESS, I DID NOT RECEIVE ANY. IF ANYBODY WOULD -- NO, OKAY, THAT PROCESS WILL BE THIS POINT AT EVERY MEETING MOVING FORTS IF YOU WANT TO HAVE A STATEMENT, THAT WOULD BE OKAY BY US. IF NOT, THAT IS ALSO OKAY BY US. COMMITTEE FINAL COMMENTS, FINAL AND NEXT STEPS, WE HAVE SAID ALL OF OUR FINAL COMMENTS, NEXT STEPS, MAYOR AND CITY STAFF, WHERE YOU WANT TO GO NEXT, UNDERTAKING OF THE PERSON ?
>> THE SCHEDULE WE ORIGINALLY DISCUSSED, THE NEXT ONE DISCUSSED WOULD BE CHRIS --, SAME THING, GIVE YOU THE BINDER A WEEK OUT , ONLINE INFORMATION, PRESENT WRITTEN COPY OF THAT IS OKAY, YOU WANT THE PRINTED ONE A WEEK OUT, LET THE TEAM KNOW. AND , LIKE I DISCUSSED, HAVE THAT REVISED LIST OF 501S OR
CHARITABLE ENTITIES. >> JUST A REMINDER, EACH OF YOU GOT A LINK SO THAT IS NOT A PHISHING SCAM, YOU ARE SUPPOSED TO CREATE WHEN YOU DO, ALL OF THE DOCUMENTS, ALL OF THE ORGANIZATIONS, THE NEXT THREE ASKED TO PROVIDE THE SAME INFORMATION AND IT IS ALL AVAILABLE TO YOU.
>> EXCUSE ME ? >> IT IS CALLED PROTEUS. YOU DO NEED TO GO IN, CREATE A PASSWORD AND ONCE YOU DO, YOU HAVE AN ACCOUNT AND ALL OF THE DOCUMENTS WILL BE THERE FOR YOU BY ENTITY.
THEY ARE MUCH MORE VOLUMINOUS THAN PROMOTE CARMEL. YOU WON'T GET MATERIALS IN THE SAME WAY BUT FOR THE NEXT MEETING. YOU CAN START LOOKING AT ALL OF IT NOW, YOU WILL HAVE THREE WEEKS
TO GO THROUGH ALL OF IT. >> ONE MORE THING FOR THE RECORD, WE DID SET UP A PROCESS WITH THE CLERK'S OFFICE FOR THE PUBLIC IF THEY WANT TO SUBMIT WRITTEN DOCUMENTATION THAT WOULD GO FOR A FILE FOR PEOPLE TO LOOK AT TO TAKE INTO CONSIDERATION AS WE TALK ABOUT THESE THINGS MOVING FORWARD, PLEASE FEEL FREE TO SEND DOCUMENTS TO THE CLERK. OTHER THAN THAT , I THINK THAT FROM MIKE PERSPECTIVE, THAT ALL SOUNDS GOOD. I DO, BECAUSE I HAVE A MICROPHONE, I'M ENCLOSING, I WANT TO THANK EVERYONE HERE, THANK YOU FOR THE EFFORT TONIGHT AND STARTING TO FIGURE OUT HOW WE WILL UNPACK THIS. I KNOW THIS IS A BIG , HAIRY, AUDACIOUS COMMITTEE TRYING TO FIGURE OUT HOW BEST TO ACCOMPLISH THE TASK OF WRITING A REPORT SOMETHING AS COMPLEX AS GOVERNMENT. NONPROFIT RELATIONSHIPS IS DAUNTING. I FEEL CONFIDENT INFORMATION LIKE TONIGHT MOVING FORWARD ON OTHER COMMITTEES WILL PUT US IN A PERSPECTIVE WE SHOULD HAVE A REALLY GOOD OUTCOME OF THINGS THAT WILL PUT ME SPECIFICALLY AS A COUNSELOR, IN A POSITION MOVING BUDGET LINE ITEMS FOR THESE RELATIONSHIPS, HOPEFULLY PUTS AFFILIATES OF TODAY,
[02:30:01]
TOMORROW, AND THE FUTURE, FUTURE CITY ORGANIZATIONS , IN A PERSPECTIVE WE CAN DO THINGS THAT MATTER TO OUR CONSTITUENTS AND CITIZENS. IN PERPETUITY WITHOUT FEAR OF BANS BEING PAID FOR WE DON'T KNOW OF. THAT IS WHAT I'VE GOT. WE ARE ADJOURNED.* This transcript was compiled from uncorrected Closed Captioning.