01-20 Resolution No . 01-20
RESOLUTION
AUTHORIZING EXECUTION OF A PURCHASE OF SERVICE AGREEMENT WITH
THE ELGIN SYMPHONY ORCHESTRA
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Ed Schock, Mayor, and Dolonna Mecum, City Clerk,
be and are hereby authorized and directed to execute a Purchase
of Service Agreement on behalf of the City of Elgin with the
Elgin Symphony Orchestra for youth programming and operational
support, a copy of which is attached hereto and made a part
hereof by reference .
s/ Ed Schock
Ed Schock, Mayor
Presented: February 14, 2001
Adopted: February 14 , 2001
Omnibus Vote : Yeas : 7 Nays : 0
Attest :
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
PURCHASE OF SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 2:2 NMo day
of 1 2001, by and between the ELGIN SYMPHONY ORCHESTRA
ASSOCIATION, a not-for-profit organization, (Hereinafter referred to as
the "ESO" ) and the CITY OF ELGIN, Illinois, a municipal corporation,
(hereinafter referred to as the "CITY" ) ; and
WHEREAS, The City of Elgin, Illinois has determined it to serve a
beneficial public purpose to maintain the Elgin Symphony Orchestra as the
largest cultural organization in the Fox Valley and as Illinois' s largest
symphony orchestra outside the City of Chicago; and
WHEREAS, The City has further determined it to serve a beneficial
public purpose to assure that its youth are extended a diverse offering
of stimulating activities which provide potential life-long benefit; and
WHEREAS, The ESO provides over 17, 000 tickets each session to
residents of Elgin, and draws almost 38, 000 ticketed patrons into Elgin
each season; and
WHEREAS, the ESO provides over 10, 000 students each season with
stimulating musical experiences .
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows :
1 . The City shall pay to the ESO the sum of $193, 000 on or before
March 1, 2001 .
2 . The ESO shall address all initial inquiries and requests made
pursuant to this agreement to the Management Assistant in the
City Manager' s office.
3 . The ESO shall apply $75, 000 of the aforementioned $193, 000 to
Youth Initiatives . In exchange, the ESO shall provide youth
programs, including, but not limited to, Arthur Anderson
Petite Musique, Elgin Financial Foundation Kids Konzerts, In-
School Music Program, Apprentice Program, and the Homeschool
Subscription series .
4 . The ESO shall apply $30, 000 to office and salary expenses
related to their location at 20 DuPage Court, including their
box office . In exchange, ESO shall maintain and operate a box
office in the center city area throughout the year.
5. The ESO shall apply $63, 000 to general operational expenses .
6. The ESO shall apply $25, 000 to the SCORE ! (Student Creating
Opera to Reinforce Education) program, designed in conjunction
with Hamilton Wings .
7 . The ESO shall provide a written report detailing the
disbursement of $193, 000 . Such report shall be submitted by
September 30, 2001 to the Elgin City Council and shall
include, but not be limited to, a summery of public
performance offering, gross tickets sold, activities offered
for youth, attendance numbers for said activities, and a
breakdown of $30, 000 in office expenses .
8 . The ESO shall be granted an additional 10% discount on Hemmens
usage fees, including hall rates, labor and equipment charges,
should it hold more than 15 performances in a calendar year at
the Hemmens Cultural Center.
9 . The City shall have the right to review all accounting records
related to the use of the $193, 000, given 72 hours notice, and
at the time agreed upon by both parties .
10 . The ESO shall indemnify and hold City harmless from and
against any and all claims for damages, suits, causes of
action or any and all other liability which may arise out of
or in connection with the performance of this agreement or
other operations as a result of any negligent actions by the
ESO.
11 . This Agreement shall be in full force and effect from January
1, 2001 through December 31, 2001 .
12 . The terms of this agreement shall be severable . In the event
any of the terms or provisions of this agreement are deemed to
be void or otherwise unenforceable for any reason, the
remainder of this agreement shall remain in full force and
effect .
13 . This agreement shall not be construed so as to create a joint
venture, partnership, employment or other agency relationship
between the parties hereto.
14 . This agreement shall be subject to and governed by the laws of
the State of Illinois . Venue for the resolution of any
disputes or the enforcement of any rights arising out of or in
connection with this agreement or its performance shall be in
the Circuit Court of Kane County, Illinois .
CITY OF ELGIN ELGIN SYMPHONY ORCHESTRA
ASSOCIATION
By By 41-7"
Ed Schock Michael Pastreich
Executive Director
Attest: htIctAl,—
City Clerk
Agenda Item No.
City of Elgin g
r y
January 24 , 2001
n�oaennoNnl_1-e is l�lar
A NI:a C T'C'I'ItAL CIT.' f'f llNlilt
TO: Mayor and Members of the City Council
FROM: Joyce A. Parker, City Manager
SUBJECT: Elgin Symphony Orchestra Support and Purchase of Service
Agreement
PURPOSE
The purpose of this memorandum is to provide information to the
Mayor and members of the City Council to consider a Purchase of
Service Agreement with the Elgin Symphony Orchestra (ESO) for youth
• programming and general operational support.
BACKGROUND
The 2001 Budget includes $193, 000 for ESO support, with $155, 000
from the Riverboat Fund designated for ESO support and youth
initiatives and $38, 000 from the General Fund Cultural Arts
Commission budget. At their January 12 meeting, the Cultural Arts
Commission approved the expenditure of $38, 000 . from their General
Fund budget to support ESO operations .
The ESO is the largest orchestra in the state outside of the City
of Chicago. With almost 38, 000 ticketed patrons each year to a
variety of concerts, the presence of ESO in the community helps
establish Elgin as a regional center for the performing arts. ESO
estimates that approximately 17, 000 of these patrons are from
Elgin. In addition to these programs, ESO, in partnership with the
City, has provided a variety of programs to school children in
Elgin (i . e . , Petite Musique, Kidz Konzerts, In School Music
Program, Apprentice Program, and a Home School Subscription
series) . ESO' s commitment to the Elgin community is apparent
through the continued use of the Hemmens Cultural Center as the
symphony' s home base and the move of ESO' s executive offices to
downtown in August, 1996.
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ESO PSA
January 24 , 2001
Page 2
A continued feature of the Symphony' s program is a collaboration
with Hamilton Wings to implement a music development program
designed for at-risk youth . Begun in 1999, Students Creating Opera
to Reinforce Education ! (SCORE) provides the opportunity for 60 at
-risk students, age 10 to 13, to work with professional singers,
composers, instrumentalists, writers, designers and theatre
technicians to create, develop, produce and perform an original
opera. The ESO will apply $25, 000 of the City' s contribution to
this program. A Purchase of Service Agreement has been drafted for
City Council consideration. The agreement is designed to establish
the public purpose for City support and provides a mechanism for
ESO' s accountability for the use of public funds . ESO has prepared
a report to the City detailing the use of the $193, 000 funding in
2000 .. Also included in the agreement is a provision granting an
additional 10% discount for Hemmens usage, if ESO uses the facility
more than 15 times in a calendar year. This provision provides an
incentive to ESO to continue to utilize the Hemmens as their home
base . This provision will be reviewed as scheduling issues are
discussed with the Symphony in the future.
• COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
Elgin Symphony Orchestra and Elgin Cultural Arts Commission
FINANCIAL IMPACT
Total funding of $193, 000 is located in the 2001 General Fund and
Riverboat Fund budgets . The Cultural Arts Commission has approved
the -expenditure of $38, 000 of their allocation from the General
Fund budget (account number 010-0902-709 . 80-10) . The Riverboat
Fund (account number 275-0000-791 . 80-11) contains the remaining
$155, 000 for ESO support and youth initiatives . Sufficient dollars
exist to fund the PSA with the Elgin Symphony Orchestra .
LEGAL IMPACT
r
`�I None.
ALTERNATIVES
The City Council could approve the agreement as drafted, edit the
agreement or decline to provide support to ESO.
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ESO PSA
January 24 , 2001
Page 3
RECOMMENDATION
It is recommended that the City Council approve the Purchase of
Service Agreement, reflecting a City contribution of $193, 000, with
the Elgin Symphony Orchestra as presented.
Respectfully submitte ,
J ce Parker
City Manager
od
Attachment
•
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Report to the City of Elgin
Disbursement of$193,000
575,000 Youth Initiatives
Family Concerts $29,345
Homeschool Subscription Series 52,725
In School Music Program 53,880
Kids Konzerts $22,134
Petite Musique 516,916
Total $75,000
530,000 Box Office (office and salary expenses)
Box Office Coordinator $20,556
Box Office Supplies 54,800
Software Support Fee $1,644
.Soffivare Training $3,000
Total 530,000
563,000 General Operational Expenses
• Total operational expenses for the 1999-2000 season were$1,636,119
525,000 SCORE! Proms
Total expenses for the 1999-2000 SCORE! Program were $102,806
Summary of Public Performances
For a summary of the Elgin Symphony Orchestra's public performances during the 1999-2000 Season,
please refer to the enclosed brochure. The ESO also performed a large number of educational
programs and several concerts in the park, including the opening of the Elgin Fine Arts Festival.
Gross Attendance (24 concerts)
Classic Series 13,373
Pops Series 3,456
Gala with Yo-Yo Ma 1,199
Holiday Spectacular! .4,006
Schaumburg Sampler 1,790
Activities Offered for Youth Attendance
Family Series 1,222
. Home School Student Program . 192
In School Music Program (6 performances) 1,800
Elgin Financial Foundation Kids Konzerts (6 performances) 7,224
Arthur Andersen Petite Musique(4 performances) 2,600
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ELGIN SYMPHONY ORCHESTRA
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1999
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Basic Consolidated Financial Statements
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statement of Activities 3
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 5-8
f Supplementary Information
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1
Schedule of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Consolidated Schedule of Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated Schedule of Printing and Promotion . . . . . . . .. . . . . . . . . . . . . . . . 12
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MUFLUR & CO., L L
' INDEPENDENT AUDITORS' REPORT
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The Board of Directors
Elgin Symphony Orchestra
Elgin, Illinois .
We have audited the accompanying consolidated statement of financial position of Elgin
Symphony Orchestra as of June 30, 1999 and 1998, and the related consolidated
statement of activities for the year ended June 30, 1999, and the consolidated statement
of cash flows for the years ended June 30, 1999 and 1998. These financial statements
are the responsibility of the Orchestra's management. Our responsibility is to express an
opinion on.these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
I whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
As more fully described in Note 1 of the financial statements, in order to improve the
usefulness of comparative information, the 1998 financial statements do not include a
detailed statement of activities as required by generally accepted accounting principles.
In our opinion, except for the omission of 1998 detailed. statement of activities as
discussed in the preceding paragraph, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Elgin Symphony
Orchestra as of June 30, 1999 and 1998 and.the changes in its net assets for the year
ended June 30, 1999 and its cash flows for the years ended June 30, 1999 and 1998 in
i conformity with generally accepted accounting principles.
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I. Elgin, Illinois
August 4, 1999
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Certified Public Accountants Management Consultants
"�^( —nrtdanri Place Elcin.Illinois 60123 . Phone:847.888.8600 . Fax:847.888.0635
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1998
PERMANENTLY TOTAL AS RESTATED
RESTRICTED RESTRICTED TOTAL
-
153,148 104,760
- 167,204 155,604
37,000 27,000
1 -
44,534 ..20.1,171
93,310 71,930
- 158,000 150,000
45,000 30,000
470,074 397,565
!• - 61,125 57,720
42,788 27,488
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! - 8,423 19,728
20,372 14,504
- 2,270 4,074
1 ,303,248 1 ,261 ,544
- 532,281 481,593
237,207 226,793
337,515 203,200
- 107,976 96,402
- 59,705 59,216
1 ,274,684 1 ,067,204
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t - 28,564 194,340
5,746 284,393 90,053
5,746 312,957 284,393
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ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Donated Services. Goods and Facilities
In addition to cash contributions, the Orchestra receives donations of goods, facility use, and
volunteer services. Donated goods and facility use are recorded at their fair value. Donations of
volunteer services which meet the criteria established by professional accounting standards are
also recorded at their fair value (see Note 5).
The Orchestra also receives a substantial amount of volunteer services which do not meet the
criteria for inclusion in the financial statements.
Cash Equivalents
The Orchestra generally considers all highly liquid instruments with an original maturity of three
months or less to be cash equivalents. Certificates of deposit and amounts invested through a
brokerage firm are classified as investments.
• Concentration of Credit Risk
The Orchestra maintains substantially all of its cash balances in a commercial bank. These
balances are insured by the Federal Deposit Insurance Corporation up to 5100,000. During the
year, the Orchestra, at times, maintained bank deposits in excess of the insured limitations.
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Financial Statement Estimates
The preparation of financial statements in conformity with generally accepted accounting
94inciples requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
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Capital Assets
Capital assets are recorded at cost-when acquired, or their fair market value if donated.
Depreciation is provided using the straight-line method over the estimated useful lives of the
L assets which range from three to seven years.
Financial Statement Presentation
. The statement of activities iftelude certain prior-year summarized comparative information in total
but not by detail. Such information does not include sufficient detail to constitute a presentation
in conformity with generally accepted accounting principles. Accordingly, such information should
be read in conjunction with the Orchestra's financial statements for the year ended June 30,
1999, from which the summarized information was derived.
ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2 - CAPITAL ASSETS
Capital assets owned by the at June 30, 1999 and 1998 included the following:
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1999 1998
Office furniture and equipment 5 47,395 47,395
I. Musical instruments 22,148 22,148
69,543 69,543
Accumulated depreciation 65,177 62,435
$ 4,366 7,108
Depreciation expense for the years ended June 30, 1999 and 1998 was $2,742 and $3,846,
respectively. _
I • ' NOTE 3 - DEFERRED REVENUE
I The Orchestra defers the recognition of ticket sales and related revenue to the period in which the
concerts are performed. As of June 30, 1999 and 1998, such unearned revenue amounted to
$422,926 and $222,882, respectively.
NOTE 4 - IN-KIND SUPPORT
! The Orchestra receives a significant amount in-kind support in the form of services provided free
or at a reduced cost. The principle sources of in-kind support are office space use, advertising and
free or reduced travel for performing artists. The estimated value of these contributions which
have been reflected in the financial statements totaled 581,310 and $71,930 for the years ended
�. June 30, 1999 and 1998, respectively.
NOTE 5 - ELGIN SYMPHONY LEAGUE
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The Elgin Symphony League is an auxiliary which conducts educational and fund-raising activities.
It has a separate Board of Directors, which annually approves a transfer of funds to support the
Orchestra.
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The Board of Directors of the Elgin Symphony Orchestra does not directly or indirectly control the
Elgin Symphony League. These financial statements do not include the League.
NOTE 6 - SIGNIFICANT CONTRIBUTION
During the year ended June 30, 1998, the Orchestra received an unrestricted contribution from an
individual which totaled $168,007.
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ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 - TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets are composed of the following:
1999 1998
Time restrictions:
Cash and investments restricted to
j fiscal 2000 and 1999 $ 75 39,409
Unconditional promises expected to
be received within one year 27,583 83,400
$ 27,658 122,809
NOTE 8 --PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted assets of $5,746 are restricted to investments in perpetuity, the income
from which is expendable for unrestricted purposes.
NOTE 9 - TAX STATUS
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The Elgin Symphony Orchestra is exempt from income taxes under Section 501(c)(3) of the
{ Internal Revenue Code.
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MULLLER & CO., LLB'
INDEPENDENT AUDITORS' REPORT
The Board of Directors
1 Elgin Symphony Orchestra
Elgin, Illinois
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Our report on our audit of the basic consolidated financial statements of Elgin Symphony
Orchestra for the year ended June 30, 1999 and 1998 appears on page 1 . Those audits were
made for the purpose of forming an opinion on such financial statements taken as a whole. The
information on pages 9 through 10 is presented for purposes of additional analysis and is not a
required part of the basic consolidated financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic consolidated financial statements and,
in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial
statements for the year ended June 30, 1999 and 1998 taken as a whole.
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Elgin, Illinois
August 4, 1999
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Certified Public Accountants M Management Consultants
17�n rrranrictnnrl Place EIQin, Illinois 60123 . Phone:847.888.8600 . Fax:847.888.0635
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iELGIN SYMPHONY ORCHESTRA
SCHEDULE OF ACTIVITIES
YEAR ENDED JUNE 30, 1999
OPERATING ENDOWMENT TOTAL
` Revenues, gains and other support:
Contributions:
Corporate sponsorships
` and donations $ 153,148 - 153,148
Annual fund 167,204 - 167,204
Elgin Symphony League 37,000 - 37,000
Other 25,500 19,034 44,534
In-kind contributions 93,310 - 93,310
Fees and grants from
i government agencies:
City of Elgin 158,000 - 158,000
Illinois Arts Council 45,000 - 45,000
I• Other revenues:
Ticket sales 470,074 - 470,074
Program advertising 61,125 - 61,125
Performance fees 42,788 - 42,788
Special events (net of direct
I costs of $8,485) '8,423 - 8,423
l Investment income 8,415 11,957 20,372
Other revenue 2,270 - 2,270
1 ,272,257 30,991 1 ,303,248
Expenses:
Artistic personnel 532,281 - 532,281
Management personnel 237,207 - 237,207
Operating costs 309,150 28,365 '337,515
I" Printing and promotion 107,976 107,976
Fundraising costs 59,705 - 59.705
1 ,246,319 28,365 1 ,274,684
Other changes in net assets:
Transfer to endowment ( 20,500) 20,500 -
Change in net assets 5,438 23,126 28,564
Net assets, beginning of year 43,563 240,830 284,393
Net assets, end of year $ 49,001 263,956 312.957
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ELGIN SYMPHONY ORCHESTRA
CONSOLIDATED SCHEDULE OF OPERATING COSTS
YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
.Auditorium rental $ 35,290 29,142
Insurance 16,475 12,568
Postage and mailing 31,195 24,153
Rent - in-kind 19,776 15,725
Travel - in-kind 13,000 -
Depreciation 2,742 3,846
Professional fees 57,497 27,644
Box office costs 4,441 3,175
Other general expenses 3,449 1,897
License fees 6,125 6,065
Seminars 9,030 7,257
Music purchases and rental 11,179 7,801
Membership fees 2,916 3,150
Special performance expense 39,580 24,614
Recruitment 14,003 2,542
Concert recording 985 247
Supplies 15,799 4,669
Cartage 14 30
Instrument repair and tuning 1,010 1,095
Program annotator 1,780 1,590
Telephone 8,167 6,867
Instrument rental 1,132 2,866
Props 507 2,598
Credit card processing 12,822 5,077
' Travel 1,058 1,134
Bank charges 39 -
Receptions 15,877 3,372
Uncollected pledges 7,508 -
Miscellaneous 1,049 1,226
Photocopying 3.070 2,850
$ 337,515 203,200
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