Orchestra to city of Minneapolis: We are in compliance at Orchestra Hall

The Minnesota Orchestral Association claims that it has complied with the terms of the city lease that governs the operation of Orchestra Hall.

The status of the concert hall has become a contentious issue in the bitter, protracted labor dispute between the association and its musicians.

Several independent sources have called on the city to find the association in breach and to retake control of the hall, which Minneapolis owns by virtue of sponsoring a $14 million state bonding request for a recently completed renovation.

The city requires the association to report each December on whether it has operated the facility as a "performing arts center."

Statements issued Wednesday indicate how difficult it would be for the city to take the hall back from the Orchestral Association.

The union was locked out more than 14 months ago after negotiations failed to produce a new contract. Since that time, several attempts to restart talks have broken down. In October, music director Osmo Vänskä resigned because of the situation. Recent informal conversations went nowhere.

As required by the lease, the Orchestral Association reported to the city that in its first three months of occupancy of the renovated hall, "musical programs" (including the Symphony Ball, a fundraising gala) brought earned income of about $600,000, while other events accounted for $67,000.

The locked-out musicians, who are performing concerts as the Musicians of the Minnesota Orchestra, a nonprofit organization, have not said they are interested in taking over the hall. Spokesman Blois Olson said last month that if "Orchestra Hall is available, we'd be happy to perform there and negotiate like any other prospective tenant."

Minneapolis has 45 days to decide if it agrees that the association is in compliance with the lease. If not, a lengthy process requires default notices and provisions for finding a solution. In the case of an ultimate default, the city would need to sell its 50-year lease with the state's permission or find a new operator.

If that were the case, "the association would need to be compensated for its investment in the facility, which is about $70 million," said Matt Lindstrom, a spokesman for Minneapolis' Community Planning and Economic Development Department.

The orchestra said it has budgeted $706,000 for hall maintenance in fiscal 2014. There is a hall endowment fund valued at $7.4 million.

When the Orchestral Association received $14 million in state money for its $52 million renovation project, the city effectively assumed control of Orchestra Hall and then leased it back to the Orchestral Association. This is similar to arrangements Minneapolis has with the Guthrie Theater and St. Paul has with the Ordway Center.

A key part of the association's argument is a legal opinion from attorney John Herman, partner at Faegre Baker Daniels. Herman contends that while the association planned a full concert schedule for the 2013-14 season, it cannot fulfill that program without a labor contract.

He cites sections of the lease that "recognize that performance will be excused in the case of Unavoidable Delays" that would include "strikes and other similar labor troubles. The current labor dispute falls squarely within" the intentions of the clause," Herman argues.

Olson, speaking for musicians, said, "They [the association] lack a clear sense of reality on the damage that the management-imposed lockout has caused."

Orchestra CEO and President Michael Henson said in an interview, "It's critical to say we have been trying to negotiate a settlement for 19 months."

Outgoing Minneapolis Mayor R.T. Rybak said in a statement that the city will take a few weeks for due diligence on the lease and the association's report.

In documents delivered on Monday, the association said five public musical events, including the Symphony Ball (which included performances by a "Twin Cities pop and jazz ensemble") and Crash the Ball, a companion event, have generated rental and ticket income of about $600,000. The association would not identify the other programs or break down how much was made from each source. The report did not include separate fundraising totals from the ball.

Ticket income for fiscal 2014 was projected at $7.2 million.

Public and private events that were not arts performances accounted for $67,000 in income. Those totals, the report states, generated performing-arts income "well in excess of the 50 percent required to meet the Governmental Program requirements."