By John Pacenti
A newly transformed Delray Beach City Commission decided March 31 to settle litigation with the ousted nonprofit that previously ran Old School Square, ending a contentious 18 months that split the city’s power structure.
The decision comes just weeks after the city, in an email obtained Friday by The Coastal Star, added to the controversy by alleging that the nonprofit – “with felonious intent” – took three glass sculptures by famed artist Dale Chihuly worth about $18,000 belonging to the cultural arts center, a claim the nonprofit disputed. The email demanded the artwork be returned or the city be compensated triple its value, or $54,000.
Attorney Marko Cerenko, the attorney for the nonprofit Old School Square Center for the Arts, Inc., said that under the proposed settlement, both sides will surrender their legal claims.
“My client felt that with the breath of fresh air with the new commission, that their resources were far better served in serving the community,” Cerenko said.
The old commission, in one of its final acts in power March 28, tried to insulate the Downtown Development Authority, which was just given control in February over managing the downtown cultural center. The commission removed from the DDA contract a 180-day “without cause” cancellation clause that the new commission could have used to change the management back to the nonprofit.
After the March 14 elections, only Mayor Shelly Petrolia is left on the dais from the 3-2 majority that removed the nonprofit in August 2021 for its failure to disclose its financials and for a mishandled renovation of the Crest Theatre.
Discussions about the settlement were not public because of attorney-client confidentiality, but when commissioners emerged from their special, closed-door session held Friday morning, March 31, they opened the door to reestablishing a relationship with the nonprofit. All of this was done without Petrolia, who had a prior commitment.
The nonprofit sent the proposed settlement to the city the day before, after the prior commission’s final meeting on Tuesday, leaving the city’s decision on the proposal to the new board.
The commission voted 4-0 Friday to have the city attorney go ahead and negotiate a final agreement and execute a settlement. Then Commissioner Adam Frankel – long an ally of the nonprofit – said commissioners should meet in a workshop with Old School Square Center for the Arts representatives to make amends and find ways to work together.
When City Attorney Lynn Gelin suggested that the DDA be present at a workshop, Vice Mayor Ryan Boylston shot that idea down and it was agreed that the commission will meet only with the nonprofit.
“I clearly recognize that Old School Square did make some mistakes here but I don’t think they were fatal mistakes,” Frankel said.
He said that he wanted to sit down with the nonprofit to “try to reestablish some kind of partnership, not only with the DDA, who we asked to do things at the campus, but also with the city.”
Boylston said the DDA will be brought in after the workshop with the nonprofit.
“We’ll bring in our established partner that we’ve already made a decision on, which is the DDA, and they are out there and doing their thing and we have a partnership with that,” he said.
“But I think first we’ve got to mend fences more than we did today and have a conversation about what does the future of our relationship look like between these two entities.”
Frankel could not be reached for comment after the meeting.
Laura Simon, the executive director of the DDA, said she had not heard about the commission bringing the former managers back into the fold.
The turnaround by the commission was remarkable but not surprising.
The commission voted 3-2 in August 2021 to oust the former operators for failing to turn over its financial records and for mishandling the renovation of Crest Theatre.
Petrolia and Commissioners Juli Casale and Shirley Johnson voted to throw out the nonprofit. But in the city’s recent elections, Casale lost to Rob Long; Angela Burns won the seat that Johnson had to vacate because of term limits.
Both won their seats by less than 400 votes and both campaigned on wanting to return the management of Old School Square back to the nonprofit.
Five former mayors backed Long’s candidacy, as well as board members of the nonprofit.
Casale said on Friday that “handing the keys back over to a group that mismanaged Old School Square to fulfill campaign promises seems like collusive government at its worst.”
An internal auditor found that the nonprofit had missing records, including an annual budget report, an annual audit report and two IRS forms that pertain to nonprofits.
The Coastal Star discovered the nonprofit reported more than $746,000 in net income for the fiscal year 2018-2019.
The auditor also found the nonprofit may have inadvertently “double-dipped” by using a federal Paycheck Protection Program loan to pay for the same payroll expenses already covered by Community Redevelopment Agency money.
The CRA demanded a return of $187,500 and stopped the flow of taxpayer money to the nonprofit.
Long and Burns said during the campaign they want to reorganize the CRA, taking it away from the commission, which comprises five of the CRA governing board’s seven seats.
The decision to oust the nonprofit enraged not only the entity but its well-monied supporters. The nonprofit filed suit in November 2021 against the city, Petrolia and others for allegedly breaching the lease, violating the state’s Government in the Sunshine open meetings law and civil conspiracy.
The city countersued, claiming breach of contract for, among other things, leaving the Crest Theatre in a demolished state.
Regarding the missing Chihuly artwork, Cerenko said the art always belonged to the nonprofit, not the city, and the letter was just attempted leverage by “certain commissioners” in the litigation.
He said the nonprofit is “hoping that the new commission is going to be significantly more supportive of what they have done and what they continue to do, as opposed to the old commission.”
Boylston, in a text message to The Coastal Star on Saturday following the meeting, said it was time to mend fences.
"Ending these lawsuits is the right thing to do for the taxpayers and four our community; paying endless lawyer bills to prove a point is just wrong," Boylston wrote. "It's time for a long overdue public workshop with the board of Old School Square Inc. to address whatever issues are outstanding, because only then can we move forward with any decisions on the future management model of the Old School Square campus."
Note: This story has been updated to include additional comments.