Art Gallery Incorporation Legacy - Part 3 of 6

Why has Council not Learned from Past Mistakes

Incorporation and Expansion

Before we explore how Council lost control of the Art Gallery before it incorporated, I think that it’s important to take a look at what it would have meant to Owen Sound Taxpayers if the Art Gallery Management Board had been successful in their efforts to incorporate as Not-for-Profit body.

First I should say that I searched public records to see if there had been any efforts to incorporate a Not-for-Profit corporation under the name: ‘Tom Thomson Art Gallery’ and that no incorporation papers were ever filed. What I did find however was very interesting and may be related to the recent efforts to assess the community’s fund raising appetite for a new Art Gallery building.

I discovered that in 2012 the chair of the Art Gallery Board at the time, Erroll Treslan, and the Art Gallery Director at the time, Virginia Eichhorn, incorporated the ‘Tom Thomson Art Foundation’ with the business address of 840 1st Avenue West which of course is the address of the Art Gallery. There is no record of Council authorizing this new corporation to use this city property. However Council did consent to the use of the name ‘Tom Thomson Art Gallery Foundation’ and also informed us that the city purchased the Tom Thomson Art Gallery from the ‘Grey County Historical and Art Society’ in 1967.

This is interesting because I’ve stated many times that the art collection is from regional artists and as such should not be under the exclusive control of the city. The Art Gallery should be a regional, vice city resource, where all regional municipalities can share in the cost of the upkeep and maintenance of the collection. Hence it would be appropriate for the city to donate the collection to the Grey County where it was originally held.

A copy of the Articles of Incorporation and the city’s consent to the use of the name can be reviewed at: www.hubnews.ca


The Collection Loan

The Artwork Loan Agreement was approved in principal at the City Council meeting of January 11, 2016. Some of the details of the Agreement are as follows:

 

1.   The Art Gallery shall indemnify the city for any and all loss to the Owen Sound Collection.

2.   The initial Term of the Agreement is 25 years and the Agreement will automatically renew every 10 years

3.   Art Gallery endowment and reserve funds of $443,000, currently held by the City will be transferred to the new corporation.

This Agreement raises a couple of concerns. First, given that the new Art Gallery Corporation has no assets, how realistic is it that the new Art Gallery Corporation could possibly cover the loss of several works of art valued at tens of millions of dollars and thereby indemnify the city?

Secondly, it appears to violate the basic contract law conditions for a legal agreement. That is, there must be “Consideration” to make any agreement legally binding. The taxpayers were not getting anything from this new corporation in exchange for loaning the Art Gallery Corporation our $30 million Art Collection. The committee worked for over a year on this agreement. How could they have overlooked such a basic principle of contract law?

I believe that the reason for this is that the focus was on making this incorporation effort happen as opposed to getting it right. This is exactly what went wrong with the financial management of the Gallery. People were too focused on the incorporation effort and no one was minding the store.

 

A simple contract not under seal requires consideration to support it in order to be legally binding. This means that each contracting party must exchange something of value, in the sense that the act or promise of one party must be "bought" or "bargained for" by the act or promise of the other.   WestLaw Canada

The Building Lease Agreement

From the January 11, 2016 meeting of Council, the council supports a property tax exemption for the new corporation. Some of the details of  the Building Lease Agreement are:

 

1. The Lease amount was to be only $1.00 per annum.

2.   The initial Term of the Agreement is 25 years and the Agreement will automatically renew every 10 years

3.   The tenant to pay for all operating costs of the building and premises including janitorial services, security services, gas, water and insurance.


SOMETHING IS VERY WRONG HERE

We learned at the November 22, 2022 meeting of Council that the Art Collection was worth “tens of millions of dollars”. We can reasonably estimate that the value of the Art Gallery building is in the order of several millions of dollars.

You have to ask yourself; how can a group of councillors who were elected for only a four (4) term agree to essentially ‘give-away’ these two high-valued city assets for a minimum of 25 years to a yet to be incorporated ‘Not-for-Profit’? These agreements would have tied the hands of at least six (6) future Councils.

Surely, decisions like this, that involve a lengthy commitment, and may only be valued by a small group of residents, should be made by the voters in a Referendum. The Council at the time was not elected to make such a commitment on behalf of the community. Just like today’s Council was not elected to spend $16 to $22 million on a new or expanded Art Gallery. Such discretionary decisions, involving millions of dollars, should always be the subject of a referendum – let the people decide.


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In Part 4 we will examine what this incorporation experiment has cost taxpayers.

Art Gallery Incorporation Legacy Part 4