A museum's $14.6 million debt began on a Consent Agenda.

On Tuesday, October 6, Mecklenburg County commissioners in North Carolina weighed whether to declare Discovery Place in default on $14.6 million it owes the county for a rebuilt nature museum. Discovery Place, a nonprofit that runs several museums in the Charlotte region, has said it cannot pay the full amount by the due date of October 27, Queen City News reported.

The museum, now called the Charlotte Museum of Nature, sits beside Freedom Park on Sterling Road. According to The Charlotte Observer, the county owns the property and the building, and Discovery Place has operated the museum since it opened in 1947. How the debt came about is a governance story for both sides.

A loan approved without discussion

The county voted in 2017 to put about $16 million into the project, and in December 2023 it agreed to add $10 million to help cover rising construction costs, the Observer reported. Shortly after that vote, county staff told commissioners on Tuesday, then-County Manager Dena Diorio directed staff to put together an agreement giving Discovery Place another $14.6 million, on the condition that it be paid back within 180 days of "substantial completion of the new building."

That agreement was approved at a January 2024 board meeting as part of the commission's consent agenda, where items are typically approved in a single vote without discussion, according to the Observer. The county said the work was substantially completed in April, which started the 180-day clock. Several commissioners said the money amounted to an unsecured loan they had not realized they were approving.

"Nobody sitting at the dais had visibility, and there was no discussion about a $14 million loan on top of the $10 million we did agree to," Vice Chair Leigh Altman said, according to the Observer.

The current county manager, Mike Bryant, said he believes the 2024 vote was legal because "the letter of agreement was attached to the agenda item where the action was taken." The commission voted 7-1 to direct County Attorney Tyrone Wade to look into whether any laws or policies were broken during the consent agenda vote and whether any policies should be adjusted to prevent similar situations.

What is on the table

County staff said Discovery Place had offered concessions, including adding Mecklenburg County to the museum's name and offering free or reduced-cost tickets to low-income families, county employees and Charlotte-Mecklenburg Schools, the Observer reported. The county's options, staff said, range from declaring a default and taking over the museum to accepting Discovery Place's terms and giving it decades to repay.

"There are no good options here," Bryant told the board. "What we're presenting to you all is the best of the worst."

Board Chairman Mark Jerrell called the terms Discovery Place offered "completely unacceptable." He said he would form a committee to tell Bryant what commissioners are willing to accept before he negotiates again, and that the full board should discuss the matter before October 27.

Commissioners did not speak with one voice. Some asked why Discovery Place could not use its other assets to secure a bank loan, and suggested the business community should cover the debt. "It feels to me like this has become a parasitic relationship," District 1 Commissioner Elaine Powell said. Commissioner Laura Meier, whose district includes the museum, said it would be difficult or impossible for Discovery Place to borrow the money because the county owns the building. "I think default is reckless and irresponsible of us," she said.

If the county does declare a default, it appears it could take back the county-owned building and run it itself, Tony Mecia of The Charlotte Ledger told WFAE, whether as a community recreation center, as offices or as a nature museum. He noted that running museums is not what the county's parks department does.

Discovery Place turns to donors

In a statement to WSOC-TV before the meeting, cited by the Observer, Discovery Place said the building "belongs to Mecklenburg County" and that "Discovery Place's role is to operate it." The statement continued: "Discovery Place is committed to working with the County toward a repayment structure that addresses those concerns while allowing the completed Museum building to open within 90 days."

On Wednesday, the day after the meeting, Discovery Place sent supporters a newsletter asking for gifts, Queen City News reported. "Now, we are asking you to stand with us," wrote Lisa Hoopes, the organization's chief science officer. "Your support at this crucial time will prove how essential this Museum is to all of Charlotte and Mecklenburg County."

What any board can take from this

In our view, the episode offers four lessons for nonprofit boards and for the public bodies that partner with them.

1. Read the consent agenda. A routine-looking item can carry a large obligation. Ask that anything creating new debt, or a new promise to repay, be pulled for a separate vote.
2. Know what starts the clock. Here repayment was due 180 days after a construction milestone, substantial completion of the building. Your treasurer should track every date that can trigger a payment.
3. Plan for overruns before you build. Decide in writing who covers costs above the budget, and how, before the first contract is signed.
4. Know who owns the asset. An operator that does not own its building may have little to borrow against when a bill comes due.

Our stories on what a board treasurer does and on what a board is for cover the oversight habits that help a board see obligations like this one before they arrive.