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Sides nearing peace on the Prairie: 'Solomonic' ending awaits Earlham, museum

February 14, 2005

Once the fine points of the deal with Indiana Attorney General Steve Carter are worked out, Earlham will hand over $91.5 million in cash and its interest in a jointly owned golf course worth another $2.5 million-much more than the $64.7 million take-it-or-leaveit offer the college made just before firing the museum's CEO and dismissing nearly all its directors in June 2003.

"We're just trying to put this behind us," Earlham board Chairman Mark B. Myers told IBJ after trustees completed a pair of marathon discussions on the topic Feb. 4-5. "We're satisfied."

The college was anything but content in 2003, when the nowformer museum board suggested an endowment split that would have given Conner Prairie $100 million, just $6 million more than the current proposal. That offer prompted the ultimatum-and ultimately a firestorm of controversy.

So why the shift? The difference, it seems, is in the details.

Earlham will retain more land under Carter's plan, and the extra 400 acres of prime Hamilton County real estate may well be enough to make up for the additional outlay.

"We're not too far from where we were two years ago," trustee Morris Mills confirmed. "We tied up some loose ends that made it acceptable."

The property Earlham will keep, nearly 500 acres south of 146th Street and west of River Road, is zoned for residential use and worth about $30 million, local brokers have estimated.

College leaders have begun preliminary discussions about selling the land, Myers said, and are growing increasingly comfortable that they will be able to make the split work without the college taking much of a financial hit.

Earlham controls a multimillion-dollar endowment established by Indianapolis philanthropist Eli Lilly decades ago, primarily to benefit the museum. But Lilly told the college it could use leftover funds for its own purposes and, over the years, Earlham has come to depend on the endowment income.

"We were always concerned that ... Conner Prairie be put in a good position with respect to its future," Myers said. "But we had to get to a settlement that would be fair to the college, the students and the faculty, since they are also beneficiaries."

The college's 2003 proposal didn't treat the real estate as a source of immediate cash, he said. With that factored in, the numbers apparently worked.

"In settlements, you find a strike price that you decide you're going to agree to," Myers said. "We have been looking at it in terms of how can we fund [Conner Prairie] without causing harm to the college and the Earlham School of Religion."

Even so, some details of the agreement still need to be ironed out, he said. Myers declined to elaborate, saying only that there are some "land-related issues" to be resolved.

Those issues may involve a 250-acre parcel east of River Road and west of White River. That land would go to the museum under Carter's proposal-to give the museum room to expand and maintain a buffer from future development-but Earlham appears to have other ideas.

A news release distributed Feb. 5 announced Earlham's acquiescence, saying it was "subject to certain contingencies including being allowed to sell land owned by the college west of the White River."

College spokesman Lou Gerig wouldn't answer follow-up questions from IBJ, saying officials "really want to just focus on getting the negotiations done."

"There are still a number of issues yet to resolve," he added.

That was news to Carter, who still hadn't heard anything directly from Earlham representatives two days after their board meeting.

"I don't think there are any remaining substantive issues," he said.

Which isn't to say the job is done. The agreement still has to be put down on paper, and independent entities must be created to govern and operate Conner Prairie.

And before any money changes hands, a judge must bless the deal.

"We hope to get that work done by the end of March," Carter said. "So far, I've made a proposal and it sounds like they've agreed to it. We need to make it official so it will actually be enforceable."

The Attorney General's Office has spent about $200,000 so far on consulting and legal fees related to the Conner Prairie dispute, and Carter expects that number to rise.

"There is still a considerable amount of work to do," he said.

Earlham's expenses also are mounting, although the college has refused to reveal how much.

"I don't intend to share that information," Myers told IBJ. "I don't think it would be useful to say anything publicly."

Still, the fact remains that the controversy has taken its toll-financially and otherwise-in the past 20 months. And the apparent resolution, which ends the dispute without assigning blame, comes just in time.

"It's Solomonic, let's put it that way" said Les Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University. "There's nothing to be gained by fighting this battle. ... Ultimately, a judge would have had to find for one party and against the other. Everyone had an interest in settling."

"The uncertainty has to be resolved," concurred Carol Simonetti, president and CEO of the Indianapolis-based Indiana Grantmakers Alliance. "Donors are not going to give until it is. I don't even think donors are taking sides. Most of them just want to know where it's going from here. These are two important institutions in our community. Let's move forward."

That sentiment wasn't lost on the Earlham trustees, said Indianapolis resident Joanne Warner, a member of the college's board since 1997. Its discussions this month were careful and thorough, she said, and the group eventually reached a consensus.

"In general, the board felt it was in the best interest of the museum and the college ... to put the controversies in the past and focus on the positive mission of each institution," Warner said. "That was very compelling for us."

And although the current deal is pretty much a wash for Earlham financially, the terms are far better for Conner Prairie than the proposal its directors rejected nearly two years ago, museum supporters said.

From their perspective, $94 million and freedom from Earlham's control more than make up for the loss of a few hundred acres of real estate-no matter the land's value.

"This is clearly better," said Berkley Duck, a former museum board chairman who has carried on his advocacy as part of a not-for-profit called Save the Prairie. "Substantially better."

Museum staffers also were pleased by recent developments, although they still asked not to be identified by IBJ for fear of retribution.

"This couldn't have come at a better time," one employee said. "Morale was pretty low when we thought it might go on for years. Now people are excited."

Executive Director Ellen Rosenthal confirmed that sentiment before referring additional questions to spokesman Gerig.

"The staff is very optimistic about the future," she said.
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