A proposed agreement to resolve leadership and control of Jefferson Public Radio would leave its fundraising foundation saddled with debt and stripped of its revenue stream, according to an internal JPR memo obtained by the Mail Tribune.
The proposed agreement, which has not been released publicly, calls for the JPR Foundation to transfer most radio station funds to a new nonprofit entity, the memo says.
"This provision alone would bankrupt the foundation," wrote Ron Kramer, JPR's executive director, who is at the center of the storm over control of the public radio stations and its foundation.
The only funds that would not be transferred are those specifically earmarked for the Holly Theatre and Jefferson Square on 10th Street in Medford, the Cascade Theatre in Redding and the proposed Western States Museum in Medford.
The memo, dated June 14 and sent to Jerry Jacobson, JPR's Medford attorney, is Kramer's view of the ramifications of a settlement agreement that is expected to be announced Friday. The Mail Tribune has not received any correspondence explaining Southern Oregon University's position on the settlement agreement.
The JPR Foundation, Southern Oregon University and the Oregon University System Chancellor's Office have been locked in a dispute over the operation of JPR.
An audit conducted by the Chancellor's Office cites potential conflicts of interest between JPR and the JPR Foundation, its fundraising arm. The audit recommends a greater separation between the foundation and the radio stations, including separate executive directors.
Following release of the audit, SOU President Mary Cullinan terminated Kramer from his position as executive director of the radio station as of June 30. He would remain the foundation's executive director.
The foundation has purchased and is remodeling the Holly Theatre in downtown Medford and is taking over buildings on 10th Street for future headquarters for JPR studios. OUS officials have said those moves prompted them to launch the audit.
JPR Foundation officials have denounced the audit's conclusions, saying they would jeopardize the mission of the radio station and its abilities to search for other revenue sources.
The foundation, initially with the blessing of the university, expanded operations to open the Cascade Theatre in Redding and, more recently, to renovate the Holly Theatre. The Cascade Theatre is owned by the university system.
The audit described the fundraising activities of JPR on those projects and others as a threat to the fundraising conducted by SOU.
A mediation session earlier this month between the JPR Foundation board executive committee and SOU resulted in a settlement agreement, but foundation board members said the agreement was reached only after they were threatened with personal lawsuits by the university.
JPR Foundation board members will discuss the agreement at 3:30 p.m. Friday at Medford's University Club, 218 W. Sixth St., next to the Holly Theatre. A portion of the meeting will be open for the board to take public comments. Multiple sources have told the Mail Tribune that board members may resign rather than approve the settlement agreement.
Di Saunders, spokeswoman for the Oregon University System, said she couldn't discuss any aspects of the settlement agreement, but did describe some of the recent documents referencing the agreement as providing "misinformation."
She said that even though documents related to the settlement agreement have been obtained by the Mail Tribune, she couldn't discuss them because of a nondisclosure agreement.
"That does not mean we're going to break our legal commitment," she said. "We are following our legal obligations to the end."
She said more information would be available once the JPR Foundation board ratifies the agreement on Friday.
"Both sides have agreed to settle, and we're bound by that agreement," Saunders said.
Kramer said Tuesday he couldn't discuss details of the settlement agreement, but said any attempt to assign FCC licenses to another party could have grave consequences.
"It could bring serious sanctions against the university and the foundation by the FCC," he said.
Kramer said he wouldn't discuss further details of the memorandum that he wrote.
In the seven-page memo, he described the financial strain the ongoing legal struggle has put on the foundation and its prospects for the future, particularly for the Holly and Jefferson Square projects in Medford.
"SOU's actions have prevented effective fundraising activities, bled the foundation as a result of legal expenses and created huge, unanticipated liabilities," Kramer wrote.
In the memo, he said the settlement agreement has put JPR in financial disarray.
If the Holly project were completed, Kramer wrote, the foundation's theater division, which includes the Cascade Theatre, could survive financially. However, if the Holly project were not completed, the prospects for the foundation's future are dim, Kramer concluded.
Under the agreement, SOU would retain one seat on the existing foundation's board, according to the memo.
"Basically, I interpret this provision as affording the university an opportunity to snoop in the foundation's affairs," Kramer's memo said. A separate, new foundation would take over fundraising activities for the radio stations, he noted.
Kramer wrote that foundation-owned radio stations have been used as collateral to secure loans over the years for other projects.
In the case of the Holly Theatre, which was purchased for $500,000, radio stations were used as collateral in a U.S. Bank loan. These assets can't be transferred to another party without some other form of collateral being obtained, the memo stated.
Another letter obtained by the Mail Tribune from Attorney General John Kroger's office on June 4 offered an opinion on the need for settlement between the two sides.
The assets of the foundation are held for the benefit of SOU, and the public radio stations owned and operated by SOU, wrote Senior Assistant Attorney General Elizabeth Grant.
The letter concluded that any change in the purposes of the foundation or beneficiaries of its assets would be subject to court approval and review by the attorney general.
If an agreement can't be reached, Grant wrote, "... and the foundation is no longer in a position to carry out its purpose to operate for the benefit of SOU, then dissolution of the foundation may well be the appropriate course of action."
Reach reporter Damian Mann at 541-776-4476, or email firstname.lastname@example.org.