Mayor Brandon Scott threatened Monday to end the city’s relationship with the Baltimore Office of Promotion & The Arts after its CEO suggested Scott’s office was partly responsible for the nonprofit’s current financial peril.

The dispute centers on a $1.5 million state grant given to the Mayor’s Office of Arts and Culture to help stage Artscape in 2023. BOPA CEO Rachel D. Graham said the money was meant for the organization and is reflected as expected revenue in its books; the mayor’s office said it was a restricted grant that was always meant for the city to spend.

BOPA announced earlier this month that the organization was insolvent and asked the city for a $1.8 million bailout — slightly more than the disputed grant amount. City funding makes up more than two-thirds of the arts council’s $4.7 million in revenue.

BOPA is undergoing a review of its finances in an effort to figure out what led to its inability to cover its expenses. Graham, who became CEO of BOPA in March, said the organization was “shocked,” for example, to discover that the mayor’s office spent more than $100,000 in state grant funds to book Kelly Rowland, who cancelled on the annual free arts festival three weeks before the event.

“While $1.5 million to support Artscape in 2023 would have made a significant difference in helping us address BOPA’s cash flow challenges,” she said, “we trust the city has Baltimore’s artists and arts community at heart.”

But the city pushed back, contending that the $1.5 million has no bearing on BOPA’s financial outlook. In a statement, the mayor’s office said the city used the grant funds on Artscape as intended. Scott’s office also directed $1 million in COVID-19 relief funds to the nonprofit in 2023, including $500,000 specifically for Artscape.

The mayor’s office questioned if Graham’s comments were meant to distract from what officials perceive as a lack of transparency from the arts group.

“BOPA’s continued inability or unwillingness to provide a clear and accurate financial picture is making it seemingly impossible to maintain the City’s relationship with the organization,” the statement said. “We will begin moving accordingly.”

State Sen. Antonio Hayes, who successfully brokered the grant agreement, said the money was designated for the city’s use from the jump.

“At the time we were seeking this funding, the CEO [Donna Drew Sawyer] had just left. They didn’t really have a leader at that time,” he said.

That’s why, he said, the money went to the mayor’s office. Hayes isn’t sure how the grant factors into BOPA’s current financial “equation.”

BOPA staffers first approached Hayes in 2022 about securing state funding for Artscape’s planned expansion into West Baltimore’s Penn North Neighborhood. Hayes met with officials both before and after then-CEO Donna Drew Sawyer resigned under duress in January 2023, according to internal communications and planning documents The Banner reviewed. Sawyer and the mayor fought publicly about BOPA’s failure to host the annual Martin Luther King Jr. Day Parade that year, which led to Scott demanding Sawyer step down.

By June 2023, the documents show, BOPA had been cut out of city plans for Artscape. Comptroller Bill Henry’s office requested a briefing about the festival with BOPA and the mayor’s office, to which a Scott administration official said: “They aren’t involved.”

Now, Scott’s office is weighing whether to give BOPA a bailout in order for it to avoid laying off staff and continue with its current level of programming. To receive the grant, BOPA would have to consent to an independent forensic audit, an accounting process reserved for detecting fraud or irregularities.

This isn’t the first time the city has considered sanctioning the arts organization. In 2023, Scott, City Council President Nick Mosby and City Councilman Eric Costello — an unexpected alliance — sent a joint statement threatening to “assess alternative options” regarding the city’s contract with BOPA. City Councilman Zeke Cohen, who is running to replace Mosby in November’s general election, proposed cutting $1 million from BOPA’s budget and reallocating it to the library system.

Ultimately, BOPA and the city moved forward together.

At a BOPA board meeting Monday, members voted to continue to ask the city for help. The agenda laid out possibilities for layoffs and an office relocation; board chair Andrew Chaveas said the organization will explore subleasing opportunities at its downtown offices and maintain its current staffing numbers for now.

For years BOPA leadership has shifted money from reserves to cover expenses and “reflect a balanced book” without replenishing itself, Chaveas wrote in a September email. Graham was tasked with making recommendations to “return BOPA to a balanced cash flow.”

Graham has repeatedly said she inherited BOPA’s problems. She recently acknowledged she went forward with staging Artscape this year even when it became apparent that the organization faced a deficit. The festival, which is required in BOPA’s contract with the city and had already drawn sponsorships, had to go on.

“You have people and vendors waiting for this to happen,” Graham said Monday. “And honestly it didn’t bear out well, the last person who said to the mayor’s office ‘we can’t do this.’”

BOPA board treasurer Angela Wells-Sims said at the Monday board meeting that an outside accounting firm is spending time “cleaning up” the organization’s accounting books, which show discrepancies between accounts payable and receivable. Some amounts incorrectly carried over year-to-year, she said, and it could take months to fully reconcile.

Board member and interim vice chair Lady Brion defended BOPA’s financial position, saying the organization is in the same boat as other nonprofit arts groups.

“I think it is really important to underscore that, across the nation, Maryland is no exception,” she said, adding that she knows of other organizations that are having to downsize. “What we’re seeing with BOPA is not unique.”

The institution, which stages many of Baltimore’s most iconic events including Artscape, also serves as the city’s film office, arts council and a facilities manager.