The Eagan Art House is losing its standing as an independent community organization and will come under the wing of the city's Parks and Recreation Department by the end of the year.

Budding artists and enthusiasts are unlikely to notice the change, however, say city officials and the nonprofit's leaders. The two entities have worked in concert for years.

The Art House's board of directors will transform the nonprofit agency into solely a fundraising arm, with no direct operational responsibility for the school.

The change comes after an Internal Revenue Service and state audit this year required the agency to reclassify its teachers from independent contractors to employees. The board decided it did not have the administrative staff and dollars to incorporate the change and instead asked the city to take over.

"The IRS determined that our teachers were really performing duties more like employees. They didn't find us in violation but told us we had to change their status," Board Chairwoman Vicki Wright said. "It was a little more than all of the volunteers could handle."

The Art House taught 1,341 kids and adults in 2005. The agency offers preschool and after-school classes and also runs evening adult classes that range from jewelry making to watercolors.

"We've touched just about every demographic in Eagan," Director Julie Anderson said. "And we do try to price our classes at an affordable level for the community."

The City Council unanimously approved the merger at a meeting this month, but Council Member Peggy Carlson warned the parks department against changing the Art House in any way.

"I would want the Art House to continue like it is now because this is what makes it a success. I don't want to see it stifled at all because of this change," she told Parks Director Juli Seydell Johnson.

Seydell Johnson said she considers the move an extension of the relationship the city already has with the organization. The parks department leases the house in Patrick Eagan Park to the nonprofit for $1 a year and also manages class registration.

"It's a really natural fit and one that allows us to use the strength of both organizations," she said. "We have the administrative capability, and they have the enthusiasm and interest in art. They will help us keep the right focus, and we can offer expansions of programs already in place."

Because the Art House revenue and expenses would be absorbed into the city budget, the cost to the city likely would not amount to more than $3,000 to $5,000 during the transition, Seydell Johnson said.

"The average person who uses the service will not notice any difference," Seydell Johnson said. "Our hope is that this is a pretty seamless transition."

Meggen Lindsay can be reached at mlindsay@pioneerpress.com or 651-228-5260.