Those national acts have not agreed to this. Period. National touring acts don't "play for the door". A notional act has a booking agent and a road manager (even if they are playing smaller venues). A booking agent would laugh at this.
Now, let's address the obvious scam. If it's a city park, it can't "go out of business". It can either be funded by local government or not. Period. If a local park is depending on outside funding to "stay in business" then it seeks local corporate donors to sponsor THE PARK, not individual events.
I have played ALL KINDS of "live after five" and summer concert series events. This whole setup is BS. They obviously handed over booking for these shows to a novice who has a friend in the bar business. This person went to the bar, had a few dozen beers, and "learned" how to book shows.
The way these things work is as follows. Either...
1) The town handles the event. Someone working for the city plans, books, and executes the event. Period. Sure, I have seen local corporate sponsors. There is NEVER a cover charge to see a band in a city park. A band under a gazebo is NOT a major event. It should not involve any unusual logistics/finances. A band playing an outdoor amphitheater MIGHT require a bit more work to pull off. I recently attended one of those events in a larger outdoor theater that was attended by several thousand of my fellow townspeople. It had sponsors. There are zero cover charge. Show up with chairs and have fun. Food trucks were everywhere. (I was actually quite nice.)
2) An outside organization puts on the show in cooperation with the city. The city provides power, security and parking. The promotor (be it a local charity group or an professional show promoter/booking agent/talent buyer does the rest. Fees may be paid to the city but the city isn't "running things". Some of the things mentioned in your discussion with your contact MIGHT be in play if you were dealing with a larger stage and a promoter.
A gazebo show with expectations of 150 person audience requires exactly ZERO percent of the stuff your contact brought up. This guy has Barney Fife Syndrome. He's a small player but thinks he's been granted authority over something. Therefore he is carrying himself like a promoter of a huge venue. He's a dipstick. Tell him to put his bullet back in his pocket and calm down.
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