Style Raises Questions About Landmark/Center Stage Deal

Scott Bass has a story in this weeks Style magazine that illuminates some questionable funding plans for the Landmark Theater (previously known as The Mosque), brought on by the controversial Center Stage.

From the article:

Increasingly, the city’s cultural hubs are paid for by taxpayers. The mayor’s plan to renovate the Landmark is almost identical to the taxpayer-funded renovation of the Carpenter Theatre, which reopened as part of CenterStage in 2009. Nearly three-quarters of the $73.5 million used to renovate the Carpenter came from the public kitty: $25 million from the city; $9.7 million from state and federal grants; and $20 million in historic tax credits.

Mayor Jones proposes allocating $14 million in city money for the Landmark renovation, but that only scratches the surface. His plan involves millions more in public dollars, primarily through diversion of state and federal taxes.

There’s precedent: The CenterStage project engendered quite a bit of controversy and political mayhem, in part because of fundraising struggles and provocation from former Mayor L. Douglas Wilder. The project also remains something of a financial mystery. Despite receiving more than $40 million in city and state funds and $500,000 annually from the city for operating costs, CenterStage’s comprehensive agreement with the city exempts the foundation from the Freedom of Information Act.

While the foundation receives more than half of its revenues from taxpayers, it isn’t required to publicly disclose how it spends the public’s money.

It’s unclear whether the Landmark deal will include a similar secrecy pact. But in his announcement earlier this month, Jones didn’t mention that the CenterStage Foundation and the Richmond Performing Arts Center, known as RPAC, are behind the Landmark deal. Because the city owns the Landmark, the mayor wants to lease the theater to the performing-arts center for 40 years; it likely will then lease the facility to CenterStage, which would manage the property.

The complicated structure is primarily designed to meet legal obligations that allow RPAC, or a similar taxable entity, to take advantage of historic tax credits. If the renovation work costs $50 million, the credits are worth $22.5 million.

Bass goes on:

But somewhere in the neighborhood of $13.5 million would be needed in private funds, assuming the Landmark renovations total $50 million, as the mayor’s proposed budget outlines, with $14 million from the city and $22.5 million from historic tax credits.

CenterStage says it can raise the private funds needed to complete the work, noting the foundation’s ability to raise “$20 million in a short amount of time” to complete the renovation and construction work at the Carpenter and adjoining facilities.

But many questions remain. For starters, CenterStage appears to be short on cash. In audited financials for 2009 and 2010, obtained by Style, CenterStage and its related entities burned through $8 million in cash in 2010, the first year they were open. Program costs — namely putting on shows and events — came in at $9.28 million, but program revenues came in at just $3.02 million.

The $6 million in economic impact that the mayor mentioned is based on the addition of new shows at the Landmark after renovations are complete. The new shows would attract an additional 50,000 attendees, according to economist Christine Chmura, who completed a study on behalf of the CenterStage Foundation. But it’s unclear whether the study — CenterStage released only a two-page summary to Style — accounts for the enormous taxpayer subsidies required.

It looks like the Save Richmond saga continues…