With large payments due to city and county in 2008, long-term solutions unclear
March 11, 2007
by Carol Biliczky, Beacon Journal staff writer
Almost five years ago, the Akron Civic Theatre got a $22.6 million face-lift -- its biggest ever and surely the sign of better things to come, supporters fervently believed.
But the groundswell of support did not cast a magic spell on the historic theater with the twinkling lights in the blue-globed sky.
It is operating in the red, owes millions of dollars and is severing its ties to the University of Akron.
Supporters are talking vaguely about more support from the community at large and government in general. But no decisions have been made on how to tackle the messy financial crisis that wasn't supposed to happen.
``If you sat down with me in May, I could tell you, `We're doing this and this and this','' Civic board President Ralph Palmisano said. ``But right now there aren't any answers.''
A job for the pros
Civic supporters thought the theater, created in 1929 as the lavish, Moorish-themed Loew's Theatre, was on the way up in the 1990s.
They decided in 1996 to turn the demanding management job over to someone who would know the intricacies of the entertainment industry, Mary Ann Jackson, then president of the Civic board, recalled.
``Ann (Amer Brennan) and I were tearing out our hair, interviewing managers from out of town, when I turned to her and said, `The best person for this job is right across the bridge,' '' Jackson said. ``It wasn't an out-of-the sky idea. Other cities had done it.''
She was referring to Dan Dahl, executive director of the E.J. Thomas Performing Arts Hall at the University of Akron since 1991. (Dahl, who resigned last summer from E.J. Thomas and the Civic for personal reasons, returned in January.)
The theater agreed to pay part of the salary for Dahl and four of his staff, who would use the Civic for the overflow business from the busy E.J. Thomas.
But it didn't work the way Jackson and Brennan, then vice president of the board, envisioned. Along the way, the entertainment business has changed, Palmisano said.
It has become so expensive to book entertainment that even when the Civic gets a full house, it might make little or no profit.
``You might be able to fill a performance and make the money you need that night, but the taxes, the electricity, the heat -- oh my god, the heat! -- those are so mammoth that it takes another source of income,'' Jackson said. ``You couldn't charge what you need. The price of the ticket would be too high.''
Today, the Civic is more than $300,000 in arrears on management fees and for advertising and related services that the university paid on the Civic's behalf.
So starting in June, the Civic is severing its 11-year tie to the university. The decision came from the theater, not the university, UA spokesman Paul Herold said: ``They said they wanted to go a different direction.''
Palmisano does not comment on what that might be.
``We're in a transitional phase.''
Debts for upgrades
Other problems stem from 2001-2002, when the Civic, long called the `Jewel on Main Street,' took the second step in its rebirth -- dramatic renovations to make the theater more viable to today's entertainers, more functional, safer. The massive face-lift included a two-story wing to the north, a larger stage and refurbishing most of the interior.
``We thought that between professional management and having the right space, we were well on our way to having a viable operation,'' Jackson recalled.
But the project was in trouble almost from the start.
Supporters found they couldn't raise as much money as they wanted and scaled the price of the project from $30 million to $22.6 million. Then fundraising fell short on the smaller figure.
With the project in gear and bills coming in, the city of Akron and Summit County stepped forward to cobble together a solution.
But the result -- a complex web of one-time gifts and grants, lines of credit and bonds from the county's Port Authority -- has hit a sour note.
While the $14.6 million in bonds are being repaid as planned by an extension of the county's 1.5 percent bed tax at hotels and motels through 2035 -- total payback, $30.5 million -- the Civic since has foundered on its part of the deal.
The theater was to pay $100,000 yearly to the city and county's Port Authority for five years, then one-time balloon payments of $1.25 million to each to wipe away the two $1.65 million lines of credit from each government. The Port Authority, the development arm for the county, in turn pays back the county.
The theater made its payments to the city and Port Authority in 2003, 2004, 2005 and 2006.
But it did not make its $100,000 yearly payment due to the city in January, Deputy Mayor Dave Lieberth said. Nor did it make good its debt to the Port Authority.
First, it paid $25,000 and later increased that by another $25,000 at the request of Chris Burnham, the Port Authority's executive director. The Port Authority picked up the balance of the debt -- $50,000.
Burnham said it was a challenge to pay half of the Civic's yearly debt service, given that the Port Authority's budget is only $600,000 a year.
``I know Ralph Palmisano wants to make good on the rest of it, but I don't know if their financial obligations will allow them to do that,'' he said.
Perhaps more importantly, the full balance of the loans -- the balloon payments of $1.25 million to the Port Authority and $1.25 million to the city -- will be due in January.
No one's pretending that the Civic will be able to meet that commitment.
Both Lieberth and Burnham said the loans would have to be restructured and extended. Both said there has been no talk with them about forgiving the debt.
Lack of business
Along with the debts, there are shortages in daily operations. The Civic's business did not pick up as projected after the renovations.
In the 2002-2003 fiscal year, the Civic's first full year of operations after the renovations, ticket sales were 15 percent to 30 percent lower than projected.
The theater faced a deficit of $100,000, its first since 1996, and was concentrating on safe programming with more commercial appeal than ballet, opera and orchestras, Dahl said at the time.
For the fiscal year ending in August 2004, the theater
