Update: This story originally reported that the offer by JP Morgan Chase and Bank of America to forgive $45 million of the AT&T Performing Arts Center's debt is contingent upon the city of Dallas contributing $15 million. Chris Heinbaugh, vice president of external affairs at ATTPAC, now says that is untrue. "It is conditional on the center being able to raise all the remaining money, including the $15 million from the city," he says. "While the banks felt it was important that the city of Dallas — which owns the asset — participate, it is not a requirement in the agreement."
It’s been a tumultuous summer for the arts community. Artists and gallerists have been embroiled in a battle with the fire marshal's office, which has shut down many art events this summer over ambiguous certificate of occupancy issues. Now many of the same outspoken arts advocates are protesting the potential bailout of the Arts District's AT&T Performing Arts Center, which has been struggling under the weight of massive debt.
On Wednesday, Sept. 7, artists who have spent years lobbying the city for money for arts programming and arts spaces in the community descended on City Hall for a budget meeting. As recently as June, they got wind that the AT&T Performing Arts Center, also known as ATTPAC, asked the city of Dallas for $15 million to pay off outstanding debts accumulated while building the center.
The proposed deal, to be voted on by City Council, would come from the general fund and funneled through the Office of Cultural Affairs (OCA), the entity that oversees allocations to the arts. It would be doled out in $1.5 million increments over the next decade.
Arts advocates complain that the money given to ATTPAC is required to be matched and given to ethnically specific entities as outlined in the city’s cultural policy. Critics of the “bailout” also complain that the services that ATTPAC would be required to provide in exchange for the money don’t add up to $1.5 million per year.
Critics such as David Lozano, executive artistic director of Cara Mía Theatre Co., even started a Change.org petition asking that the council say no to the ATTPAC request and instead redirect those funds to something called Dallas Citywide Arts Impact Project to bring roving arts centers to the city’s culturally underserved areas. The petition has garnered nearly 1,000 votes.
“It’s a typical David vs. Goliath story. And a classic Wall Street bailout,” says Giovanni Valderas, an artist and assistant gallery director who was formerly on the cultural affairs commission.
But according to Doug Curtis, president and CEO of ATTPAC, the center wouldn’t be asking for the money if they didn’t direly need it. Repayment of the loans isn’t due until 2041 but the center was only paying off the interest and other fees each year, which amounted to $3 to $4 million, and hadn’t made a dent in the principal.
The center realized it was up a creek about two and a half years ago when it was scrubbing its operations from the top down. “We realized we weren’t going to be able to fund-raise our way out of it and we weren’t going to be able to earn our way out of it,” says Chris Heinbaugh, vice president of external affairs at ATTPAC.
The center has already used all of their cash reserves to repay the loan, which amounted to $56 million. They’re intent on paying another $8 million from previous fundraising pledges and $27 million through future fundraising, which according to independent research is the capacity of their fundraising capabilities.
As far as the remaining debt? The kicker here is that JP Morgan Chase and Bank of America, the banks guaranteeing the loan, are willing to forgive $45 million of the debt if ATTPAC can secure $15 million from the city, just under 10 percent of the entire $151 million debt.
“We need to deal with this now … while the deal is still on the table with the banks,” says Heinbaugh. “We could have just sat there and let this problem go on down the road for years. But Doug said, ‘We're not kicking this down the road for future generations, for future City Councils to have to deal with it.’”
The pair say even many of the philanthropic contributions are contingent on the center getting the city’s support.
“One of the first questions that the donors want to know is if the city is going to participate. Any donor, especially a potentially large donor, is going to want to know that the city is willing to support their asset,” Curtis says.
In exchange for the money, the ATTPAC is required to provide services to other organizations in the arts community that are worth the $1.5 million yearly increase to its budget. The center is still negotiating the terms with the OCA, but several of the proposals include providing e-ticketing and marketing services to the small and mid-sized organizations.
The ATTPAC’s marketing reach includes 155,000 homes, a reach that the smaller organizations wouldn’t be able to garner on their own. They also mentioned possibly offering day-of discounted performance tickets to artists who can’t otherwise afford to see the shows at ATTPAC.
Arts advocates such as Valderas argue that the proposed services are not worth $1.5 million, and many of the arts organizations already have arrangements for the services that ATTPAC is offering.
“Everyone knows that the list of services they provide don't equal $1.5 million,” Valderas says. “This is the point that I find most egregious: There’s no contract that’s been written, there’s only bullet points that have come out … and it’s not much.”
Jennifer Scripps, director of the OCA, counters that claim. “Many organizations are telling us they want these services,” she says. “They might not be equal to $1.5 million to some people, but the fact remains that there are benchmarks for what a database of 150,000 prequalified households is worth, and if they’re doing a certain number of e-blasts, that is calculable.”
Artists such as David Lozano have other ideas of how and where the money could be better spent. His petition for the Dallas Citywide Arts Impact Project offers a sort of an umbrella plan for everything that’s going wrong in the arts community. It proposes roving neighborhood cultural centers for severely culturally underserved areas. The petition says that only four of the 14 council districts have a cultural center. His plan would use existing buildings, like churches, instead of building permanent venues to hold public performances and exhibitions.
The petition also asks for money to build a performing arts space at the Latino Cultural Center, and revisions to the current coding that would allow arts spaces to obtain appropriate certificates of occupancy and stop getting shut down by the fire marshal, among other goals.
According to Valderas, a previous initiative to bring a roving cultural center to Pleasant Grove, spearheaded by Lozano, was approved by the OCA for $25,000 yet they never saw the money. Provisions for that are in the petition too.
“How can you bail out one of the wealthiest organizations in town when you have no money to give to the community? We feel like that money could be better utilized,” Valderas says.
Jennifer Scripps, the director of the OCA, says that an equal percentage increase, which would amount to $285,000 for culturally specific entities, is on the table should the bailout be approved by City Council. It’s not $1.5 million, but it is in alignment with the current cultural policy, which dictates a matching percentage increase.
According to ATTPAC, when the recession hit it left the center without the funding base they expected and with uninsured bonds.
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“A lot of this was put in play when the economy was good,” Heinbaugh says. “When the economy tanked, the bond market flipped on its head. Fundraising dried up; we didn’t raise any money for four years. What they thought were protected bonds really weren’t.”
“The expectation was once the economy picked up, we’d finish raising the money, and get the debt paid off, but the economic crisis drug out. We had higher than expected opening costs — we were a start-up operation,” he adds. “It kind of got away from everybody. There was never an expectation we would hand this to the city with this big bill attached. Everyone always believed that they would get this taken care of.”
Curtis doesn’t want to think about what would happen if his center doesn’t get the bailout — a term he says describes the situation inaccurately. Previously in a Dallas Morning News story that broke the news, the author stated Curtis said it would be “harder but not impossible” without city support. Curtis says he was trying to be diplomatic, but it’s more serious than that.
“It would present a very significant challenge for us. I’d rather not think about what that contingency plan is. We’d have to figure out where to get that money,” he says. “It’s not just a matter of not getting the $15 million from the city, it’s a matter of are we going to get these other donations? Donors are going to wonder why isn't the city participating in this. It’s something that would snowball on itself.”