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10/26/1989 CITY COMMISSION SPECIAL WORKSESSION JOINT SESSION With LEADERSHIP OF PERFORMING ARTS CENTER AND THEATER (PACT) October 26, 1989 The City Commission met with the Leadership of the Performing Arts Center and Theater (PACT) at Ruth Eckerd Hall, Thursday, October 26, 1989. Members Present: Rita Garvey Mayor/Commissioner Don Winner Vice-Mayor/Commissioner Lee Regulski Commissioner William Nunamaker Commissioner Richard Fitzgerald Commissioner Also present: Ron H. Rabun City Manager Mike Wright Assistant City Manager Cynthia E. Goudeau City Clerk The meeting was called to order at 1:37 P.M. I. Opening Remarks & Introductions Charles Rutenberg, Chairman of PACT, stated there has been a lot of information and misinformation regarding PACT. He stated problems are not new for Ruth Eckerd Hall but it is an outstanding performing arts center. The basic financial problem is that the center started with no capital and has depended on donations and heavy government support. He stated the response has been extraordinary. While there is government support for the mortgage, it is PACT's responsibility. Mr. Rutenberg stated PACT has a $9 million a year budget, $2,755,000 of which is not covered by ticket sales. The remainder of the budget is covered by a $400,000 yearly contribution from the City of Clearwater, $75-100,000 from the state and county, and an annual fundraising drive that produces $1.6-1.7 million annually. Even with these contributions this past year, there was still a $375,000 deficit. He stated the goal is to be deficit free, and a new program which will allow a yearly balanced budget has been developed. He stated they are changing programming, and will eliminate those performances that require a minimum of four nights. There has been internal reorganization and the proposed budget is balanced unless ticket sales have been overestimated. He stated they still have to make up prior deficits. They have gotten loans from banks and are in the process of a major fundraising campaign. II. History of City of Clearwater Involvement with PACT Timothy A. Johnson, Jr., immediate past chairman of PACT, reviewed the history of the organization stating the City has been supportive of PACT and that PACT has also supported the City. He stated plans for a center in downtown Clearwater never materialized, and the donation of the PACT property from the Kapok organization in memory of Mr. Baumgardner started the PACT project. A condition of the donation was that work had to begin within two years. PACT helped the City deliver on its promise to produce the facility. The City of Clearwater has a facility use agreement with PACT and donates $400,000 a year to PACT. The City has a guarantee of $1 million to PACT with other guarantees being provided by the parent company of Vision Cable, Pinellas County and Dunedin. He stated the $400,000 a year from Clearwater can be cancelled, however they hope it will not be decreased but in fact that the City consider increasing it at some future date. Mr. Johnson stated a bond issue of $1 million to build the PACT parking lot was issued by the City in 1983. PACT owns the building footprint and the City owns the rest of the property. PACT does pay debt service to the City for the parking lot. He stated this is quite different from other performing centers in the area, as in Tampa a bond issue of $40 million was issued for the Tampa Performing Arts Center and the City of Tampa pays the debt service through utilities taxes. The same thing is true of the Bayfront Center. Jack Eckerd, major supporter of the center, requested permission to speak. He indicated he had met with PACT staff during the last week and expressed his gratitude to them for making Ruth Eckerd Hall a nationally acclaimed center. He stated the support of the City Commission deserves appreciation, and he and his wife remain deeply committed to the center. He also indicated that the lion's share of funds for PACT comes from the private sector. He stated he is ready to join others in increasing their financial support to ensure that PACT will continue to provide quality services to the community. He thanked everyone for being faithful partners in this endeavor. III. Financial Overview Carroll W. Cheek, Chairman-Elect of PACT, provided a brief financial overview. He stated the $2.75 million expenditures incurred per year is supported by $1.5 million from programming receipts. The remainder of the funds have to be furnished by the public and the $375,000 deficit for the last year was actually less than expected. He stated he has prepared a budget that will be balanced. A critical point that should be understood is that the average ticket price for a performance at this center is $24.00, while the average cost to the center is $36.00. He stated everyone should support the hall through contributions. IV. $9.5 million Financial Stability Fund Fred Fisher, head of the PACT Campaign Steering Committee, stated the first priority is to pay off the mortgage and a financial stability plan has been devised. The board already has $1.2 million in donation commitments. He further reported if the mortgage could be paid off, $800,000 in debt service per year would be eliminated. He has confidence in a successful campaign. Carroll Cheek, Chairman-Elect, stated his chairmanship becomes effective in March of 1990. In accepting the chairmanship he met with Jack Eckerd and asked regarding the Eckerds' commitment to the hall. He announced that the Eckerds have agreed to donate $2 million in the form of a challenge grant. He stated they need $9.5 million to pay off the debt, retire the mortgage and provide operating capital. He also reported that PACT serves local communities in the area other than Clearwater. V. Questions & Answers, Closing Remarks Charles Rutenberg, Chairman, stated that Mr. Arnold Breman, former Executive Director of PACT, was hired by Palm Beach County to be the executive director of the performing arts center being constructed there. He stated a search committee headed by Tim Johnson will be searching for a new executive director. In the interim, Elissa Getto has been appointed as interim director. Mayor Garvey thanked the PACT membership for their time and commitment and expressed appreciation to the Eckerds for their donation. In response to a question regarding how the $375,000 deficit was to be taken care of, it was indicated that PACT has borrowed working capital. They will attempt to reduce expenses in the budget this year and have broadened the scope of programming. It was indicated that the $375,000 will not be paid out of the 1989/90 operating budget, but would be paid out of the capital campaign. A question was raised regarding Clearwater's responsibilities for maintenance at the center, and it was indicated that they maintain only the parking lot. PACT pays $11,000 a month to the City toward the debt service on the parking lot. A question was raised regarding whether or not raising ticket prices $1.00 would help. PACT feels ticket prices have been raised to a maximum that the public will tolerate. Concerns were expressed regarding the cumulative debt for the center, and it was indicated that the capital campaign of $9.2 million would provide the monies to pay off short and long term debt and still provide working capital. Concerns were also expressed regarding whether or not the capital campaign would be successful as there are three performing halls in the Tampa Bay area. It was indicated by PACT representatives that the campaign will continue until all the funds are raised. $3.2 million of the campaign has already been collected according to PACT. It is hoped from here on that the center will function with a balanced budget. It was indicated that, while PACT is in its major capital campaign, the annual campaign fundraising will also continue. In response to a question regarding the value of the hall, Timothy Johnson responded that it is difficult to place a value on the hall. He stated in order for the City to have to pay the $1 million guarantee, the hall would have to cease operation and be foreclosed by the bank. He did not feel the community would allow that to happen. City Commissioners emphasized they were not questioning the PACT organization's dedication or plans, but they were addressing concerns as they are obligated to do for the taxpayers of the City of Clearwater. Appreciation was again expressed to the leadership of PACT for their efforts. The meeting adjourned at 2:50 P.M.