After a poor performance in 2005, the arts district and a seperate trust fund board opted to undertake a refinancing plan, one which many people, including Mayor Dave, were opposed to. Apparently the opposition was for good reason, as the fund continues to do badly.
According to the WSJ:
The trust, which must be at least $104 million to meet all commitments, sank from $105.83 million on July 13 to $100.86 million on Aug. 15, doubling any prior decline and nearly forcing the district to tap other sources to meet debt payments.I'm not sure what's going on, but I can't help but feel like better planning and more knowledgeable people running the show would have helped. And they may want to seriously consider making changes now, instead of waiting until the whole thing drops into default and everyone else has to help bail them out.
The fund recovered to $103.31 million -- still below the $104 million mark -- by Sept. 28, according to the latest report by Madison comptroller Dean Brasser. The trust has since added another $400,000, the Overture Foundation said.
Overture Center was built with a $205 million gift from philanthropist W. Jerome Frautschi. About half the gift was put in a trust fund for operations and maintenance, while the rest was coupled with a $115 million loan to build the Cesar Pelli-designed facility on State Street.
But the original financing plan, which didn 't involve the city, failed in a weak investment market. In late 2005, the council approved a controversial refinancing deal, with the city providing a financial backstop on some debt for six years.
Under the deal, the trust covers about $7.45 million in annual debt payments and pays another $1.4 million every year to Overture 's operations and maintenance reserve. To do so, the trust must earn a 8.25 percent rate of return over the long term.
The trust, which stood at $109.3 million in late 2005, has fluctuated with the market and as it makes required payments.
After months of effort, the trust fund board earlier this year began a new investment strategy designed to get a strong return but better protect against market volatility.
But in the third quarter, due mainly to poor investment performance, the trust declined to a point where it couldn 't meet all commitments, said Chabot, who also sits on the trust fund board.
The trust 's performance came close to partial default, Chabot confirmed. If the trust drops between $100 million and $97 million -- as it nearly did -- Frautschi would cover the first $5 million in debt payments, then the arts district, and finally the city. No payment would be made to the reserve.
If the trust falls below $97 million, creditors would enter discussions with the trust fund board to evaluate the need for change.
Between this mess and other little signs like Overture boosting their facility fees from 2 to 3 dollars last year, something just doesn't smell right. They're charging us extra to see shows, extra money that the performer's don't see, by the by--and they're charging those performers just to have merchandise tables out in the lobby in front of their shows, too.
The Overture Center was supposed to be a community arts space--welcoming to both national touring acts and local troupes. They put forth a token olive branch to the local arts community when they first opened, but, outside of the galleries, I haven't seen much local content since (and I mean really local--not just the Wisconsin Chamber Orchestra and the occasional jazz band in the Rotunda). That might have something to do with the high rental fees charged for the various spaces (and they charge extra for tables and chairs).
Perhaps if they were able to get their act together with the financing/trust fund, they wouldn't feel the need to charge unreasonable fees for their rentals and their patrons. And that might increase use and attendance, which would in turn increase their revenues. Now there's an idea.