As more financial information emerges about a Barter Theatre project in Mount Airy, the total price tag potentially facing city taxpayers is reaching what’s known in show-business terms as “epic proportions.”
“My feeling right now is the only people who really have skins in the game are the property owners in the city limits,” Commissioner Jon Cawley said Tuesday in response to support for the proposed theater expansion from perhaps a different “audience.”
“And that’s what I’ve been trying to change,” added Cawley, who reiterated his recent concerns about the construction and other costs falling solely on the backs of municipal taxpayers.
“That has to change or it’s not going to be good for Mount Airy,” he said of the community as a whole. “It will be good for certain businesses, but it won’t be good for the city of Mount Airy.”
While it came to light Tuesday that an alternative financing plan has been developed by Surrey Bank and Trust which could significantly lower the project costs, the numbers known so far are provoking concern among Cawley and interested local observers:
• First there’s the $3.6 million expense of constructing the 500-seat downtown theatre on former Spencer’s industrial property owned by the city government. This assumes that federal and tax credits are awarded to offset the total overall costs exceeding $13 million which will reduce that to the $3.6 million figure.
• Another $5 million or so is eyed for the interest on bond financing that would be utilized and fees.
• Meanwhile, the city has planned to spend $4.5 million on infrastructure costs for Spencer’s property, for utility, street and other improvements. This is to cover not only the Building Nine site for the proposed theatre but other parcels where a four-star hotel/banquet center and upscale apartments are envisioned.
• It also appears the city would pay operational costs of the new theatre, or yearly subsidies, to range from a low of $100,000 to a high of $600,000 annually.
Just the construction-related costs, including the infrastructure work, total around $13.1 million, “not counting yearly subsidies and what we’ve already spent,” Cawley said.
Concern has surfaced among the citizenry about property taxes being exempt for the theatre for eight years, which relates to additional tax revenues generated from the Spencer’s redevelopment often being cited as a way the city will recoup expenses.
But Cawley said the municipality actually will own the theatre, and therefore not be paying taxes to itself, although the city might be charged county taxes on the property.
He doesn’t know if Barter Theatre will pay rent to use the facility.
Top taxpayer impact
Information on how a bottom line of $13.1 million for construction-related and infrastructure costs could affect the city taxpayers, especially those at upper tiers owning multiple parcels, has been compiled in recent days by Bruce Springthorpe. He is a former commissioner candidate who monitors city government finances.
Springthorpe’s research shows that the top 11 businesses or individual taxpayers in the city will pay more than $100,000 in extra levies over a period of 20 to 22 years, counting the construction, interest costs and infrastructure outlay, but not the subsidies.
He explained Tuesday that this time period is based on that specified for the loan, or bond, payback.
The 11 top taxpayers would pay an average over that time of $5,043 to $16,494 in extra charges, based on that research.
That would be accompanied by property tax rate fluctuations from the present 48 cents per $100 of assessed valuation to 70 cents or higher, according to calculations from Commissioner Jim Armbrister.
Thirty-two taxpayers would fork over more than $50,000 during the period specified, according to the research, which shows the vast majority of city property owners face more than $1,000 in additional levies due to the theatre expansion.
‘Gag order’ limits options
Cawley said Tuesday that a “gag order” has hampered Mount Airy officials’ ability to explore alternative funding sources other than committing taxpayers on a long-term basis.
He explained that the commissioners did not negotiate directly with Barter Theatre officials on the possible local expansion, with that task handled by the city’s legal representative, Mac McCarley of the Parker and Poe law firm in Charlotte.
“We (board members) were given permission to talk about the possibility of them coming to town on Friday night, Jan. 26,” Cawley said of the aftermath of a closed meeting that day.
“So that’s the first day we were really allowed to talk about it,” he said of that occasion less than three weeks ago, which has not allowed time to adequately explore additional financing for the theatre project.
“We haven’t exhausted all of our options for alternative funding,” Cawley said, which could include a possible partnership with the county government or other revenue sources.
The Barter project is scheduled to be discussed at length again during the city council’s next meeting Thursday at 6 p.m. in the auditorium of Mount Airy High School. It will include several informational presentations, including one on the possible alternative financing package by Surrey Bank & Trust, and others by Barter, Surry Arts Council and hotel officials.
Cawley is wary of rushing a decision, saying it effectively would box Mount Airy into a corner concerning other possible funding arrangements.
“If we vote to do this,” he said of the situation as it now stands, and lock up city finances long-range, “we have no leverage — we won’t get anybody to help us.”
On the other hand, the proposed agreement with Mount Airy allows Barter Theatre theater officials to walk away at any time if they find the local facility to be a losing proposition.
“Without repercussions,” Cawley said.
Tom Joyce may be reached at 336-415-4693 or on Twitter @Me_Reporter.