No member of a recently formed citizens group is opposed conceptually to a Barter Theatre expansion in Mount Airy, said one of its leaders — but he believes it could be handled better by city government.
Gene Clark, the treasurer of the Committee for Transparency in Mount Airy (formerly known as Citizens for a Transparent Mount Airy), charges that a proposal now on the table subjects the municipality to too much risk while benefiting various business interests.
“The reality is that the currently proposed deal — which we learned recently was initiated by a handful of local businessmen — is not in the best financial interests of the city,” Clark said during a special presentation Thursday night before the Mount Airy Board of Commissioners.
“It does, however, serve to enhance the financial interests of a few.”
Clark did not name the “handful of local businessmen” during his remarks,” but later identified them as Gene Rees, Tom Webb and Chip Pulliam, saying this was relayed to him by a Barter official. He did not say how the expansion would specifically benefit them.
Plans for the local expansion of the Barter, which would be the first outside its home base of Abingdon, Virginia, in the theater’s 85-year history, have been debated in Mount Airy since early this year. The 500-seat facility is targeted for the former Spencer’s Inc. industrial property downtown, which the city government now owns, along with a hotel and upscale apartments.
The level of public participation, aka city funding, for the Barter project and other aspects of the Spencer’s redevelopment, have been a source of controversy.
In March, analysts with a state government oversight agency said it would not allow an initial proposal for the theater to proceed because it subjected Mount Airy to fiscal peril. That plan would have required long-term loan or bond financing to develop the $13.5 million facility and obligated the city for decades.
Then in early August, a revamped concept emerged through the efforts of an ad hoc team in which the hotel developers agreed to foot most of the costs for the Spencer’s redevelopment including the Barter Theatre construction.
Deal called misleading
However, that arrangement is not as rosy as it might seem, Clark said during his presentation Thursday night.
The private developers, Dana Bryson and Gray Angell, have estimated that their up-front costs will be about $32 million to build both the hotel and theater, he said. That’s part of an overall redevelopment plan totaling around $50 million which also includes public funding for infrastructure and other needs.
“While that amount may suggest that they’re carrying their own weight financially, that’s not the whole picture,” the Committee for Transparency official continued.
“Once the buildings have gone up and are owned by the developers, they will receive approximately $19.2 million in marketable tax credits – which means that their net investment, at that point, would be only $12.2 million,” Clark said told a crowded meeting room at City Hall.
He also mentioned a demand by the developers for Mount Airy to lease the theater from them for its first five years of operation at an average annual cost of $560,000, or a total of nearly $3 million. After the initial five-year period, renewal options would have to be re-negotiated, according to Clark.
He further took aim at another developer expectation that the municipality subsidize theater operations to the tune of $2 million over the five years, as it gets off the ground.
“The theater also has demanded that the benchmark on their subsidy payments from the city be based on ‘number of performances’ rather than ‘ticket sales,’” the spokesman for the citizens group said.
“That’s like the CEO of Ford Motor Company telling investors that the company’s success will be based on the number of cars that roll off the assembly line — rather than the number of cars sold.”
Clark said the citizens committee thinks “it is not the responsibility of any municipality to guarantee the payment of subsidies – direct or indirect – to any business to ensure (its) ongoing viability. Yet here in Mount Airy, that’s what we’re being positioned to do.”
City officials appear “relatively comfortable” with the terms now on the table, Clark observed.
“But their comfort is our discomfort,” he said of citizens, referring to a “shockingly excessive amount of city funds” the plan would require.
“Those outlandish demands have the real potential to lead to bankruptcy for the city of Mount Airy,” Clark claimed.
“As currently configured, we believe our tax dollars will be used inappropriately — and in a very shrewd and circuitous manner — to significantly support a for-profit, private developer team – in this case, two individuals who have aligned their efforts to build the proposed hotel/theater complex.”
The citizens group spokesman did not just attack the present proposal Thursday night, but offered recommendations for contractual terms he says would maximize the city’s benefits while limiting its liabilities.
“First, we recommend that, for the first five years, any annual lease payments be linked to the amount of ‘new’ tax revenues projected to result from the project; and after five years, lease payments should be linked directly to direct revenues generated,” Clark suggested.
“This type of clause ensures that taxpayers will not be stuck with any shortfall. And, if all parties truly believe their own projections, it should be easily embraced by them.”
Clark also said theater subsidies must be based on tickets sold rather than number of performances.
He also would like to see the Surry County government join in the venture with a minimum financial participation based on ticket sales.
Clark concluded his presentation by saying the Committee for Transparency wants the hotel/theater project to be successful, without placing undue risks on taxpayers.
“With the current deal, the developers stand to make multiple millions of dollars in tax credits, lease income and profits, (and) the Barter Theatre gets hefty subsidies,” he said.
“It’s only logical, then, that they should both assume more of the risk.”
Clark’s presentation produced no comments, questions or other reaction from city officials.
Tom Joyce may be reached at 336-415-4693 or on Twitter @Me_Reporter.