As the clock came down, they danced. It was a glorious Saturday afternoon in mid-June — no humidity, no wind and barely pushing 80 — and anyone who was anyone in Richmond politics stood proud on a makeshift stage in front of the lifeless, aluminum-sided Thalhimers building on East Broad Street.
That was the scene a year ago when the Virginia Performing Arts Foundation launched its capital campaign for a $168 million performing arts project with a street festival, the unsightly sidewalks and ragtag retail shops cordoned off with portable chain-link fences. It was a celebration of creative destruction: confetti swirled as the old department-store clock was presented to the Thalhimer family. The party was well-attended. State Sen. Henry Marsh, Congressman Eric Cantor, Chesterfield County Supervisor Ed Barber, businessman Jim Ukrop and about a dozen others celebrated on the platform like old pals, wearing weekend-casual polos and dress shirts sans ties. Former City Manager Calvin Jamison and then-Mayor Rudy McCollum gyrated and sang along with the band. A clown on stilts shimmied.
The excitement was understandable in June 2004. Just two weeks earlier, former Gov. L. Douglas Wilder had electrified the city, making a surprise bid to become the city's first popularly elected mayor since the 1940s. It was Christmas in June, even if the notion of Mayor Wilder seemed surreal. Even Charles Nance, previously the frontrunner and first mayoral candidate to join the race, didn't seem to mind as he worked the crowd, handing out campaign placards.
Twelve months later, such civic giddiness has dissipated. Thalhimers is now a hole in the ground. Private fund-raising for the arts center has been deathly slow. And Wilder says he wants the land back. What so many had hoped would become Richmond's saving grace — a grand music hall that would complete a renaissance on East Broad Street — has been derailed. Despite boasting an "all-star" board of Richmond's business elite — Ukrop, Media General Chairman J. Stewart Bryan and prominent local investor Beverley W. "Booty" Armstrong, among them — the project has failed to gain traction.
Meantime, local institutions such as the Virginia Museum of Fine Arts and Virginia Commonwealth University continue to win significant capital donations. The Museum recently received a bequest worth more than $100 million. And businessman and philanthropist William H. Goodwin Jr., who shares an office with Booty Armstrong, gave VCU $32 million toward its engineering school two weeks ago.
But for the arts center, the going won't get easier anytime soon. If fund-raising was already difficult in part because of negative publicity, as the foundation asserts, it promises to get worse as Wilder continues his assault on the business community, making the performing arts center his personal punching bag of taxpayer waste.
The foundation's problems, however, began long before Wilder took aim. During the past year the arts center project has suffered from a number of strategic missteps, ineffective public relations, and a fund-raising campaign that has been ineffective in both the private and public sectors. Meanwhile, serious questions about the arts center's future operations remain unanswered.
"The danger is they build this partially and can't complete it," says John Gerner, managing director of Leisure Business Advisors in Richmond, which performs financial analysis for theme parks and other entertainment venues. If arts center officials are not "rooted in reality," he says — "the practical aspects of meeting their expectations — they could be easily forced into a cash crunch. Then they are deep into debt and desperate, coming to the city with open hands, saying we have to have this amount of money or we will have to close the doors."
The story of how the performing arts center fell into dire straits has many chapters and subplots. But there is a consistent theme, say insiders and observers, which has dogged the project over the last four years. The foundation stumbled to keep up with a changing city.
"I don't think they understand," says a person close to the project speaking on the condition of anonymity. "They are too caught up with where we want to go instead of how we get there. They didn't want to talk about Plan B."
The plans for a downtown performing arts complex first emerged in the spring of 1998, when business, community and cultural leaders engaged in a civic brainstorming exercise known as MAPS, an acronym for Metropolitan Area Projects Strategies.
A process that had worked in other cities, MAPS attempted to identify an array of infrastructure projects such as stadiums, museums, educational facilities and transportation facilities that could improve the metro area, particularly downtown, while engendering broad support throughout the region. The idea first came from the Metropolitan Richmond Sports Backers, which contacted a sports stadium consultant from Miami to spearhead MAPS in Richmond. The theory: A broad array of projects with something for everyone could boost the lobbying efforts of chamber of commerce officials in the General Assembly. The lobbyists wanted legislation to enable a metro-wide referendum for a 1-cent sales-tax increase that would pay for the projects.
MAPS, however, failed to gain political momentum in a Republican-controlled Statehouse. But the wish list of projects had been created, among them plans to renovate the Landmark, the Carpenter Center and both the National and Empire theaters. Despite the fizzling of MAPS, the idea for the renovations was kept alive.
But there was a challenge. A central piece to MAPS had been the eventual solicitation of public support in the form of a referendum. In order to preview levels of support for the various plans while lobbying legislators, MAPS officials contracted with the Center for Public Policy at Virginia Commonwealth University to poll the public. In one poll, 45 percent of those contacted in early 1998 said they would consider a 1-cent sales-tax increase if provided more specifics on the projects. A follow-up poll later that year found widespread support for public money going toward projects in the areas of education, high technology and public safety. After analyzing the data in 1998, VCU professor Robert D. Holsworth said the poll also showed "small pockets of support" for arts-based projects.
A referendum was never held, and no funds were raised.
But the performing arts subcommittee that formed through MAPS was interested in studying the arts portion of the wish list, with a new downtown arts complex as their centerpiece. In May 2000 they put together $150,000 to hire AMS Planning & Research Corp. to study the idea.
After nine months of study, AMS consultants recommended a series of projects: First, that the Landmark be renovated to improve its "acoustics and backstage logistics," at a cost of $5 million to $10 million; next, that the Carpenter Center be renovated and a new 650-seat home for the now-defunct TheatreVirginia be built in the Thalhimers block, at a cost of $40 to $60 million; finally, the Empire and National theatres, respectively, be renovated at a cost of $25 million to $35 million. There was no recommendation for a new music hall.
Key in the consultants' report was completing renovations to the Landmark first so that the primary users of the Carpenter Center, namely the Richmond Symphony, Richmond Ballet and Virginia Opera, would have a place to perform while the Carpenter Center underwent renovations.
Armed with research that the project made sense, at least in the eyes of the consultants paid by the Alliance for the Performing Arts, a group of local business leaders took the baton. They formed a nonprofit, the Capital Region Performing Arts Foundation (which eventually became the Virginia Performing Arts Foundation), to oversee the work and act as an umbrella organization for all of the downtown theaters.
In February 2001, Ukrop, chairman of Ukrop's Super Markets Inc. and First Market Bank, was named the foundation's chairman. From the onset, the group made its intentions clear: Its primary objective was to build a new performing arts complex at Seventh and Broad streets after demolishing the former Thalhimers department store. At Ukrop's inauguration as chairman at the Carpenter Center — during a regular meeting of Richmond Renaissance — members of the new foundation received tiles from the old Thalhimers department store engraved with the date 2-21-01. Ukrop said at the time the tiles represented a "remembrance of this history."
For the business community, the arts complex represented an opportunity to clean up what Booty Armstrong described as an economic wasteland on Broad Street. Armstrong says he shepherded the project through Richmond Renaissance and recruited Ukrop to take the helm because he and others envisioned the arts complex as "an oasis in the desert" that would complement the newly expanded Greater Richmond Convention Center.
In an interview in 2004, Booty Armstrong said fund-raising wouldn't be a problem, and the facility itself wasn't the primary risk: "I believe that the brick and mortar part of it is not the highest risk. That will happen. It's just a matter of how long will it take. The biggest risk is the city itself. Do they have the political will to keep the bad element out of that area? Do they have the passion to keep it clean?"
Four years later, the consultants' recommendations are a distant memory. Instead of the new home for an out-of-business TheatreVirginia, the foundation is building a 1,200 seat music hall, primarily to be used by the symphony. It has put the renovation work to the Landmark, National and Empire theaters on the back burner until the Thalhimers block is completed — where the music hall will be built at a cost of $93 million. Once the entire project is complete, including the renovation work to existing theaters, the total cost is expected to be about $168 million.
Plans changed only after much study by its consultants, foundation officials say. But the key market study that estimates demand for an arts complex used figures from 2001, based on an area within a 20-mile radius of downtown. And their report concluded there was sufficient demand for a new 650-seat theater for a homeless client, not a 1,200-seat music hall.
Gerner, the financial consultant, says making too many conclusions about the current market based on a 2001 study is a dangerous proposition.
"What might be demand three to five years from now is not demand today," he says. "These things operate at a loss. And the goal is to minimize the loss. If you overbuild to the market with the expectation that the market will grow into it while you are waiting, you are going to be absorbing a much greater loss. And that's the risk."
Brad Armstrong, who was hired as president and chief executive of the foundation in 2001, says those concerns are unfounded. The foundation has "tons of backup pages" that include years of study by leading consultants in the industry, he says, with widespread input from various arts organizations in the Richmond area that show sufficient demand exists to support a new music hall. The foundation declined to provide Style Weekly with consultants' research that supports those conclusions.
Two pieces of the arts complex are happening simultaneously: the performing arts center, or music hall, on the Thalhimers block, and renovations to the Carpenter Center. In the push to get the performing arts center built, the foundation tied the projects together physically — the steel framework, the heating and air-conditioning systems, as well as shared dressing rooms and loading docks.
To date, the nonprofit has spent $18.2 million on architectural design work, consultants, administrative operations and construction costs related to demolition. The foundation says it would be too costly to separate the projects now — about $10 million in redesign work and lost savings, Armstrong says — and it has no choice but to build the $93 million arts complex.
"These buildings are inextricably intertwined. They share so many systems," Armstrong says. "You can't just saw off one piece of it."
The all-or-nothing mindset illustrates a critical misstep, says one person working closely with the project. The foundation didn't address what would happen if the fund-raising didn't come as quickly as planned, this person says. Meanwhile, the foundation's board of directors never aggressively questioned the wisdom of the strategy, insiders say, or posed the tough questions. The need to build downtown's next savior always took precedent.
"There are certain members of the executive committee who are so enamored with being on the executive committee that they lost sight of where they were going," says one person close to the project. "It became, 'Let's not worry about Plan B. Let's get it done.'"
By fast-tracking construction of the arts center — and making it the priority — the foundation has been forced to cobble together an overly ambitious operating budget, says Joel Katz, the foundation's former vice president for programming and marketing who resigned out of frustration in early May.
When Armstrong submitted a revised plan for the center to Mayor Wilder April 25 — enticed by two strongly worded letters from the mayor — it included an even riskier construction strategy with operating assumptions that were a "long way from being borne out," says Katz.
"It was difficult for me to support the numbers," says Katz, who was charged with creating an operating budget for programming at the center. "It may be the right size for the symphony audience, but it has very little commercial appeal in the industry."
Katz, who managed the Carpenter Center for nine years before it merged with the arts foundation in February, says that with 1,200 seats the hall was too small to attract many national acts, which bring in big profits, and the symphony's plans for the music hall include a large number of rehearsal dates, which don't generate ticket sales.
Meanwhile, Katz says the foundation's plan to become its own Broadway traveling-show promoter, another big assumption, is flawed. He says attracting such shows is extremely difficult and more costly without a national promoter such as Clear Channel, which has the leverage to bring in large acts at better margins.
"It's risky to do it alone," says Katz, pointing to recent experiences at the Kimmel Center in Philadelphia, which also took on the role of national promoter. "They decided to go into the Broadway business in their plan, and they lost a ton of money."
Katz says Richmond's plan is full of aggressive forecasting, from the expected $1.3 million in ticket surcharges to the $2.8 million in presenting revenue to the $360,000 in program sponsorships, which he says foundation leadership devised after a "ten minute conversation" about sponsorship revenue at the Carpenter Center before it closed for renovations. "The pro forma of the music hall, it's all a big assumption," Katz says.
In early May, Armstrong told Style that Katz "resigned to pursue other opportunities," but revised his statement a week later in the Times-Dispatch, declaring that Katz was a "disgruntled" employee who was "terminated for cause."
Sources say the two didn't work well together, and clashing personalities played a role in how Katz's departure came about. Katz and Armstrong both declined to discuss their past working relationship.
Can Richmond support the planned performing arts center? Brad Armstrong says the assertion that the foundation has been overambitious in forecasting is simply not true. "We tried to be conservative in this because we are a conservative organization when it comes to finances," he says, noting that leading financial consultancies in the performing arts business have been working closely with the foundation since its inception.
"It's based on previous activity here and what happens in other cities," he says. "AMS was very helpful with this. They have the data from all these other performing arts centers about what they were able to achieve when it comes to sponsorships and concession sales and all these things. National averages play a big part in this. We got all of this data from all around the country that were able to use as bench-marking."
Armstrong, a former Martin Agency executive known for his tireless enthusiasm and occasional emotional outbursts, says he doesn't "get the skepticism. I mean I honestly don't get the skepticism."
Some observers say the skepticism comes, in part, from the foundation's reluctance to be transparent to the public. The foundation has been slow to provide the studies and financial analysis that back up its plans. While some limited information has been provided, the foundation declined a request by Style to inspect its business plan in detail, or to peruse in-house research the foundation says is key to understanding how it arrived at its current projections.
In a recent interview, foundation officials described many of the various reports and studies, and actually displayed them for two reporters, but cited restrictive "confidentiality agreements" with local organizations and others across the country. They provided copies of only a limited number of documents, including the master plan for the arts facilities and a summary feasibility report by AMS Consulting — both of which were completed in 2001.
In a phone message responding to Style's repeated requests for information, the foundation's newly hired spokeswoman, Carolyn Cuthrell, said that one study would be made available, but that "at some point we've got to say enough is enough."
The unwillingness to disclose their supporting documentation, some say, has only fueled speculation that the foundation hasn't done its homework.
"We should not be simply asked to take it at face value, considering the amount of public money involved," says Gerner, who points out that other cities planning similar projects have been more forthcoming. For example, in Virginia Beach, which is scheduled to complete construction on a performing arts center by 2007, officials provide copies of their business plan, needs assessment study and other financial information on a Web site. The Virginia Performing Arts Foundation does not.
"There definitely should be more transparency here," Gerner says. "For them to say we have tons of backup and take it at face value, it's very unusual."
There is other uncertainty. The foundation says its financial projections for a completed center depend primarily on rental fees, concessions and corporate sponsorships generated by the Richmond Symphony and the Richmond Ballet. But neither the symphony nor the ballet has committed to how often it would use the performing arts center. The foundation's operating pro forma assumes the center will be used 171 days out of the year. Officials say the symphony and ballet account for 80 percent of those dates. But they declined to break down usage of the facility any further.
In an e-mail, Richmond Symphony Executive Director David J.L. Fisk writes that the symphony's plans for the performing arts center are still in "draft form," and that he couldn't confirm the foundation's operating pro forma as it relates to the symphony's expected ticket sales, corporate sponsorships and concessions. "Much of this is still dependent on confirmation of external data and information," Fisk writes. "Our business planning process embraces a number of potential scenarios."
The Carpenter Center's closure has affected the symphony's ability to generate revenue, according to Fisk, and the symphony has "incurred extra costs as a result of having to manage in other venues." But it's seen a considerable spike in new subscriptions since being forced out of the Carpenter Center. In the 2004-2005 season, it gained 950 new subscribers, Fisk says, while losing fewer than 250 subscribers. Part of that increase can be attributed to shifting the Masterworks series to churches in the suburbs, closer to the symphony's fan base.
Keith Martin, managing director of the Richmond Ballet, says the ballet has given the foundation several different scenarios for how it could potentially use the new music hall. As for how often the ballet would rent the hall, Martin can't say for certain. Doing so, he says, is "like predicting a stock."
"The point is, we will have a variety of facilities from which to choose," Martin says. "By having the Landmark and the Carpenter Center and the music hall, we can appropriately accommodate the venue."
Without knowing for certain how often its major tenants will use the music hall, some people are concerned about the foundation's future operations, particularly relating to its operating endowment — and raising private dollars.
The foundation's conservative plan is to raise a $2 million endowment to cover operations once the facility is open, according to a supporting document released to Style. But officials envision raising $15 million. That's in addition to the $93 million they need for construction.
It's difficult for some people to see light at the end of the tunnel, considering that it's taken the foundation four years to raise $22.3 million in private pledges, cash and in-kind donations, and has lobbied City Council to extend a key July 1 fund-raising deadline by 18 months.
"I have no doubt it's going to get done," says another person close to the project. "But it's going to get pretty dirty and pretty ugly."
The biggest challenge has indeed been fund-raising. The foundation says it's missed its projections because of difficulties in a post-9/11 economy. Critics say the foundation didn't do enough private fund-raising before its public launch.
The foundation members had planned to first secure between $30 and $50 million from the state, which would serve as the catalyst for raising private donations. Four years ago they nearly achieved that goal. Former Gov. Jim Gilmore went so far as to include $25 million for the new arts complex in his last budget, in 2001.
"We really expected that we were going to have significant state funding right off the bat. I mean we were just a fledgling organization when we first went to the state for that [funding], and that was going to kind of launch everything," Brad Armstrong says. "But our first board meeting happened on Sept. 11, 2001. While we were in that board meeting, American Airlines Flight 11 slammed into the north tower of the World Trade Center and the world changed."
Reeling from the attacks and the economic slowdown, the state scuttled Gilmore's $25 million. It wasn't until earlier this year that lawmakers agreed to pitch in $8.5 million for the project. That money is contingent on raising a matching amount of cash or in-kind contributions. So far, the foundation says it has raised $67.9 million, $22.3 million of which is in cash or in-kind donations. But it's spent $18.2 million, leaving it with $4.1 million in the bank — not enough to receive the full $8.5 million from the state. (The foundation must show it has $8.5 million by Dec. 31, not including pledges.)
Throughout the fund-raising campaign, the foundation has pledged that the arts center would be paid for mostly with private dollars. So far, $39.9 million of the $67.9 million it's raised has come from the public sector.
With so many of Richmond's wealthiest and most powerful leaders running the foundation's campaign, some wonder why private dollars haven't been raised sooner. Some people close to the organization say the foundation has stumbled in part because it has skirted traditional fund-raising methods, relying too heavily on phone calls and an aggressive letter-writing campaign.
Judy Ford, vice president of development for the foundation, says she'll invite potential donors to the foundation's model room at its offices in Shockoe Slip. Then the foundation follows up with phone calls or letters seeking future meetings.
That technique apparently didn't sit well with one potential donor, Edmund A. "Ned" Rennolds Jr., an influential arts supporter who helped found the symphony and guided it through a revival that started in the late 1950s. Today, at 89, he is still active with the symphony. But he didn't appreciate that the foundation asked him for $2 million and offered to name the hall's grand staircase after him — by mail, in three separate letters.
"There's been a lot of money raised in Richmond in the last 40 or 50 years, but I've never heard of any money being raised with a letter," Rennolds said in a recent interview at his home. "You don't get anything without meeting with them in person."
Armstrong and Ford say they have yet to rev up their private fund-raising campaign — the focus to date has been on raising public funds. Now that the city has extended their deadline, they say they will. The foundation's all but abandoned a controversial push in the counties to increase their lodging taxes by one percentage point, which was estimated to generate between $12 million and $14 million for the center.
The foundation also has yet to win a significant lead gift, which would help its fund-raising considerably. "They haven't gotten a break in a while," says a local fund-raiser experienced in running major capital campaigns. "They just need a pacesetting gift, another big break. All major efforts need that good fortune."
The foundation has come head to head with another significant challenge during the past year. What was once a project that had city leaders grateful for the leadership of Ukrop, Bryan and Booty Armstrong has collided with a powerful antagonist in Mayor Wilder. Earlier this year he vowed to cut off additional money to the foundation, including the $15.8 million City Council has promised to give if the foundation raises $93 million by Dec. 31, 2006.
Perhaps board members should have seen it coming. At the June 13 campaign kickoff last year, Wilder, two weeks into campaign mode, was nowhere in sight. He was noticeably absent during the pre-party luncheon hosted by some of Richmond's biggest businessmen and wealthiest political donors. He wasn't onstage, dancing with Ukrop.
Wilder's almost weekly clashes with Richmond's business community over the arts center project has stirred a whirlwind of debate about who's in charge of the city's planning, and who is strategizing its future.
Brad Armstrong says their vision emerged from within the arts community, from the various entities that make up Richmond's cultural soul — the Richmond Symphony, the Richmond Ballet, Virginia Opera, Elegba Folkore Society, Richmond Boys Choir, Richmond Shakespeare Co., and countless others.
Wilder has intimated that the project is an example of what he vowed to stop: business as usual. Some say the management of the arts-center project symbolizes an outdated version of city development, one of old moneymen directing downtown's future with good intentions, but unaccustomed to publicly accounting for business decisions.
Not only is Wilder against giving away any more city money to the project, but he's also asked that the land at Seventh and Broad streets where Thalhimers once stood be deeded back to the city. "I am going to convene a group of people to say what should be there," Wilder says, "to envision what is the best possible use for the city, to get that property back to make the appropriate offerings to whoever is interested."
Whatever foundation officials may think of Wilder, he's become an extraordinarily difficult obstacle to overcome in capital campaigning during the next 18 months.
John W. Bates III, a partner at McGuireWoods who also serves as the foundation's secretary, holds out hope that Wilder will come around, that he'll see the wisdom in building a performing arts center.
"I have confidence in the mayor, and believe that he will come to see the broad support that the project has," Bates says. "He consistently tells us to 'listen to the people.' I know he is listening." S
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