In a statement outlining its fund-raising status last week, the Virginia Performing Arts Foundation reported having received a total of $22.3 million, $18.2 million of which has been spent on construction-related costs in the Thalhimers block, architectural design work and operations. That leaves $4.1 million in cash.
The foundation says there is more money in the wings. It reports having raised $45.6 million that it hasn't collected $12 million in private funds, $28.7 million in city and state funds, and another $4.9 million in historic tax credits.
But some of that money is in question. In order to receive a state grant of $8.5 million, for example, state law dictates that the foundation show it has received a matching amount of cash or in-kind contributions by Dec. 1. If not, the money may be directed back into the state's general fund.
Brad Armstrong, president and chief executive of the performing arts foundation, says the money will be there, and very little is based on any contingencies. "We've got $67.9 million that we can identify toward this project," Armstrong says. "Tell me why that shouldn't give huge confidence that we can close the gap?"
For starters, some big deadlines have already gone by the wayside. While Armstrong blamed the fund-raising shortfall on a post-9/11 economy, the promise to raise the $98 million came almost two years after the terrorist attacks.
Mayor Wilder says the project, based on available cash, simply isn't realistic. While the foundation's statement issued Friday shows balance of $4.1 million, Armstrong, in separate meetings last week with Wilder and Style, indicated the foundation has "about $3 million" in cash available to it. (On Monday night, Armstrong says he mistakenly gave out the wrong number.)
"It's almost ludicrous," Wilder says. "Where is the money to build it? They have raised $67 million and they have $3 million? You can't build it on pledges; you can't build it on emotional support. You have to have money."
Raising money is still only half the battle. The biggest challenge, say some close to the project, will be staying within the construction budget, a difficult task for any project of similar size. To allay those concerns, Armstrong says the foundation expects to reach a guaranteed maximum-price agreement which should lock in the price with its construction contractor, Gilbane-Christman, sometime this summer. But some worry that volatility in the construction market and the uncertainty of committing to a project that isn't fully funded will lead to significantly higher costs.
The foundation has enough money now to finish the Carpenter Center portion of the project, Armstrong says. Starting on both the performing arts center and the Carpenter Center at the same time, he says, will save "millions and millions of dollars."
As for the potential cost increases, Armstrong says that concern was what led to taking the project off the 2007 fast track in the first place and opting for a normal, less-aggressive completion goal deadline of fall 2008 at the earliest.
Some close to the project are concerned that shifting construction costs could cut into the $5 million that the foundation has worked into its budget to operate the facility once it's up and running. If that money gets eaten up in construction, where will the operating budget come from?
"That's my biggest concern," says one person involved in the project who spoke on the condition of anonymity. "They don't end up with all the money they need to cover the operations."
Joel Katz, who abruptly resigned as the foundation's vice president of programming and marketing, says the foundation's operating budget is based on some "very ambitious" programming assumptions.
Katz devised an operating budget for new programming based on his experience as director of the Carpenter Center the Carpenter Center merged with the foundation in January and warned of the new hall being too small to attract many national acts. He questions how the foundation will operate its own Broadway programs, to retain more profits, without a national promoter.
According to the operating pro forma submitted to Wilder, the foundation is expecting to generate $2.8 million in revenue from new programming outside of Richmond Symphony performances and other rental revenues generated locally.
"There were assumptions in the numbers that were a long way from being borne out," Katz says. Without the leverage of a national promoter, says Katz, getting major acts for reasonable cost can be difficult.
Other assumptions also bothered Katz, who didn't agree with the direction of the project and resigned in frustration May 4. (Armstrong told the Times-Dispatch that Katz was "terminated for cause.")
For example, Katz says the line item in the pro forma summary sent to Wilder April 26 that anticipates $360,000 in program sponsorships was based on a brief conversation he had with leadership at the foundation.
"It was a 10-minute conversation. We needed to hurry up and change pro forma No. 1 and submit pro forma No. 2 to Mr. Wilder," Katz recalls. "The pro forma was always a work in progress."
Armstrong refutes that any decisions have been made in haste. In fact, he says, the numbers in the business plan and pro forma submitted to Wilder are "conservative," and are the result of months of study and work.
"Those numbers are based on our estimate of the minimum of what we think we can do," he says. "It's looking historically at what has been done at other facilities like the Carpenter Center. Every one of these numbers that's on here has tons of backup pages associated with it."
Armstrong will need all the backup pages he can muster. Wilder, who wants the land where Thalhimers once stood given back to the city, says the project isn't viable and vows not to give the foundation any more city money.
"Why hold on to something that isn't going to take place?" Wilder crows. "Why should you hold the city hostage?" S
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