MAKING THE CAPITOL THEATRE DISAPPEAR
Seriously, I don't get it. What has happened over the last month since the February 19 Council meeting. On Friday afternoon the Star reported:
- "Francis said there are still too many outstanding questions to be answered.
“I think there’s a number of questions that need to be answered and some legal questions as well,” said Francis. “You had the Capitol Theatre indicate this week that they were insolvent. If they are insolvent, they are insolvent, and that raises a whole number of issues that need to be dealt with.”
Francis said the city has forwarded a letter to the theatre’s legal counsel requesting a full list of both unsecured and secured creditors.
“Who do they owe money to and what is the level of indebtedness?,” said Francis."
This comment is an absolute indictment of the Mayor and his lack of attention to urgent City matters. He is supposedly a micro-manager and he should have ensured that Administration did what Council required: to "prepare a further report within 30 days to update Council on the due diligence review." What have they done? It seems that the Mayor knows nothing, even the most basic information. Or was that the intention all the time?
But then again, I forgot that it is the CAO that has the real authority at City Hall and Eddie is a mere figurehead.
Anyway life has a way of putting everything in its place. If the Capitol closes on Friday, it is fitting that its last show was a Magician who made it all disappear. The language from his ad was interesting and appropriate too. Let's hope there is some magic
THE CLEARY DISAPPEARED TOO BUT GLEN MURRAY DID NOT
I wonder how many PR types and sloganeers worked on this project. The Cleary clearly had to have a new name since St. Clair took it over on Friday and it does:
St. Clair Centre for the Arts
Brilliant. Very imaginative.
And for one of the best magical performances ever, Eddie made Glen Murray disappear (He and Diane Francis were part of the "Looking Forward: Windsor’s Future in a Changing World" session that was postponed by Eddie until who knows when) but then made him re-appear months later.
On MAY 10-12, 2007, Eddie is hosting Southwest Economic Assembly--representatives from businesses, industry, chambers of commerce, colleges and universities, municipalities, development agencies and other governmental organizations.
Actually, it is a one day session on the 11th (but with an Essex County Winery Tour and Dinner or a Canadian Club Brand Heritage Centre Tour and “Mystery Night at Willistead Manor” option).
On the 10th, there is a “A Taste of Windsor” Reception with wines of the area, listening to the talented local musicians (except for those who practised at the Capitol) and eating a variety of delicious appetizers (leftovers from the previous Council meeting).
On the 12th, there is a Guided Tour of Odette Sculpture Park.
The May 2007 Assembly will feature internationally recognized experts, who will address our future vision in trade and manufacturing, tourism and culture, agriculture, and the knowledge economy. That's how Glenn Murray is made to re-appear. He is a Keynote speaker. BUT not Diane Francis. The other speaker is Michael Gallis, an expert in large-scale development strategies and in regional planning.
Two matters of interest.
First the cost---not ten bucks like that money-losing forum in Windsor that Eddie postponed but for a Delegate:
a) Thursday Pre-Conference Event and Friday Assembly only---$275
b) Full 3-Day Conference Program $300
The good part is that Mayors, Wardens, MPP's and MP's are "no charge."
Sorry Councillors, you are irrelevant and have to fork out the cash! The Senior politicos can free-load without taxpayers getting mad and so that lots of them can come for a free meal. (Who pays the expenses though if there is not enough "private enterprise" money that comes in from delegates to subsidize them.) No Tigers game tickets though, at least not so far unless the Detroit Consulate comes through again.
Secondly, and you thought Eddie was not a good planner, what a wonderful kick-off event for his Provincial election campaign. Good publicity with the local folks and, when he wins, why he'll be the buddy of every politician in SW Ontario and be their spokesman at Queen's Park, or so he'll tell them. And no local Councillors to share in any of the good publicity and glory.
Now do you understand why we had the "prequel" meeting in September, 2006 where "Windsor [hosted] a planning meeting...to discuss the future activities and plans of the Assembly."
IT'S A DIRTY JOB BUT SOMEONE NOT THERE HAS TO DO IT
I had thought that Councillor Halberstadt was smarter than that. Had he lost his mind? Why become the Operating Budget Chair after an election budget when you know taxes are going up! You will take the hit for it no matter what the increase is. Like Alan, haven't you learned never to volunteer!
I heard a scratching noise at my door. It was my inside moles with a big scoop! Alan did not volunteer for the position. He was not even at the meeting since he was sick! But he was appointed Chair at it.
Talk about guts, where was the Councillor formerly known as Councillor Budget. Why didn't he take on another year as Chair? Why not someone who was AT the meeting , why didn't one of the others remaining step forward. How convenient that Alan was away.
So expect a nice increase. And guess who will be blamed: Alan. And guess who can say that taxes were kept low when he was Chair: the Councillor formerly known as Councillor Budget.
The politics are that the Councillor formerly known as Councillor Budget had to get out fast knowing there was an increase so he can consider running for Mayor even though he said he never would. He has NO chance but the idea is to discredit Councillor Halberstadt so that the only choice remaining is Councillor Valentinis who gets the Mayor's job handed to him on a silver platter when Eddie leaves.
If you were Councillor Halberstadt's political advisor, would you suggest that he give back the Chair position and have another vote? Frankly, that would be my advice.
But if I know Alan, he won't do that. He will take it on and slug it out to reduce the tax increase as much as he can. So if that is his choice, I, as his advisor, would tell him to use his BLOG as a weapon and explain all of the inside stuff as to why taxes are going up so he won't take the blame for it. Let Windsorites know what is really going on behind closed doors. Let them judge who is a coward and cannot stand up to make the tough decisions
That will show them to take on a Blogging politician!
A CAPITOL THEATRE PRESS RELEASE
I thought it would be interesting to post it since I do not remember the Star publishing it. It certainly sets out the Capitol's version of the facts! And what is the bequest of $200,000 all about and who would get that if the Capitol went bankrupt?
I am surprised also that Ken Lewenza Jr. has not jumped on-board and supported the project since it costs only $1 per citizen. That's how the Councillor likes to simplify costs issues for us dumb folks who cannot do math calculations.
If you read to the end, why is bankruptcy needed since it looks like the Board is willing to resign and give over control to the City. I wonder if it has to do with those Capitol employees and who will take the blame for getting rid of them.
- PRESS RELEASE
MARCH 6, 2007
The City recently passed a resolution agreeing to lend the Capitol $65,000 subject to obtaining a first charge on all of the assets of the Theatre. It has been reported that IndCom Leasing Inc. (IndCom) is refusing to postpone the security it holds, in favour of the City, thereby thwarting the City’s attempt to assist the Theatre.
In order to understand the impasse that exists, it is necessary to revisit events of the past.The Windsor Star recently reported that the City “loaned” the theatre $1.83M at the time that the theatre was undergoing its initial renovation. This information is inaccurate. The assistance provided by the City was in the form of a grant, or gift, not a loan. The City’s support was augmented by large grants provided by the Provincial and Federal governments to allow the renovation to be completed. Unlike the other two levels of government, the City registered a charge or lien against the property to insure that the City would retain control of the property in the event that the Capitol were to fail.
The local bingo industry has been in decline for a number of years. The Capitol was able to adjust it’s operations to contain expenses to within revenues up until last summer when the number of licenses the City permitted the Capitol was drastically reduced with the result being a $500,000 reduction in revenues. A committee to the Board of the Capitol initially met with the City last August to advise the City that the decline in revenues would cause great hardship and that the theatre would be forced to close if a solution could not be found. Subsequent to this, additional meetings with the City took place, however, with the municipal election approaching, John Skorobahacz advised that the City could not proceed further until after the election when the new council was in place.
At this point, the Capitol’s financial position had become dire. The theatre was within a few days of having to close when IndCom agreed to provide a $50,000 loan to keep the theatre afloat until the new council was sworn in and the City could complete further due diligence. This loan was as much a good faith accommodation to the City to allow it further time to get a new council in place and complete it’s due diligence as it was to the Capitol. The loan was made at below IndCom’s cost of funds so there was no profit to be made on this transaction.
On January 29th of this year, during an open session of council, the City passed a resolution stating the following:
“ That City Council ACCEPT the transfer of the operating entity known as the Capitol Theatre and Arts Centre (Windsor) along with the transfer of all capital and current assets of the organization to the City of Windsor for the purpose of preserving this community cultural asset: and
That the Chief Administrative Officer BE DIRECTED to work with the current Board and staff of the Capitol to bring about an orderly transition and dissolution of the operation with full disclosure to the Chief Administrative Officer; and further,
That the Chief Administrative Officer BE DIRECTED to perform due diligence on behalf of the City and bring back a report to Council regarding costs associated with the facility, options for it’s future use, as well as suggestions for a new Board, with input from the Arts Council Windsor & Region and the various Theatre/Artists groups who utilize the facility.”
This came about after questioning by council, in an open session, about the theatre’s debt position, including the IndCom debt, and the likely cost of supporting the theatre going forward. During the discussion, IndCom made it clear that it was not looking for the immediate payment of the loan it had granted and would be completely willing to work with the City. A number of possible options were suggested.
While Council passed the resolution on January 29th, they did not pass a money bill. This did not occur until February 19th at which time the following resolution was passed.
“That APPROVAL BE GIVEN to advance a loan in the amount not to exceed $65,000.00 to the Capitol Theatre, to be secured by a General Security Agreement registered as a first priority against the assets of the Capitol Theatre; and further, that Administration prepare a further report within 30 days to update Council on the due diligence review.”
Of all the possible options that IndCom had suggested, the council knowingly passed a resolution that they were aware, or should have been aware, would not be palatable to IndCom. This is considered to be heavy-handed treatment of a corporate citizen. It is doubted that a similar request would have been made of a bank had it been the lender.
The City has a lien on the Capitol’s land and buildings while IndCom has first position on other assets, being primarily the equipment. According to the theatre’s June 30th, 2006 audited financial statements, the cost of the land and buildings are on the books for $8.75M while the original cost of the equipment was approximately $650,000. In a forced sale situation, the realizable value of both classes of assets would be much lower. If IndCom were to postpone its security, it would quickly find itself in a virtual unsecured position should the City decide to advance additional funds beyond the $65,000. On the other hand, except for a small amount of property tax arrears, the land and buildings are owned free and clear. There is ample value to secure any funds that the City would choose to advance, without the need to have a first position on IndCom’s assets as well.
The City has not made a meaningful commitment to the Capital. With payables of $140,000, the $65,000 that the City has approved would only be sufficient to pay the most pressing accounts and cover a payroll. The Capitol is not asking for a “blank cheque”. Since August of last year, the Capitol has provided the City with financial statements and cash flow projections. Year over year our bingo revenues will be down approximately $500,000. To offset this, salary expenses have been reduced by in excess of $100,000. Allowing for normal growth in other expenses, the annual shortfall would be no more than $450,000.
The Capitol has been named as the beneficiary of a bequest in the amount that is believed to be in excess of $200,000. The Capital has been awarded a $140,000 grant under the Ontario Government’s Trillium programme. The grant is to be used to fund the hiring of an individual to perform outreach and there would be fundraising responsibilities associated with the position as well. Considering the bequest, the net cost to the City over a twelve month period would be no more than $250,000 and this amount would be further reduced by any success the fundraising position would realize.
In summary, the cost to the City for a twelve month period would be no more than about $1 per citizen. The City should commit to this period of time, which would give it ample time to evaluate the theatre and, perhaps, bring other interested parties to the table.
The Capitol needs to maintain it’s charitable organization status. Such status, allows the theatre to obtain grants and continue to operate fund raising activities such as bingos and other charitable events. If the City took over the entity this would be lost and the Capital would lose the Trillium grant. Maintaining charitable status is the most effective and tax payer friendly approach as it allows the theatre to maximize its revenue possibilities.
The Capitol board, at it’s March 5th meeting, requested that the City provide a grant instead of the loan that council had authorized. So, why a grant instead of a loan? In short, because the Capitol would be unable to repay a loan. The board is charged with the responsibility of ensuring that any contracts that theatre management enters into, it has the capacity to fulfill. The board is aware that the Capitol is currently in an insolvent position. For the board to continue to allow management to enter into contracts, be they with user groups or with the City, knowing that there would be a default, could result in individual board members becoming personally liable. For this reason, a grant is the only option. The City supports both the Art Gallery and the Windsor Symphony with grants. The Capitol wishes to be treated the same way if the City truly believes that it is a “community cultural asset” worth preserving.
A review of the City’s 2006 budget suggests that the City allocates approximately 2.1% of its budget toward Culture & Recreation. Similar reviews of the budgets for London and Kitchener reveals allocations of 6% and just under 11% respectively. Included in the London expenditures is a grant to the Grand Theatre in the amount of $480,000. While we may not be comparing “apples to apples” in each situation, due to the way certain budget items may be classified, nonetheless, it is safe to say that the City could do more. Investments in this area are community enhancements and improve the image and “livability” of the City. With the Cleary issue now resolved and the Canderal costs coming down, the City has the capacity to assist but it is not clear that they have the will.
The City either has not been forthright in its dealings with the Capitol board or has no plan, despite the fact that it has been in excess of six months since the theatre’s problems were first brought to their attention. It is difficult to believe that this gem of a property, which has few equals nationally, would be allowed to sit idle and deteriorate. What is really required here is for council to reconvene, take a close look at the cost and benefits of the theatre and make a decision. If they choose not to support it, so be it. If they choose to support it, they should provide a grant sufficient to carry operations for 12 months. They have people available on their staff to manage it and the board should be replaced to allow for fresh start.
John R. Funnell
President of the Board of Directors
Capitol Theatre & Arts Centre (Windsor) - NOTE: Subsequent to issue of this press release, Mr. Funnell resigned from the Board of Directors of the Capitol Theatre due to the conflict he had. Upon resigning he made a personal donation to the Capitol sufficient to enable the Capitol to repay the IndCom loan. Indcom then discharged its General Security Agreement clearing the way for the City to obtain the security it required to advance the $65,000 loan.
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