Why the Performing Arts Center Is Coming Back Looking for Another $10 Million

BY GRAHAM HAWORTH

The futuristic-looking Performing Arts Center cost about $30 million to build, and when it opened in September of 1996 it was hailed as one of the best concert halls in the western United States.

Every season since has been hailed as a success, with more events drawing bigger crowds than expected.

It’s an unmitigated success story in every way but one: Less than four years after opening the Center, PAC officials are back looking for another $10 million to keep the county’s foremost concert hall solvent and pointed toward the future.

What happened?

The construction costs were higher than originally anticipated, for one thing. To make up the deficit, money was taken from the PAC Endowment. The Endowment was established to set aside monies for general upkeep and improvements in equipment, furnishings, and acoustics. It was also supposed to provide enough money to take care of any extra operating costs.

The decision to hand over the endowment money is now haunting the three partners who run the center–Cal Poly, the City of San Luis Obispo, and the Foundation for the Performing Arts Center (FPAC.) In fiscal 1998—99, the PAC wound up with a $39,236 deficit after the partners split the operating costs; before, the deficit was closer to $450,000. If the Endowment were still in place, it would have generated enough revenue to cover these operating costs.

PAC officials don’t seem too worried. According to Cal Poly vice president for administration and finance Frank Lebens, it was known from the beginning that, without an Endowment, operating costs would leave a deficit. The plan now is to re-establish the Endowment so the partners won’t have to continue making up the operating costs at the end of every fiscal year. Currently, the projected annual average deficit stands at about $500,000.

"Nothing has changed," said PAC managing director Ron Regier. "We’ve always been running on a shoestring budget." If the PAC is fully booked all year and sells out a lot of its shows, how can this be?

First of all, the PAC isn’t supposed to make money; it’s a nonprofit organization. The Center’s goal is to support itself through rental fees and ticket surcharges so that FPAC and the City don’t have to make up deficits. If there’s a deficit at the end of the year, the FPAC and the City of San Luis Obispo cover it. Since the PAC itself doesn’t share the financial risk of an event, neither does it share any financial reward.

A long-term campaign is in the works to replenish the depleted Endowment for the PAC. According to Michael Morris, president of FPAC, the Endowment needs at least $10 million to produce sufficient revenue.

"It’s a rather daunting task," said Morris, "but we have to take it on."

A couple of easy ways to make money for the Endowment would be to raise the rental fees and ticket prices. According to Morris, however, these aren’t options.

"The PAC’s aim is to serve the community," said Morris. According to him, the PAC’s rental fees are comparable to other centers of the same caliber, and ticket prices are kept low to attract the community. Raising rental fees or ticket prices could prevent some shows from coming to the PAC, including such local events as the SLO Symphony, the Mozart Festival, and the Vocal Arts Ensemble.

As president of FPAC, Morris’s oversees the Endowment’s fund-raising. So far, he said, there is only about $350,000 in the Endowment. Fund-raising events include an annual FPAC Ball like the one that was held recently, and benefit concerts throughout the year.

"Endowments are a long-term thing," said Morris. "It’s a long-term plan to maintain the PAC into the future. We don’t want to keep holding fund-raisers every year to make up the deficit." The reality of the situation is that raising enough money for the Endowment will take up to 10 years. Until that time, the partners will have to continue making up the deficit

Morris said that donations from the community are always coming in, but it would be nice to see more. Another source of income for the Endowment is bequests from estates. While Morris and the rest of the PAC officials would rather see patrons alive and attending shows, some of the bigger donations are bequests left to FPAC by members of the community who have died.

Adding to the growing deficit has been a lack of up-front subsidies provided by the three partners at the beginning of every fiscal year. The City and FPAC provided $65,000 each, while Cal Poly coughed up $260,000 in up-front subsidies. According to Regier, these numbers just weren’t cutting it.

Enter John Dunn, SLO’s city administrative officer, who chairs the Central Coast Performing Arts Center Commission. This commission shares authority over budgetary matters with Cal Poly president Warren Baker. Dunn has been saying from the beginning that the three partners need to contribute more in up-front subsidies. He has prompted the partners to increase their contributions, suggesting that the city and FPAC raise their donations to $100,000 each and that Cal Poly give $300,000 up front. This would give the PAC an extra $110,000 at the beginning of each year.

The shortfall can be said to stem mainly from the depletion of the Endowment when the PAC was first built, on the one hand, and the insufficiencies of each partner’s advance subsidies, on the other. Both parts of this problem are being addressed.

Had the Endowment been kept in place, the revenue it produced each year would have covered most of the deficit.

"The PAC would never have been built except for the unique partnership between the City, the University, and the Foundation," said Dunn. "Together, we’ve created a treasure. Now we’ve created it, we have to maintain it into the future. This is proving to be the more difficult part." Æ

Graham Haworth is a New Times intern and Cal Poly student.