CRA Lends Theater Center $255,000 but Questions Growing Subsidy

Downtown’s 7-month-old Los Angeles Theatre Center, struggling to meet its payroll and debts, on Monday obtained an emergency loan of $255,000 from its principal benefactor, the city’s Community Redevelopment Agency.

While approving the loan, some members of the CRA commission expressed concerns about the growing public subsidy of the $16-million complex and postponed action on a proposed $4.2-million loan package designed to carry the nonprofit theater center through its 1986-87 season. Commission members agreed to try to decide whether to approve the larger loan at their March 31 meeting.

The four-theater performing arts complex on Spring Street is a cornerstone of the CRA’s efforts to revitalize a former booming financial district that deteriorated when banks moved into new high-rises on the downtown’s west end. In recent years, the street has drawn an increasing spillover of derelicts from Skid Row, a block to the east.

Several years ago, the CRA launched a major drive to revive the street that included plans for a huge new state office building, refurbishing old office buildings, developing condominiums, and bringing in new evening activities--such as the theaters.

However, as construction and start-up costs on the complex mounted, the CRA’s commitment grew to nearly $10 million, including a $1.3-million operating subsidy last year. The 1986-87 proposed operating subsidy is $2 million. “This is substantially more involvement than was anticipated by the agency,” said Jim Wood, CRA commission chairman.

Since opening last September, the theaters have attracted audiences by presenting a mixture of stage productions ranging from the classics to experimental. Attendance is running about 5,000 per month or 68% of capacity, which is above projections for the first year, said Bill Bushnell, the theater center’s artistic producing director. But Bushnell said the center has fallen several hundred thousand dollars short in contributions from large corporations and art supporters.

“This was a pioneering venture,” Bushnell said. “There is a reticence in some quarters to accept (that the east side) is a viable part of downtown.”

The center’s cash-flow problems are “serious,” Bushnell said, but not unusual, particularly for a new nonprofit theater. He said he had anticipated that city subsidies would be needed for three to five years with the amounts of money “. . . to be analyzed on an ongoing basis as to what is reasonable.”

But Commissioner Chris Stewart said that when the project was first approved in 1982 the agency planned to finance only acquisition of the building and relocation of tenants. “We never had anticipated operating subsidies” or, as is now the case, holding the first mortgage on the building, he said. “Our position has substantially changed over time,” he said.

CRA Commissioner Irene Ayala said she is concerned about the size of the subsidies and said she was surprised when the theater needed a special loan to carry it for the next several weeks.

Wood and Stewart said they expect a substantial operating subsidy to be approved later this month for the center’s 1986-87 season. But Wood said the commission also intends to hire an independent consultant to review Bushnell’s operation of the center and offer recommendations for putting it in the black.

Despite the center’s financial difficulties, Wood said the city’s investment is not in jeopardy because it is secured by “a first-class theater.”

Wood said the theater complex is helping to improve Spring Street’s image. One sign of this is an improving market for office space in the old bank buildings, he said.