Dance Gallery Loses $500,000 Funding Pledge

Due to a disagreement over funding policy, a pledge of $500,000 from the Times Mirror Foundation to the downtown Dance Gallery has been withdrawn.

In addition, Times Mirror Foundation representative Charles R. Redmond has resigned from the board of directors of the Dance Gallery, the long-planned, oft-delayed $20-million cultural project intended to be part of the California Plaza development on Bunker Hill.

Redmond, who is senior vice president, finance and administration, for Times Mirror, said that the foundation’s money was withdrawn because “the character of the (Dance Gallery) project has changed to the point where the pledge was made on one set of facts and now there’s a new set of facts.”

Previously, the facility was scheduled to be built at 4th Street and Grand Avenue. But fund-raisers were unable to meet a June 30 deadline (imposed by the city’s Community Redevelopment Agency and the California Plaza developer, Bunker Hill Associates) to have all the budgeted $20 million in hand. As a result, that site is no longer available.

While discussions proceed on another location for the Dance Gallery, new methods of funding are being sought to secure the $6 million needed to complete the project. According to Redmond, it was the Dance Gallery board’s plan to issue more than $10 million in tax-exempt bonds to provide cash for construction that led to his resignation.

“They’re proposing now a debt structure (the bonds),” he said. “Debt has to be serviced. First of all, you have to pay the interest on it and that puts an obligation on future boards to pay for the project, pay for the ongoing operation and also the service of the debt. And debt also has to be paid off, and so it forces another obligation and I just felt that from the financial standpoint, it was unwise to proceed this way.”

He said that the Times Mirror Foundation would be willing to consider a new funding proposal.

Actress Barbara Bain, chairwoman of the 35-member Dance Gallery board, said that she intends to submit such a proposal once a site is confirmed and funding strategies finalized. Bain said that other major donors have not withdrawn from the project.

Dance Gallery board member Royce Diener, chairman and chief executive officer of American Medical International, defended the bond financing plan as a response to “a set of conditions that were imposed on the Dance Gallery, by the CRA and Bunker Hill Associates, that were unprecedented--the requirement to have all the money up front in cash before any construction could begin.”

“That put an unrealistic time frame and constraint upon the Dance Gallery’s fund-raising. I fully expected to miss the deadline on the first site.

“I’ve worked in the field of finance nearly all my life and there’s a great deal of precedent in not-for-profit projects of bond or mortgage financing,” Diener said. “It makes sense, and we made a very thorough, careful economic projection, based on past levels of fund-raising, toward what would be resonably expected in the future. It worked out better than the covenants of the bond financing would have required.

“The bond is a 10-year bond, which is an extremely easy schedule to live with,” he said, “and we expect to raise the funds (to retire it) in three or four years.”