S.F. Festival 2000 Faces Bankruptcy : Arts: The Bay Area event played to generally good reviews, but ran up $500,000 in debts. The city has promised to bail out local artists.

The next performance of Festival 2000, the Bay Area’s three-week multicultural artistic venture that staged hundreds of shows and arts events but ran up $500,000 in debts, could be in bankruptcy court.

Today, the festival’s 11-member board of directors is expected to announce what many in the arts community here already anticipated: a declaration of bankruptcy despite a $100,000 city bail-out of local artists owed money from the festival.

Susan Cushing, festival general manager, said Tuesday that bankruptcy will be either liquidating the assets under Chapter 7 or reorganizing the debt payments under Chapter 11. Cushing said that with slim possibilities for raising new funds, liquidating the assets under Chapter 7 seems most likely. “Today, we have about 200 creditors,” she said, “the largest the San Francisco newspaper group, which is owed $29,000 to $30,000 for advertising.”

The final performance, however, won’t be played out until reviews of the city’s financial controls and the festival’s expenditures are completed.

Audiences and critics were generally pleased with the festival’s artistic flavor, which included such acclaimed events as “Gospel at Colonus,” “Uncle Tom’s Cabin” and “Praise House.” But one week into the Oct. 6-28 program, the $2.3-million festival suspended operations for lack of funds. Most of the performing organizations went on with the show anyway.

Al Williams, vice president of the festival’s board of directors, is now considering several options: “We are going to review the events of the past several weeks, and make a determination as to the course of action of the festival relative to ongoing fund-raising efforts and to a legal solution--whether and when to file for bankruptcy,” he said. “I’ll be making a recommendation to the board as to where we should be going. At this point, I’m not at liberty to divulge what the recommendation will be.”

Most local artists involved with the festival will have their fees and expenses picked up. Two San Francisco agencies--the Grants for Arts Program and San Francisco Arts Commission--have decided to bail out about two dozen individuals and arts groups not fully paid for their festival participation.

Totaling about $100,000, the money should shore up all local unpaid financial contracts, according to Kary Schulman of the city’s Grants for Arts Program. Unpaid, though, will be national groups which participated in the festival and are owed monies, such as the American Indian Dance Theatre, which, according to Williams, has $25,000 coming. Efforts are being made, he said, to raise money for unpaid national groups.

Producer Barbara Schwei said the American Indian Dance Theatre has engaged a lawyer in San Francisco. “We have been told that we will have some sort of answer from Festival 2000 by this Friday. And if we don’t, we will be forced to proceed with legal action.”

The city money will be earmarked for local artists. Grants for the Arts bail-out funds will come from the city hotel occupancy tax, which ironically generated $600,000 less for the agency this year as a result of tourists staying away after the 1989 Bay Area earthquake.

Terence Hallinan, a San Francisco supervisor, has filed a request for a hearing on Festival 2000 finances. He is specifically interested in how the festival spent the city’s $500,000 seed money and wants a committee to look into what happened and how to prevent it in the future. “Somebody should have been following it all along,” he said.

Festival 2000 officials, meanwhile, still have a messy task ahead of them. Williams said the board faces the daunting task of figuring out what went wrong with the festival finances. But he stopped short of calling for an outside audit of his organization.

“We are now trying to compile as much information as we can on the financial situation. We have attempted to get some pro bono assistance from one of the big-eight accounting firms to help us determine what steps need to be taken,” he said.

“We’re confident the results will show that while there are some things that could have been done differently and perhaps would have minimized the problems, we ultimately feel the analysis will show the festival staff and board operated in a principled and above-board manner throughout the festival,” he said.

Williams said that the arts community also plans to form an ad hoc committee that will hire an outside consultant to evaluate the festival’s operations.

City officials, however, continue to accentuate the positive.

“There were exactly two events that wound up not happening,” Schulman said. “One was a touring company that decided not to come here and perform, and the other was an event in Oakland. Everything else went on as scheduled. I think that’s a great testament to the city’s artists . . .

“The festival was certainly a risk, but it was a risk worth taking,” she continued. “We will all be learning from this--learning how to do it, not that we should not do it. . . . Sadly, it seems to be the nature of festivals that there are financial deficits.”

In Los Angeles, meanwhile, Peter Sellars’ festival successfully completed its Sept. 1-17 running. Financially, it is expected to “just squeak by,” according to executive director Judith Luther.

“The (San Francisco) festival itself was a resounding creative success,” Williams maintained.

BACKGROUND

Festival 2000 was conceived as a Bay Area multicultural arts festival. Opening with an Oct. 6 gala, the festival encompassed 200 performances and 54 performing and visual arts events. But 11 days after opening, the festival suspended operations when executive director Lenwood Sloan announced the festival was out of funds. As the board scrambled to find additional donations from local arts foundations and individuals, most of the performances went on anyway. The festival eventually came up short $500,000. Meanwhile, Sloan began work Monday at the National Endowment for the Arts, heading a $4.4-million interdisciplinary arts program, with a two-year contract paying him $59,216 to $76,900 annually.