Escrow Closes on LATC- L.A. Deal : Theater: The city Department of Cultural Affairs has acquired the downtown complex, but questions remain over its financial survival.

The city Department of Cultural Affairs was to have become the legal owner of the downtown complex that houses the Los Angeles Theatre Center by this morning, but the city’s new downtown stage complex is afflicted by continuing cash problems that threaten the LATC’s survival.

Adolfo Nodal, director of the cultural affairs agency, said on Monday that he is optimistic that the LATC can overcome what nearly all observers agree is a critical and potentially fatal cash-flow imbalance. But Nodal predicted that the next year will be difficult.

“I would say this next year is going to be their toughest year since they opened,” Nodal said. “We’re all very hopeful that they’re going to pull through, but it’s going to be very rocky.”

The theater center’s money woes, which have been ongoing since it opened six years ago, have been exacerbated by deterioration of the general economy and the LATC’s inability to raise $75,000 per month toward the costs of maintaining its building. The theater center agreed to come up with the maintenance money under a deal with the City Council that led to city purchase of the building.

That deal was struck as a result of recommendations last October by a special study commission appointed by Mayor Tom Bradley. The commission recommended that the city buy the complex and provide ongoing subsidy funds to maintain the structure.

But political problems with the council made the subsidy agreement impossible to conclude. In the end, the LATC board accepted responsibility for raising the maintenance funds--despite predictions that it would find the added financial obligation difficult to fulfill.

Earlier this year, LATC officials cut the budget for the 1991-92 fiscal year to $6.6 million--about $1 million less than last year, and vowed to increase earned revenue by 9%. Among the cost-cutting measures were suspension of new play commissions, six fewer days of technical and dress rehearsals for mainstage productions, a salary freeze, reductions in travel costs and the elimination of 16 staff positions.

Virtually all observers agree that no new appeal to the council for additional city subsidy money would stand any chance of success. Under the terms of the agreement with the council, both the LATC and the cultural affairs department agreed not to seek new city funding.

As part of the escrow, the CRA transferred to the Department of Cultural Affairs a $450,000 lump sum earmarked for major repairs to the LATC complex. Nodal said Monday the money would be left unspent for the moment pending review by his agency.

Several weeks ago, the LATC appealed unsuccessfully to have the Department of Cultural Affairs advance all of a scheduled $150,000 budgeted by the city to help underwrite productions by outside groups at the LATC. Instead, the city turned over $68,000 to the LATC. The amount includes just $22,000 of the production underwriting funds, as well as proceeds of cultural affairs agency grants to the LATC that had been previously approved.

The closing of escrow for the LATC structure at Fifth and Spring streets was to occur when the Community Redevelopment Agency paid off $5.25 million in bonds floated to finance construction of the LATC in 1985. The complex now becomes a facility of the cultural affairs department, which would be responsible for finding new operators if the theater center is forced to vacate the four-stage, internationally acclaimed facility.

LATC is known to be seeking an operating partner for the facility--perhaps by forming an affiliation with a college or university-based theater program. However, no negotiations are under way for any specific relationship, according to sources familiar with the situation.

The escrow closing was delayed nearly a week after the Department of Cultural Affairs balked at completing the deal because of growing fears that the theater center might not have the liquidity to survive more than a few more months. A short-term failure, the cultural affairs department contended, might leave the city stuck with a theatrical white elephant for which no new operator could be found because of the combined effects of the recession and the failure of the CRA to complete a series of projects intended to help Spring Street reemerge as the cultural nucleus of downtown Los Angeles.

Nodal and Bill Bushnell, the LATC’s artistic director, declined to discuss the escrow closing delay. It was learned, however, that the theater center has experienced worrisome new accumulations of unpaid bills during the last few months and that its short-term balance sheet reflects acute problems with paying suppliers, settling past-due bills and maintaining normal operations. The center is thought to be about $1 million in debt.

The LATC is believed to be within days of receiving a major grant from the National Endowment for the Arts. Last year, the theater center got $65,000 in general operating support from the NEA. The theater center reportedly expects a modest increase for the 1991-92 fiscal year.

Bushnell reportedly intends to ask the downtown-based Atlantic Richfield Co. for accelerated payment of $200,000 in grant money that LATC is due to receive in the first quarter of 1992. However, an ARCO spokesman said Monday the company’s usual practice precludes such early payments and discounted the possibility that LATC will be granted an exception.

Last week, LATC announced a massive overhaul of its upcoming season. Three productions were deleted from the schedule, and two smaller-scale replacements were named, with the promise of a third replacement to be announced in the future.

Bushnell said one of the canceled shows, “The Comedy of Errors,” “seemed a little extravagant” in the current fiscal climate.

Single ticket sales for LATC productions are believed to have improved somewhat in recent weeks, but renewals of season subscriptions have lagged badly.

The LATC is operating only two of its four stages.