Rochester Civic Theatre’s finances are improving.
“It’s not a clear bill of health, but we seem to be in recovery,” Rochester City Council member Nick Campion said following a committee review of the finances Tuesday.
The nonprofit performing arts organization, which operates out of the city-owned Mayo Civic Center, was put on notice last year, and the City Council considered ending its lease after several financial concerns were cited by the council’s Outside Agency Oversight Committee.
Campion, who is chairman of the committee, said Tuesday he expects addressing the issues will require a multiyear effort, and that a key concern is a $300,000 unsecured loan the organization received..
Additionally, reports of unpaid bills had begun to circulate early last year, and personal loans were made by board members to help balance the books.
In response to the concerns, the theater organization named Misha Johnson as interim managing director last year. On Tuesday, she was joined by the nonprofit's accountant, Erich Heneke of Heneke Business Consulting, to outline improvements.
“We’ve really made tremendous strides in the last year in righting the ship,” he said.
What happened: The Rochester City Council’s Outside Agency Oversight Committee reviewed the latest financial reports for Rochester Civic Theatre.
Why does this matter: The nonprofit theater organization occupies space in a city-owned facility, and past financial struggles had led to the City Council to put the organization on notice.
What's next: The Civic Theatre will continue to work on concerns and the council’s committee will continue to review progress.
He said the organization’s 2019 fiscal year ended with its cash accounts overdrawn by nearly $60,000, and the 2020 fiscal year ended with a cash value of nearly $45,000 in hand.
The organization is approximately six weeks from closing its 2021 fiscal year, and Heneke said the cash balance should remain near the same level.
However, he said the organization has been able to catch up on most of its unpaid accounts from 2019 and early 2020.
He said one larger account remains unpaid, but payments are scheduled.
“Everything else, with very few exceptions, is current debt and current obligations,” he said of any active accounts with vendors.
According to the 2020 audit, the accounts payable totaled $123,270, which was down from $152,158 the previous year.
Heneke said the preliminary 2021 financial report, for the fiscal year that ends in July, indicates the amount owed will be reduced to a third or a quarter of what was reported a year ago.
Among payments being made are $5,500 a month for the $300,000 loan cited as a concern last year.
Dale Martinson, the city’s director of finances and information technology, said the debt was the greatest concern in his review of the audit. Payments, so far, have not included interest, but interest will be added in July with $277,182 remaining to be paid.
The Civic has applied for two federal grants — $40,000 for employee retention credit and $300,000 for shuttered venue operations — that could be used to pay all or part of the loan, according to Heneke.
Johnson said the organization expects to hear whether the grants are awarded or more information is needed within the next six to eight weeks.
Heneke said the application and approval process is time-consuming since thousands of organizations are seeking help throughout the country.
“Everything we have seen indicates what we have applied for is what we qualify for,” he said, adding the grants could pay off the loan or fund future operations.
The theater organization has also received a pair of federal Paycheck Protection Program loans for nearly $80,000 each, and Heneke said a portion of the first loan was forgiven last year and the remaining amounts are also expected to be forgiven.
“I’m totally impressed with the turnaround financially,” council member Mark Bransford said, adding that he has participated in Civic Theatre performances in the past.
Johnson said the changes aren’t just financial, noting the group has embraced the Civic Center’s new “one-roof” model, which has organizations in the facility working more closely with each other, as well as community groups.
“We want to be an asset to Rochester nonprofits,” she said, adding that several other organizations have held activities and programs in the theater as COVID restrictions have been lifted.
“It’s not just about the theater anymore,” she said.