Questions about Civic Theatre funding linger
Rochester City Council member Shaun Palmer went into a meeting with Rochester Civic Theatre representatives about 13 hours after proposing the city reclaim $200,000 in funding.
"Reading the lease, we have no obligation to fund anything for the Civic Theatre, and looking at their finances, I would say we don’t want to," he said Monday night at the end of a council meeting.
While Council President Randy Staver called the proposal premature, Palmer hadn’t changed his mind in the morning.
"I’m ashamed we gave you $200,000, and I sit on the City Council," he told Civic Theatre Board President Jeff Haynes and Sinéad Chick, the theater's director of operations. "I think we were misled. I think we were duped, and I'm just offended by that."
Sitting across the table from the two representatives, he encouraged them to consider reimbursing the city following questions about the organization’s financing.
Haynes acknowledged that the Civic has seen significant financial challenges recently, saying the majority of the problems became evident in June, following unclear financial reports.
Unaudited reports appear to show deficit spending since the beginning of the fiscal year that started in August 2018.
In an attempt to address some problems, the theater obtained a $300,000 unsecured five-year loan last fall and board members pitched in a combined $100,000 — approximately $40,000 in donations and $60,000 in loans.
The loans have raised red flags, since former Civic Executive Director Kevin Miller reportedly opted against disclosing them to the city, despite the private nonprofit organization’s reports of growing dependence on outside support, including annual city funding.
Rochester City Attorney Jason Loos said the loans from sitting board members could cause conflicts for the organization.
"I would see that as a huge conflict of interest," he said.
Council member Michael Wojcik put blame on a lack of board oversight regarding Miller, who resigned last month.
"It’s pretty clear looking at the financials and the history of events that happened that Kevin Miller was a snake-oil salesman. He was a fraud, and he cheated the community," he said, while stopping short of suggesting the city pull all of the organization’s funding.
Wojcik said he’d like to see the theater return $90,000 in funds intended to cover building maintenance costs, which could be overseen by the city. Additionally, he suggested the city take back at least half of the remaining $110,000, which would be held until the Civic is moving toward solid financial ground.
Council member Nick Campion also raised concerns about the delay in discovering problems.
"I’m struggling a little bit to understand when the board said this was a problem," he said.
Haynes said problems came to light over time, but the board has a plan in place to correct financial reports and gain financial footing, with weekly updates and working to create a more "realistic" budget for the year.
"I personally have every confidence we can turn this around," said Haynes, who took over as Civic board president last month.
Wojcik said the lack of reliable numbers point to a need for further investigation by the city. The council members were presented with some balance sheets and budget items at one point, and additional material was posted days later. Some of the items appeared to send conflicting messages about the financial state of the Civic Theatre.
Haynes said some of the confusion in reporting appears to stem from Miller’s lack of understanding regarding the financial software, adding that the organization has relied on volunteer bookkeeping support throughout the years.
Following estimates that $250,000 was spent on professional actors in 2019 and reports that bills, including November and December payrolls, were missed or late during the year, members of the council’s Outside Agency Oversight commission said more information is needed.
"We are going to need to get continuous updates before we can get a true final opinion on what’s going on," Wojcik said.
The council members scheduled another meeting to discuss the issue at 9:30 a.m. Feb. 12 in Room 104 of City Hall.
During the meeting, they said they want to review continued disclosures, as well as potential models for funding and ways to see a return of funds for possible monthly distribution.
City Administrator Steve Rymer has suggested that alternate models could end funding for the Civic Theatre.
"We should look at ways of sustaining performing arts for this community," he said, noting that it doesn’t mean sustaining the organization that has operated in the Mayo Civic Center for decades.
Wojcik said recent operational changes, as well as work done by the city’s Civic Music Department, could provide options for reducing costs for performing arts options, while also adding options for a growing number of local theater programs.
Looking at options could ensure programs are supported and city funds are spent properly, he added.
"A big part of this for me is risk mitigation for the city of Rochester," he said.