The city of Toledo is giving nearly $70,000 to the Valentine Theatre, which may help offset the downtown landmark's $150,000 operating debt.
City council is expected to pass a measure at its meeting Tuesday so it can forward the money - interest income from city funds pledged toward the construction of the theater - to the group that operates the theater and the Valentine's endowment fund.
Jim White, chairman of the board of the Toledo Cultural Arts Center, Inc., which runs the theater, said the money would help to “shore up our operating deficit.”
The debt is about $150,000, he said.
The plan before council calls for the arts center to get $10,000 and the endowment fund about $59,700.
Mr. White said the money won't solve the theater's budget woes, which he expects to continue until the theater passes its early years, but it will help. “There still will probably be a shortfall. But again, we're still on the start-up phase. As we get more bookings, more productions, we hope the deficit will shrink,” he said.
Until the theater's $5 million endowment fund is fully funded and the theater is able to collect a full year's worth of interest off that fund, an annual operating debt is likely, he said. So far, more than $4 million has been collected for the endowment. The remainder is outstanding pledges, Mr. White said.
How much the fund might earn would depend on the interest rate the board is able to secure, he said. A rate of 6 per cent to 9 per cent was a realistic expectation, he said.
Theater officials approached the mayor and council President Peter Ujvagi this year about making a donation to the renovated theater's first birthday celebration. The city agreed to give $10,000. The city always has supported the theater as an anchor of its ongoing downtown revitalization program.
The state recently returned the $69,706 in interest to the city, and council and the administration agreed to make the donation from that money. Later, they agreed to forward all the interest to the theater.
The state had been holding the interest since 1998. That year, the city committed $1 million of its Toledo Edison compact money toward the theater's construction.
The move to put the money on account in Columbus enabled the state to award construction contracts for the theater's renovation while the Valentine awaited an expected $3.5 million in state money for the project.
The city asked Toledo Edison to forward $1 million of its compact money for that year to the arts center, and the center sent the money to the state, said Arturo Quintero, Mayor Carty Finkbeiner's executive officer.
The $1 million was the city's “good faith money,” Mr. Quintero said, so if the state funding did not come through, money would be on account to back the construction.
The agreement was that once the state money was awarded to the project, the $1 million would be returned to the city, which it was in May, 1999.
At that time, the state told the city the $1 million earned interest, which it would return at the end of that fiscal quarter on June 30, 1999, Mr. Quintero said.
The state, however, did not return the interest and the city forgot to follow up on it, so the money stayed on account with the Ohio Arts and Sports Facilities Commission and continued to earn interest, he said.
City auditor Dan Hiskey said Mr. Ujvagi asked him to track down the interest.
Mr. Hiskey said he located the money, and he and Mr. Quintero worked together to get Edison and the theater to sign off on its return to the city. The state sent the money to the city about six weeks ago, Mr. Quintero said.
Both sides agreed to use $10,000 for the donation to the Valentine's first anniversary. But council and the mayor disagreed on what to do with the remaining $59,700.
The mayor wanted it put into the administration account, while council wanted the money in its account, Mr. Hiskey said.
Eventually, they agreed to put the money into a miscellaneous city account, Mr. Hiskey said.
Theater officials hoped the city would give all the money to the Valentine, but the mayor didn't want to do that, Mr. Quintero said.
Council was not opposed to giving the theater all the money, Mr. Hiskey said, because he explained to them that the end of the year is close, and at that time, the money will revert to the budget carryover.
Unless council could find another use for the money quickly, it would end up back in the general operating fund.
Mr. Quintero said Mayor Finkbeiner changed his mind Tuesday and agreed to give the theater all the money, as long as everything over the $10,000 donation was put into the theater's endowment fund.
The mayor wantes the city to use the money to best serve the theater in the long range, not just for current expenses, Mr. Quintero said.