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Shubert Deal Debuts To Mixed Reviews
by Thomas MacMillan | Oct 17, 2013 7:11 am
Posted to: Arts & Culture, Theater, Business/ Economic Development, City Hall
In order to get out of show business, the city plans to pay a theater management company $2.5 million to take ownership of the Shubert.
That deal might turn out to be the cheapest way for the city to keep the 100-year-old city-owned theater running and finance overdue renovations. And it might save the city money in the long run.
Aldermen are hearing that argument from city and theater officials as they consider a deal to sell the Shubert to CAPA, the company that runs the theater. The proposal goes before the full Board of Aldermen for a first reading this coming Monday night.
At least three aldermen aren’t convinced. One, Alderwoman Migdalia Castro, said the deal doesn’t offer enough of a return for taxpayers. She and Aldermen Doug Hausladen and Delphine Clyburn voted against recommending the deal when it came before the Finance Committee last week.
The three in opposition were outnumbered by seven aldermen on the committee who voted to send the deal to the full board for a vote, pending some clarification by the city on two sticking points.
The first sticking point: What happens if CAPA wants to mortgage the theater? And what happens if CAPA then defaults on the mortgage?
The second sticking point: The deal would require the city to bond for $1.4 million next year and make payments over the next 10 years. Can the current Board of Aldermen require future boards to do that?
The city promised to clarify those two issues before aldermen hold a final vote on the proposal next month.
The Shubert will celebrate its 100th birthday next year. The theater, which has a storied history as a test stage for classic Broadway productions, shut down during the ‘70s and reopened in the ‘80s as the centerpiece of a revived downtown entertainment district.
The city took partial ownership of the theater about 20 years ago, and full ownership about 10 years ago. For the past 12 years, CAPA has been under contract with the city to run the theater. The city has chipped in between about $250,000 and $400,000 per year to keep the theater running.
Despite that subsidy, the Shubert has not been able to afford much-needed maintenance. It hasn’t had a major renovation in 30 years and now needs between $7 million and $8 million in repairs and work that would bring it up to code, said John Fisher, the theater’s executive director.
Coinciding with the theater’s “Centennial Plan,” the city is looking to sell the theater to CAPA. The deal would let the city off the hook for the $7 million in repairs and it would allow CAPA to more easily raise money for an endowment.
Working together, the city and the theater came up with a plan for the hand-off—the plan presented to the Finance Committee last week.
In a conversation this week, Fisher offered a breakdown of the money involved in the deal:
• Under the proposed deal, the city would pay a total of $4,545,000 over 10 years, including $2.5 million in capital repairs ($1.1 million of which has already been allocated) and a cumulative total of $2,045,000 in operating support.
• If aldermen don’t approve the deal and the city retains ownership, the city would pay $10,075,000 over the next 10 years. That’s $7,585,000 in capital repairs and $2,490,000 in operating support.
• The deal thus represents a possible savings of $5,530,000 over the next 10 years, according to Fisher.
“Financially, the city saves money and has no exposure going forward,” said Fisher. Meanwhile, CAPA would be able to build an endowment for the theater. CAPA could seek funding from sources that won’t currently support it because it doesn’t own the Shubert. “Some places just don’t fund municipal-owned buildings.”
Mike Piscitelli, deputy economical development administrator for the city, presented the plan to the Finance Committee. Here are the highlights:
• The current fiscal year’s budget includes $1.1 million in capital funding for the Shubert. The city would supplement that with another $1.4 million in the next fiscal year, adding up to $2.5 million. CAPA would be tasked with raising the other $4.6 million needed for physical improvements. $4 million of that would come from the state.
• Over the next 10 years, the city would gradually reduce its annual operating subsidy to the theater, eventually eliminating it entirely.
• The property title would transfer to CAPA as soon as aldermen approve the deal, said Fisher. The sale price: $1.
• The agreement would require the city’s approval if CAPA decides to sell the building. And the deal states that the building has to remain a theater, with at least 150 active nights per year.
• If CAPA violates any of the requirements of the deal, the city would have a “claw-back” provision to re-take ownership of the building.
• Among the physical improvements would be the construction of a new, 200-seat “black box” performance space at the Shubert, in what is now office space. This would give the theater a venue for rehearsals, performances, functions, and conferences, providing another revenue stream for the theater.
At last Wednesday’s Finance Committee meeting, Fair Haven Alderwoman Castro and others began firing tough questions.
Why would the city invest all this money in the theater if CAPA is buying it? Castro asked. “How will it benefit the taxpayers?”
“Two ways,” Piscitelli said. For one, the city would no longer be responsible for capital improvements. “There will always be more that has to be done to the theater,” but it wouldn’t be the city’s problem anymore. Second, the city would eventually eliminate its operating subsidy.
Dixwell Alderwoman Jeanette Morrison raised the specter of the Palace Theater (pictured above), the long-shuttered venue that sits just across College Street from the Shubert. What’s to prevent CAPA from walking away and leaving the Shubert to the Palace’s fate? she asked.
“We’d take it back again,” said John Ward, a lawyer for the city.
“And do what?” Morrison asked.
“CAPA came to us with a business strategy that makes sense to us,” Piscitelli said. “They know how to make it work.”
CAPA has kept the theater in the black for 11 years, even through a difficult recession, said CAPA President Bill Conner. “Endowment money is hard to raise, but we think we can do it.”
If the city doesn’t put up $2.5 million for capital repairs, could CAPA come up with the money? Castro asked.
“If you didn’t do the 2.5 million we’d have to figure out another strategy,” Conner said. “We’re trying to raise $7 million for the building and $4 million for the endowment. We don’t really see another source on the capital side.”
When CAPA owns the building, would the city be able to collect taxes on the property? Morrison asked.
Nope, Conner replied. “We’re non-profit.”
Later, during the committee’s voting session, Castro called the deal “not responsible.”
“We shouldn’t have our taxpayers paying that and especially committing them for so many years,” she said. “We’re paying to get more debt.”
Castro, Hausladen, and Clyburn were outnumbered 7-3, as the committee voted to send the matter to the full board without a recommendation.
A Bad Precedent?
Castro later aruged the deal would set a bad precedent. The city would be giving up prime real estate, and paying for the privilege, she said. “All the non-profits are going to say, ‘You did it for the Shubert ...’”
Castro said the city should handle the theater sale the way it did with the sale of the Martin Luther King School on Dixwell Avenue: by negotiating for a set of benefits to the city.
On the topic of benefits, Fisher said the Shubert brings an estimated $20 million into the city each year in the form of things like restaurant meals and parking fees. The Shubert attracts people to downtown New Haven, which translates into more jobs for New Haven, Fisher said.
Ninigret Partners consultants put the estimated economic impact at $14 million per year. The theater brings 140,000 visitors downtown each year, 79 percent of whom are from out of town, the consultants found. “Shubert patrons represent approximately 32 percent of total downtown restaurant spending in the four-month period of the Broadway touring productions,” Ninagret Partners’ Kevin Hively wrote in a February letter to Kelly Murphy, the city’s head of economic development.
The theater also offers a number of educational and training programs for New Haven public school students who are interested in the arts. It has programs during the school year and during the summer, brings kids into see shows, organizes “master classes” for students when performers are in town, among other things.
“I’ve always been a great supporter of the Shubert. I know it brings economic help to the city,” Castro said. “I understand the process, but it doesn’t add up.”
She said the deal should include provisions for CAPA to eventually pay back the city for some of the money it’s putting in.
“That would make sense if we were a commercial business,” said Fisher. “As a not-for-profit, we have to raise a million and a half dollars every year to operate the theater.” Any revenue goes back into the business, he said. Paying the city back is “not really viable,” not for a not-for-proft and especially not for a performing arts organization, he said.
If that’s the case, then why not sell the theater to someone who can turn a profit on it? Downtown Alderman Hausladen raised that question. “Nobody’s made the case that the Shubert shouldn’t be sold off to anyone at the highest bid.”
Hausladen stressed that he expects to end up in favor of the proposal; he just wants to have more public discussion first.
“There’s an assumption that we’re going to sell it to CAPA and that CAPA is the only one who would bid on it,” Hausladen said. “That’s literally what we’re saying: We’re going to sell it to a non-profit and keep it off the tax rolls. ... I’m going to be in favor of this, but you have to make that case to me on the record.”
Without a full discussion of all the options, “we don’t know what would be best for the city of New Haven,” Hausladen said.
The city hired a consultant, AMS Planning & Research, to provide advice on what would be best for New Haven. AMS found that a new RFP process is unnecessary because CAPA has shown it can operate the theater, they would probably emerge as the most qualified bidder, and a new operator would require several years to prove itself, which would delay improvements at a critical time.
Click here to read AMS’s report.
An appraisal found that the value of the property is the value of the land minus the cost of demolishing the building, Fisher said.
Given the small size of the theater—1,600 seats—it could only be run by a not-for-profit, said Fisher. Almost all theaters of that size are run as not-for-profits, including Long Wharf and the Bushnell in Hartford, Fisher said.
Aldermen will vote on the proposed sale in November.
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1) The theater is unquestionably the best use of the property for economic stimulation; it bring significant visitors to the city whose spending far outstrips our current annual payment.
2) NHI’s number don’t really add up but if they’re in the ballpark, the cost comparison favors sale
The current cost over ten years including deferred repairs would be (($400K subsidyx10)+($8M repairs))=$12M
The city’s projected cost of the transfer is (($2M subsidy)+($2.5M repairs))=$4.5M (oh yeah minus one dollar paid by CAPA)
3) Of course its legal. The BOA makes long term financial commitments all the time; except many of them don’t have a clear payback like this one.
4) The risk is that we might be back in the same boat if CAPA fails; is that a reason not to try?
5) Any non-profit that could definitively prove this kind of cost advantage should be given the same consideration. Those that can’t should refrain from asking.
Why not let the state buy it, like it did our failing and poorly-attended women’s tennis tournament?
Where do the mayoral candidates stand on this?
Why is this still the responsibility of Joe Taxpayer?
If the Shubert is truly so beneficial to the hotels and restaurants etc., let them pay the costs and/or raise ticket prices.
Screwed 30 years ago by Shubert aficionados,
the City is about to cave in again.
Demolish this formerly- worthwhile, self- supporting- location and finally end continual subsidies from the taxes of non-users.(Hang the old posters at a Library or City Hall);
Just another subsidy—boondoggle for the elitist artistes.
Way past time to stop these wastes of other folks’ funds by theatre fanatics.
Theater lovers still have these, three of them all within a block of the Shubert.
Yale Rep on Chapel Street
University Theater on York Street
Yale Cabaret on Park Street
Long Wharf Theater on Sargent Drive
This kind of thing should go on a ballot/referendum for the people of the city to weigh in on before the powers that be just do it.
Do we really NEED a fifth theater in New Haven, and a fourth one downtown? All this attention and funding could go towards reviving the Q House or some youth center like it…of which New Haven currently has NONE.
Where are all the aldermen who keep calling for the Q House to open back up on this issue? Youth center or theater number five, which is it?
Another Bad Idea Note:
1. The rubber-stampers used to sell city assets and get paid for them. Now, they’re selling assets by paying CAPA millions of dollars to take them. This is an extremely poor idea and it’s being given the bums rush to force it through before DeStefano leaves office.
2. Taxpayers have a vested interest in the Shubert. We have been subsidizing it for years even as CAPA has refused to use it for more events that could have absolved us of operating support long ago.
3. The public should be allowed to weigh in on the deal, to testify and that testimony should be passed on to the full board before they agree to sign off on another decade of payments. Why is the public being cut out?
4. If a deal is done, there should be a deed restriction that forbids the mortgaging of the Shubert and there should be a PILOT agreement with the Shubert. Moreover, the Shubert should have to be operational a lot more than a paltry 150 nights a year which is the only way the operating subsidy will decline.
5. There are way too many “might save money” concepts in this agreement. If we are going to give up this asset, pay millions of dollars in debt and operating support, there should be zero doubt as to whether it will save money.
6. Hausladen is correct - not putting the Shubert out to bid is not smart. This is the only reason why this deal is structured this way. This is not in the best interests of taxpayers.
I support this. I’d hate to see what would happen to great restaurants like Zinc and Roia without the theater visitors.
It’s sad to see the Palace Theater empty for so long. With such a huge college population, it would make sure a great standing-room-only concert venue. With the right management and promoters. it could easily eclipse Toad’s as the premier touring-band venue in the city.
Can someone tell me if the management company has been running the Shubert in the black for 11 years, why is the city subsidizing them?
Stylo, I agree - it is a shame that the Palace has been boarded up for such a long time. Lots of wasted potential there. Hopefully venues like the newly reopened Capitol Theater in Port Chester will inspire somebody to do the same for New Haven.
Give my 2.5 Million to Spend on the Arts in New Haven, and WATCH what happens….(you have already seen what I can do FOR FREE)....
Get the Bureaucrats Out of The ARTS!!!!!
They have proven again and again their utter ineptitude….
Could you in fact get a constant yearly flow of broadway acts and big name artists? And the answer is no. People point to other theaters but the fact is they’re small scale affairs. I mean the YRP might currently have Joe Manganiello, but even they are usually just student run affairs. Not to mention the Shubert is now the largest music venue in the city(1,600 capacity compared to Toad’s 750) and it’s probably why for example The Pixies are playing there in January. The only remote close thing is Long Wharf Theater, but they again cater to a different catalog of events,(in fact it’s kind of reverse, the Shubert gets many plays that use to be on Broadway, while LWT produces many plays that make it to Broadway or off Broadway) but more importantly, it’s also in a terrible location. People don’t stream out and walk to bars and restaurants.
For Walt, it’s not enough for the Shubert to fail, it must be destroyed. I’m sure the “old posters” will need to find another home, since surely the library will be next to close since it’s also a burden to “Joe Taxpayer.”
I wouldn’t be so dismissive of my abilities. I do have some pretty strong connections in the Music World….....and I can think out of the BOX SEATS…
I wonder if the city could seek sponsors to fund the renovations. Perhaps a wealthy donor or two who could have an area(s) of the theater named after them, (for example, “the John Doe Mezzanine” or the “Jane Doe Orchestra”). If that didn’t work we could do what lots of stadiums around the country have done and get a sponsor for the whole theater, for example, “The TD Bank Shubert Theater”. I think it would be an attractive marketing opportunity for the right business.
Lets recap the more recent giveaways:
360 State st. prior to a parking lot subsidized by the taxpayer with the proceeds to a third party. 360 state land deed sale for $1. 360 state st. no building fees, 360 state st reduced 2011 assessment.
NHPA lot to Yale at Broadway.
Center garden lot to yale at broadway.Leased for 100 years.
Wall & high sts to Yale for a parking lot $3M.
Sale of Martin Luther school to Armistad for $1.5M.
The New Haven Green Owned by the five from yale, city to maintain for life.
The list goes on and on with a staggering loss of taxpayer dollars over the decades.
The hidden point in this proposal is that after the $1 sale, the city will continue to fund the Shubert for the next tens years with taxpayer money. In addition the city is not off the hook for the &7M; in repairs, the city will pay 1.1M this year and another $1M next year which represent $2.5M city share, $4M for the state(city taxpayer) while the CAPA raises $0.5M.
Conspicuously absent from this scenario is a comparative proposal of sale; in order to determine value to risk benefit analysis.
Also absent is the expectation of a check and balance analysis performed by the BOA.
Here the rubber-stampers are only giving us the $heck.
As others have said I would hate to see the Shubert end up like the Palace. I have been a waiting tables in New Haven on and off for years now. I have seen what business is like when there are no shows at the Shubert. My family depends on my income. When the Shubert is busy my bills get paid. It seems to me this plan will save the City money and keep the Shubert open.
You are right.
As I figure it the only thing that will stop Shubert enthusiasts from continualleeching of $$$$$$$$ from the State and City is demolitionwhich would prevent periodic re-building of the facility
An alternate to demolition would be financing, not by us but by the folks who use the building
If you start financing rather than just talking maybe I’ll toss in a few bucks myself (only if you’ll in return give me the right to use “Contrarian” as my tag that would often be `appropriate)
I agree that the possibility of a competitive bid is probably a good discussion to have but aside from just shutting it down, the numbers in this proposal are better than what we’ve got now and (I can’t believe I’m the one arguing this) the performing arts have, throughout the last century, been the model for unionized professionals; artists, artisans and technical workers. If a labor oriented BOA can’t support this, I’ll be damned if I know what’s actually going on in this town.
The city hired a consultant, AMS Planning & Research, to provide advice on what would be best for New Haven.
“An appraisal found that the value of the property is the value of the land minus the cost of demolishing the building, Fisher said”.
According to Visions government solutions, the Shubert’s 2011 value is:
239 college st.
Parcel Value Item Gross Assessed Value 2012 Grand List Gross Assessed Value 2011
Total: $5,316,990 $5,316,990
Owner of Record
CITY OF NEW HAVEN
So just who are we to we believe? the city hired jack-leg, or the city hired appraiser who valued your property in which your tax is based??
Mo Money Notes:
1. I think it’s worth exploring taking the state’s money and adding the balance from the taxpayers via bonds - and getting the Shubert redone, maxed out and ready to max out revenue.
2. CAPA should be told to max out performance nights - supplement performances with music concerts at a rate of one or more per month. The city could actually see some net revenue.
3. It is deeply troubling to hand over a many multi-millions dollar Shubert Theater, debt free to CAPA; pay for a big chunk of the repairs and still keep them on the public teat for nourishment with nothing more than “hope” they wean themselves off of it at some point over the next ten years.
4. At least we could actually get revenue from the Shubert vs. having to put it in.
You do not need to look at ANY of the consultants numbers to cut through the BS.
Ask this question instead:
How come both Waterbury (THe Palace) and Torrington (The Warner Theatre), have historic theaters that are doing just fine…..
Once again, a problem with corrupt management…and the short-sightedness of our fearful leader….
@Gener yes the Port Chester theater is a good example, especially since they’re booking modern acts. They seem to get a lot of help booking from Bowery Presents, which does an excellent job.
Another refurbed theater that Palace could model after is Music Hall in Williamsburg. Of course, it doesn’t hurt that area was desolate 10 years ago and has been booming lately. Someone was smart enough to renovate that space into a great venue.
Palace could be more like a Terminal 5, Music Hall, Hammerstein type space. It would mean ripping out all the seats at the ground level, putting in a bar, and perhaps refurbishing the upper balconies into VIP spaces. The floor could be fairly rough and the decor doesn’t have to be great. It would be certainly cheaper than trying to create a traditional theater. Connecticut desperately needs a venue of that kind and size. Toad’s is not big enough. Webster Hall comes close. There are dozens in most cities and it’s the type of place most “hip” bands want to play. The kind of bands that college students flock to, and New Haven has no shortage.
Just need some vision and investment. :)
I am in support of CAPA buying the Shubert. Through the years I have worked, volunteered and attended shows at the theatre, and in the 12 years since CAPA’s involvement, their ability to run the Shubert has been outstanding! The Shubert is an historical, community gem that offers something for everyone in our community – and contributed to the success of restaurants, local shops and of course the parking garages. Under CAPA’s leadership, they have developed a strong relationship with not only Co-op High School, but other schools as well—the theatre has made a difference in the lives of our youth — many of whom have gone into the arts after being exposed to the arts through Shubert outreach. Now with planned expansion, we’ll have job creation as well!
In the past 12 years, CAPA has proven themselves to be productive, fiscally responsible managers (finally, the Shubert is operating in the black!) — and part of this community. Let the Shubert continue on it’s positive path with CAPA at the helm!
This seems like a win-win-win solution for the City. Once this transfer is approved (1)the City will no longer have to make consideration of any maintenance or future repairs that the theater may need; (2) the City will no longer have to appropriate funding to operate the theater, thereby saving money for the City’s taxpayers; and (3) any future renovations, repairs or remodeling will be covered by CAPA and not the City.
In addition, CAPA assumes all liablity on the theater’s operations and programming.
I’m sure the Board of Alders has the wisdom to make the right decision for the City’s taxpayers—approve the transfer.
The sale of the Shubert to CAPA is a good thing! It will save the city money and assure this New Haven treasure gets the repairs, tech upgrades and capital improvements it desperately needs. New Haven needs this great, historic theater to thrive—to attract people to restaurants and parking. When the Shubert was shut, streets were desolate and restaurants empty.
Back in the year 2002 I was fortunate to be named chairman of the board of the Shubert. Those were the early days of CAPA managing the theater. Many theaters have failed or closed across the country during the ensuing 12 years. We added board members who were truly dedicated and active in the city. Our work with the department of education, the arts high school, and other not-for-profit organizations is noteworthy. Bill Connors, John Fisher and Sheri Kaplan along with very dedicated staff and volunteers have done a truly remarkable job. It is not easy to find a theater management company of this quality and community dedication. The theater needs to be properly maintained or it will fall into disrepair. At the end of the day the theater is a building but it is the community, with the staff, that needs to take very special care of it.
So if there are no funds for CAPA to afford capital improvements, who paid for the 1600 reupholstered seats a couple of years ago? And just how much money does the Shubert take in from the 3 dollar facility charge tacked on to every ticket sold?
I have worked and lived in New Haven for my entire life and support the transfer by the city. The Shubert is an historic part of New Haven, and also provides over $15 million in economic activity every year, as well as community and educational programs in our schools.
This will save the city and the taxpayers over $5 million in the next 10 years and will relieve the city from future repairs and responsibilities.
We would like to thank our neighbor Claire Criscuolo of Claire’s Corner Copia for her support of the Shubert and the plan to keep the Shubert viable and operational.
What wonderful news! Please note that I support any and all of the decisions that you make. Why? Because from the first day your tenure began, until this present day, every single decision you have made has been in not only the best interest of our beloved Shubert, but in the best interest of our beloved city. This sort of competence and integrity earns further trust, and you have mine. We all gain when the Shubert exists and thrives because the arts contribute to a city that is better for all of us.
Thank you for your contributions to our city, to the arts.
Obviously this deal will pass like the many subsidies for the entertainment of the elite have in the past——-taxpayers the suckers, theatre enthusiasts the beneficiaries
As CAPA has already been managing the Shubert for many years with real inability to break even and carry =on needed maintenance without continued big municipal participation, it throws me that you folk seem to really believe that after this new agreement is completed the Shubert can continue to operate without a new contract guaranteeing more and more big subsidies from the taxpayers
CAPA’s President Connor’s claim that they have operated in the black is obviously pure BS in the light of a #250,000 to $400,000 annual subsidy already received from the City as shown above.
Any of you Shubert supporters want to make a bet that similar desperate pleas will not be the move again about 10 or 15 years from now? If so, I have a bridge in Brooklyn which I offer for sale.
This is a very good proposal and should be approved. It will allow CAPA to raise philanthropic funds not previously available to it and gets the City out of the theater business. The CAPA team has been first-class ever since they arrived here. In addition to running a good theater operation, they are everywhere in the community, they support other arts organizations, the Festival, the schools, and neighborhoods.
I didn’t realize I was elite because I had been to the Shubert before. This gets really old really quick, anything someone disagrees with in New Haven becomes a tool of the elites, and it reaches the point where anyone not in the most grinding of poverty is now elite. Can afford a $35 theater ticket? Elite.
Maybe you are right
If the total cost of maintaining and operating the Shubert , in addition to the price of tickets requires up to $500,000 per year from the taxpayers the current and requested deal is perhaps better compared to welfare for the ticket buyers rather than elitism
Every time you attend a show at the Shubert, you do not pay your fair share, but the New Haven taxpayers whether rich or struggling, are forced to pay part of your true costs.
It is irksome that not even one supporter in the Shubert fanatics has suggested raising prices to absorb even one penny of the costs, or asking that those who presumably profit from the theatre (restaurants,bars, hotels, etc ) kick in a bit too,
Just take, for example, a year of $400,000 subsidy , divide it by the total attendance and it will show about how much Joe Taxpayer must pay , in addition to your ticket fee, for your evenings’ pleasures (I do not have attendance figures but CAPA does and hopefully will release them).
The City has many projects much more worthy than further subsidy for this new proposal.
Time to pay for your own entertainment for a change, I think.
Hope the Alderpersons will protect their constituents from further rooking.