 |
|
|
|
|
|
|
|
|
 |
 |
|
||||||
 |
 |
 |
 |
 |
 |
 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
The Real Estate Development Boom May Mean a Bust for Your Theatre
New York’s classic 13th Street Repertory
Company has spent over $200,000 over the past four years simply trying to
save themselves from destruction as skyscrapers blossom around them. Blake
Yelavich, from Austin’s Arts On Real, was unable to save that theatre
when its landlord, apparently driven by the dollar signs that come with development,
hiked the property’s value to levels that made the theatre’s tax
burden unmanageable.
While maintaining a small to mid-sized theatre has never been an easy or affordable
task, the development boom in many major cities is threatening to drive the
arts from urban centers altogether. The different circumstances some theatres
face illustrates just how many different ways theatres are feeling the pinch.
For Edith O’Hara, who founded the 13th Street Repertory Company in 1972,
the problems started when she brought in a partner whose intentions were,
it turned out, less than honorable. “He helped us raise money and do
fundraisers,” recalls O’Hara, “but it turned out that his whole
idea from the beginning was to sell the building and make a big profit on
the real estate.”
The investor was hoping to sell the theatre to a real estate development company
that hoped to build – as is the trend in lower Manhattan of late –
a high rise. They offered to build 13th Street Rep a new theatre in the new
building, but to O’Hara, who revels in her building’s historical
status and what it represents in terms of the character of the city, this
was unthinkable.
“This building is very historical. We traced it back to being one of
the first brownstones built back in the 1780s,” she says. “So I’m
fighting two battles—first that the building shouldn’t be lost,
then for the cultural institution that we have established here and has done
so much for the community.”
When she refused the offer, she was threatened with eviction if she didn’t
sell her stock in the building. She refused that as well, leading to four
years of costly eviction proceedings and court cases, and continues fighting
what is so far a victorious, but very costly and time-consuming battle.
While the possible loss of the 13th Street Repertory Company, home of the
longest running play in Off-Off-Broadway history in Israel Horovitz’s
“Line,” is troubling, it’s even more so when you consider it
as just one more dying cultural institution in the city that is supposedly
theatre’s Mecca. As rents and real estate values have skyrocketed in
recent years (Manhattan is only now starting to feel any effects of the market’s
bust, and even that just slightly), and the famed Manhattan skyline becomes
increasing lined with cloud-scraping glass monstrosities, the very existence
of small theatre in New York is tenuous.
But these days, it seems, every urban center has its own version of this same
story. While O’Hara is engaged in a prolonged war, Austin’s Arts
On Real was the victim of a stealth blitz attack, subjected to the sort of
shenanigans one usually sees only in overblown “evil landlord” movies.
Arts On Real was located in a warehouse just east of Austin’s I-35 in
a section of the city generally perceived by Austinites as a cultural no man’s
land, but which Yelavich saw as having a “whole lot of potential and
charm.” His decision to locate a new theatre there turned out to be prophetic,
as the area cleaned up over the past four years, slowly becoming an entertainment
destination. But earlier this year, says Yelavich, just three days after the
city announced the development of a light rail system that would make Arts
On Real’s location an easily accessible commercial hub, his landlord
increased the property’s declared value, which had been $237,000 when
he initially signed the lease, to over a million dollars. As a result, while
Yelavich had been paying tax bills of $438 a month, he received, on May 8,
a back-due tax bill for $8,800—due about three weeks after receipt.
“The landlord has a choice of paying all of the taxes at one point or
over twelve months, so we were already late,” says Yelavich, who notes
that property values in the area had increased maybe twenty-five percent throughout
the theatre’s existence. “We would have been in default and in lien
if we didn’t pay it by May 31.”
In Yelavich’s mind, he was the victim of a greedy landlord who saw dollar
signs and the evils of development run amok. “It’s the problem with
these owners who go into downtrodden neighborhoods and buy everything up,”
he says, “and just sit on them and wait for the jackpot.”
Yelavich was able to raise the money quickly through donations, and, he believes,
stunned his landlord by paying the new taxes on time. What happened next was
evidence that even the goodwill of the community couldn’t overcome the
forces of development.
“We said, ‘Here, Mr. Landlord, we have the $8,800, then he upped
it to $15,000,” says Yelavich. “He wanted us to put first an additional
$4,000, then $7,000, into an escrow account for the next year’s taxes.”
With the renewed monetary crunch, Yelavich couldn’t afford an attorney
and used a pro bono lawyer to help him sort out the increasingly complex financial
picture. He cites this as a cautionary tale for others going through this
sort of trouble. “That was a bad idea,” he says. “I would have
fought harder than the lawyer did.”
With no luck on the legal front and no help from otherwise sympathetic city
officials, Arts On Real was evicted from their space with less than 48 hours
notice and prevented from entering by a hastily installed security fence and
a chain on the building.
While Yelavich has lost his theatre (he’s now talking with a large local
theatre company about resurrecting his company at one of their smaller houses),
the lessons of his ordeal, lessons applicable to other theatres in similar
situations, have not been lost on him.
“I should have gone to a real lawyer, a commercial realtor, and the tax
assessor immediately,” he says. “I would tell anybody to get a commercial
realtor and someone who knows taxes on your board. And having a lawyer on
the board who’s not necessarily pro bono, or who truly believes in your
organization, would have been a much smarter thing too.”
In Seattle, development recently took its toll on the city’s artistic
hub, the dynamic Capitol Hill neighborhood, when historic OddFellows Hall,
which housed several theatres and a dance studio, was bought by a developer
who immediately raised rents to more than double their previous rates, virtually
wiping out half the area’s creative community in one fell swoop.
In this case, development is notably changing the dramatic face of the city.
“What’s fascinating is that you see culture shifting neighborhoods,”
says Josh LaBelle, executive director of the city’s Seattle Theatre Group,
an organization with rare protection due to its theatres’ landmark status.
“It’s hard to get people to understand that whether you’re
a large, small, or mid-size arts organization, we are all equal in this ecology.
So if a small dance organization stumbles, it takes not too many years for
the rest of the dance industry to feel that somehow. If you look at it from
a community standpoint, I don’t think any of us really want arts organizations
exposed to this kind of transient role.”
Unlike in some other cities, however, Seattle seems to be making an effort
to alleviate the problem. The city council, in conjunction with the city’s
arts organizations, is considering a proposal for a Cultural Overlay District
that would offer incentives such as transferable development rights to developers,
making the encouragement of arts-related businesses worth their while.
San Francisco also has efforts in the works to try to keep theatre alive in
the face of challenging economic times. Kary Schulman, director of the city’s
municipal funding agency Grants for the Arts, says that San Francisco has
some unique models in the works.
“One of the nonprofit housing developers in San Francisco’s Mercy
Housing works with our local EXIT Theatre to put a theatre in the ground floor
space of their housing development, with the idea that this would bring some
street life to the theatre,” says Schulman. “In return, EXIT raised
money to equip it with lights and seating and that kind of thing. That’s
a possible model we’d like to see happen more.”
Schulman also notes that for developers seeking to establish sizable properties,
the willingness to work with arts organizations can “make permitting
easier” and generally ease their course. “It makes them look like
good community citizens who want to do more than just make gigantic profits,”
she says.
But overall, of course, theatres need to establish the security of their own
future rather than hoping for developers to act in their interests. Looking
back, Yelavich realizes that the problems he faced were partially caused by
loopholes in his lease he could have closed had he realized they were there
and advises theatres to inspect any lease very carefully before signing.
“I wouldn’t wait until I was in the situation. I would say, right
now, look at your lease,” he says. “What are the loopholes that
can raise your rent? If there’s a flexible figure based on anything –
whether utilities, taxes, or what the landlord or property owner is allowed
to do to around that property that would change what you pay – have that
hammered out, because the loophole is always gonna go in favor of [the landlord].
In fact, one of the assistants to one of our city council members looked at
[our lease] and said, ‘You have a fatal flaw in your contract—the
ability to have flexibility in the taxes.’”
“What I’d say to theatres is, get the longest lease you can, and
get as many options as you can,” says Schulman. “And having good
legal counsel is a good baseline recommendation for theatres no matter what
space they’re in. They should have someone with expertise look at whatever
lease documents they’re signing to make sure they’re getting the
best deal, and to make sure they’re getting as many options as possible.”
Perhaps the other key to keeping small theatres alive in the face of development
is not just to prepare, but, given the intensity of the encroaching problem,
to fight. “Most of the people around me feel as I do that we might be
able to win the battle,” says 13th Street Rep’s O’Hara. “We’ve
gotten a lot of publicity, notoriety, and good will, and we’ve had people
making generous donations. So I hope that we can succeed. I know that if I
lose, I’ll lose by fighting for it. I’m not gonna give up.”
To share your battles of how you kept your theatre space, visit the DramaBiz
Magazine forums at www.dramabiz.com/forum.
