Dipping into the public's piggy bank
Original post made by Tim Hunt, Castlewood, on Mar 18, 2013
The Livermore Valley Performing Arts Center board has filed legal action against the state because the Dept. of Finance refused to consider more than $120 million in redevelopment funds as an obligation that existing prior to the Legislature’s abolition of redevelopment agencies in June 2011. Like many other cities and counties with redevelopment agencies, Livermore signed an agreement in February 2011, after the governor announced his intention to eliminate the agencies, designed to encumber the funds. Of course, the theater has not broken ground and the non-profit’s board has been seeking financial help after two years of uncertainty.
This evening, a $475,000 loan will be sought from the city of Livermore. The city staff has provided a report (on the web site under the City Council agenda tab) and wisely has declined to make a recommendation—instead, staff members seek direction from the council members.
Phil Wente, chair of the arts board, frankly admits in the letter seeking the loan that six years ago he told a prior City Council that the 500-seat Bankhead Theater and the 2,000-seat regional theater could be operated without any subsidy from the city. He said that there were ample funds from the operation of the big theater to subsidize the operations of the Bankhead, which is designed for community groups and has been operating since 2007.
The city’s loan would be unsecured and is the second major loan from a government entity.
On Nov. 20, 2012, the Alameda County Board of Supervisors approved a $400,000 loan from community benefit funding provided by a power plant operation near Mountain House on the eastern boundary of the county. The fund is about $600,000 and the supervisors approved the loan, which has been drawn down according to non-profit executive director Len Alexander. Both the county loan and the city loan, if approved, are due to be paid back by the end of 2015. In the event that the non-profit cannot repay the loan, there are un-named guarantors who would make it good. Alexander and the county agreement left them anonymous.
Supervisor Scott Haggerty requested the county loan on behalf of the non-profit and the agreement with the power plant operators was amended to permit it. Haggerty has backed the down theaters for years—a number of years ago he diverted millions from a legal settlement concerning the Altamont Dump to the Bankhead theater. The irony in that decision is that the effects on the city of Livermore from dump operations are trivial. The dump is located on Altamont Pass Road and 18-wheelers exit I-580 at Greenville Road, spend a minute or two on city streets, and then turn on the road to the dump.
The real need was improvements to I-580, not a theater downtown.
Just what the City Council will decide to do will be interesting. Both Haggerty and Vice Mayor Stu Gary, as members of the oversight group charged with determining pre-existing obligations, voted to declare the theater an existing obligation that the state denied.
The arts group has an impressive board with many very successful individuals. Bottom line, there’s substantial financial resources and political clout.
I have supported the Bankhead since the concept was first discussed years ago and been skeptical that a regional center in Livermore—no matter how well designed—could effectively compete with the big arts houses in San Francisco. San Jose-based groups have a hard time doing that and there’s substantially more wealth and population in the Silicon Valley than there is in the Tri-Valley.
The loan amounts to bridge funding to keep the organization alive while it pursues the Hail Mary legal action. Without success there, two options to fund the theater come readily to mind: major donors put up the money or the city asks residents to approve a bond measure to build it or a combination of both.
By contrast, the redevelopment tax increment was almost painless from a resident’s standpoint. That’s why city leaders across the state used them so widely. They’ve worked quite well—think of San Ramon’s senior center and the Bankhead in Livermore—as well as funding white elephants such as convention centers and the Stockton arena. The governor’s move to eliminate the agencies was the right call—the most unfortunate loss from the fund that provided affordable housing as part of the redevelopment proceeds.
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