Business

Facing questions, Playhouse leaders defend funding request

By Bill Moss, Published: July 6, 2012

FLAT ROCK — Facing hostile fire from a Henderson County commissioner and questions from the public, Flat Rock Playhouse leaders are defending the hotel tax funding that the organization could receive if the Board of Commissioners goes along.

The General Assembly in its final hours this week passed legislation that would restructure the county's Travel and Tourism board and raise the occupancy tax from 5 to 6 cents. Sponsored by state Sen. Tom Apodaca and Rep. Chuck McGrady, both Hendersonville Republicans, the legislation could provide a boost of $223,000 a year to the Playhouse, which is trying to recover from a $1.4 million loss in 2010. But it won't get the money without a fight, said Commissioner Larry Young, who staunchly opposes the measure.
"I can tell you now I am totally against it," Young said Friday. "I just think it shouldn't have ever happened."
The increased tax and the establishment of a Tourism Development Authority can only happen if the Board of Commissioners approves it. The legislation makes the governing board an independent authority instead of a county agency. It would be made up of three members appointed by the Board of Commissioners, three appointed by the Hendersonville City Council, one each by the Fletcher and Flat Rock town councils and one recommended by the Chamber of Commerce and appointed by county commissioners. The legislation limits service on the board to five years.
Apodaca and McGrady filed the bill after the commissioners made the request, in a 4-1 vote with Young voting no. Infuriated by the situation, Young has resigned from the Travel and Tourism board, which he served as chairman. He said he notified Board of Commissioners chairman Tommy Thompson in a letter that he was quitting effective Aug. 1.
"Travel and Tourism is not broke but they're fixing to break it," Young said. "They're going to destroy what I've worked 11 years to build. As of Aug. 1 I'm through with Travel and Tourism."
Vincent Marini, the director of the Playhouse, said he has been dismayed at "the level of vitriol" directed at the Playhouse over the room tax issue. Marini and Playhouse trustees said in interviews on Friday that they are trying to move the Playhouse forward through a business approach that will increase ticket sales for the theater and also boost visitation to Henderson County.
"The Playhouse's strategy over the past three or four years has been to look at ways of growing our capacity so that we have the opportunity to bring more people into the area," Marini said. "If we just had the main stage, for example, there's a limit to how much work we can get done on that stage and do it really well.
"We felt like the way to grow our audience was not just to grow it by having more locals come, because we already get an incredible percentage of local audience coming to the shows. It's by reaching out to wider tourism pool to bring more and more people to the area. What we wanted to do was to give those people more reasons to come here and that is the whole impetus behind all the money we spent to develop our Music on the Rock series, which now has over 10,000 people attending, and to build our second space downtown."

Economic impact
Young says he believes the Playhouse figures for its audience numbers and economic impact are inflated.
"People around here have quit going out there, because they can't afford the ticket," he said. "The old people around here tell me they've quit going because of the language and the vulgarity; the church groups have quit going out there."
Marini said the numbers the Playhouse has been using are accurate because they come from ticket sales a survey and economic impact study done by Western Carolina University and Appalachian State University. The study, conducted in 2003 and updated in 2006 and this year, calculated the economic impact at $7 million in 2006. Adjusted for inflation and accounting for Music on the Rock, other shows downtown and YouTheatre revenue, the impact in 2012 should be about $10 million, the Playhouse says.
"We have two ways of knowing who comes to the Playhouse, one of which is we obviously can do a zip code analysis that tells us, here's where people were from that bought tickets to the Playhouse last year," he said. The second part is the universities' study. "What they found is that of the 60,000 people that come from out of the area, that 30,000 of those people come to the area specifically to see a play," he said. "Where we get our information is not from our own personal observation. It comes from the actual surveys that we've done and that we've updated over the past few years."

Sen. Apodaca said that the Playhouse generates more visitors and more spending than any other organization, and that the room tax paid by out-of-town visitors is a fair way to provide funding.
Young said that he had seen some of the financial records of the Playhouse but has asked the county manager and county attorney to get more. The figures from tax records have raised some questions, not only from Young but from other organizations who oppose the precedent of directing the county occupancy tax to a specific use. (A half-cent of the tax funds the Henderson County Heritage Museum.)
A review by the Hendersonville Lightning of the tax documents filed by the Playhouse showed that in 2010 the Playhouse had expenses of $4.6 million against revenue of $3.2 million for a loss of $1.4 million. In that year, six trustees made personal loans to the Playhouse totaling $145,438, loans that Marini says were repaid by March 2011 after a refinancing and consolidation of all the debt owed by the corporation.
Marini and Playhouse trustee Chris Ricker acknowledge that the recession caused ticket sales to plunge, especially in 2010, a little more than a year after Robin Farquhar, the son of Playhouse founder Robroy Farquhar, committed suicide on the Playhouse grounds.
Like all non-profits, the Playhouse, whose corporate name is the Vagabond School of the Drama Inc., must file a form 990 with the IRS detailing its expenses and revenue. The forms for 2008, 2009 and 2010 showed:
• The Playhouse assets of $5.3 million on Jan. 1, 2008, had fallen to $4 million at the end of 2010.
• Revenue grew every year from 2008 to 2010 but not enough to cover expenses. Revenue was $2.86 million in 2008, $3 million in 2009 and $3.2 million in 2010.
• 2010 was the worst year for the corporation, with expenses outpacing revenue by $1.4 million. That year, the IRS form said, six trustees made loans to the corporation: Chris Ricker, $15,438; Bill McKibbin, $50,000; Clyde Allen, $20,000; Cam Boyd, $15,000; Marv Seibold, $20,000; and Steve Johnson, $25,000.
• In 2010, the revenue breakdown was $1.7 million in box office receipts, $565,408 in season ticket sales, $139,304 for educational programs, $132,000 from Second Stage productions, $85,000 from executive producer sponsorships and $102,000 from other sources for a total of $2.7 million. Other revenue came from fundraising, room and board rentals and other sources.

Public money grows
The Playhouse will receive $234,000 more this year in local and state government support than it did two years ago. In 2010 it received $42,251 from the General Assembly, $5,000 from Henderson County Travel and Tourism and $10,650 from local government pledges — a total of $57,901.
Once it expanded to its Playhouse Downtown space, becoming a partner, Playhouse officials say, in attracting tourists and their dollars to Main Street, the Playhouse board accelerated efforts to win support from local and state government. This year the city of Hendersonville and Henderson County have each allocated $100,000, the Village of Flat Rock $25,000 and the state $67,000, for a total of $292,000. That does not include the room tax proceeds, which under the legislation would sunset after two years.
Asked whether the room tax request had any connection to the trustees' loans, Ricker said, "Absolutely not."
He said the loans came at a time when the finances were under great pressure from new construction (the Playhouse had just completed the YouTheatre) and the drop in ticket sales.
"I'm surprised the question would even come up about the trustees," he said. "It has not even occurred to me that that had anything to do with the rest of this, and I'm certain that every other trustee that has done that would say the same thing."
"... The purpose of the kind of revenue that comes from community sources like that is to increase or improve the economic impact on the community," he said.
Ricker, the past president of the board, said the recession caused the board and administrators to focus on an updated business plan that would increase the number of shows across multiple venues and also to seek greater participation from local and state government.
"Part of what needs to happen with the Playhouse is to convert to a business model that's more typical of regional theaters and where their revenue comes from," he said. "We've recognized that this needs to be addressed for several years and we have been addressing it. One part that still needed to change some was the contribution from local government. The city's certainly stepped up and the village has too. We looked for a way for the county to be involved."
Although the Playhouse sought and received a $100,000 contribution from the Board of Commissioners, Playhouse leaders believed that over the long term the room tax was the fairer and more logical approach.
"The Playhouse is not in a position where we can fund all of our education programming, all of our main stage programming and all of our outreach programming and also be able to expend all of our funds on not just bringing people to the Playhouse but also bring people to Henderson County," Marini said. "We need help to be able to do that."
"This tourism tax is an opportunity for us to number 1, to get out of the county budget, so we don't have these debates about whether or not the Playhouse should or should not be in the budget," and also to form a united plan to increase visitation to all Henderson County's destinations.
Marini said he was dismayed at Young's criticism of the Playhouse and its management and hopes that it's not representative of the commissioners and community at large.
"This board does not deserve to hear things like the organization has been mismanaged," he said. "It's not fair, it's bordering on libel and it's not in any way substantiated."
He said the books are open for anyone to review. "The only thing we don't share is confidential employee information," he said.
"I will not stand for people saying we're looking for funding because of mismanagement," he said. "We're looking for funding because the organization deserves to be funded.