Council puts hold on theater request for added support
FAYETTEVILLE — City council members expressed hesitance over potentially paying for TheatreSquared’s annual maintenance and utility bills but expressed interest in supporting the venue in other ways.
The council voted 8-0 Tuesday to indefinitely hold a request to change the terms of the lease with TheatreSquared. Any council member could request the item be discussed again until the end of the year, when it would automatically expire.
TheatreSquared is a community theater company founded in 2005 that is governed by a nonprofit board. It previously operated out of Nadine Baum Studios before moving to a new building it constructed in 2019.
The request asked the city to pay the costs for TheatreSquared’s building maintenance and structural repairs, except for janitorial costs. The city also would pay the theater’s building insurance and utility bills. TheatreSquared would continue to pay its property taxes.
The city owns the building and the land at West Avenue and Spring Street. It agreed to lease the property to TheatreSquared in 2016 rent-free for 100 years. The request was to amend the lease agreement with the new conditions, meaning the city would pay the additional costs for 94 years.
TheatreSquared’s more than $30 million construction received $9 million in taxpayer support. The City Council in 2017 agreed to invest $3.1 million toward construction. The Advertising and Promotion Commission also committed $3 million over 15 years. Gov. Asa Hutchinson authorized a $2.9 million commitment from the state’s rainy day fund in 2019.
Martin Miller, executive director of TheatreSquared, said the theater would put on more performances each year as a result of the cost savings. Visitors to those performances in turn would generate sales tax revenue by going out to the entertainment district or staying in the city’s hotels, he said.
Miller said the requested costs amount to about $186,000 annually.
Teresa Eyring, president and chief executive officer of Theatre Communications Group in New York, said ongoing local government support is key to a nonprofit theater’s success. Cities in states such as Colorado, Minnesota and Texas all invest longterm support for cultural arts facilities, she said.
“The business model of nonprofit theaters is difficult,” Eyring said. “But the return on investment is indisputable.”
Justin Tennant, former city council member, was one of two people who asked the council to reject or delay a decision to support TheatreSquared’s maintenance and utility costs. The other speaker was Steve Clark, president of the Chamber of Commerce.
Tennant voted against the original lease in 2016 over concerns with potential maintenance costs, he said.
“No one could tell me then how much anything was really going to cost. No one could show me a maintenance plan. I was not comfortable with any of that,” Tennant said.
He expressed support for TheatreSquared in general, but equated the proposal to signing a blank check that residents would have to pay for 94 years.
City Attorney Kit Williams advised the council against amending the lease, saying the proposal was legally dangerous. Arkansas law prevents cities from appropriating money to private entities except for services or economic development projects, but theaters are not permissible under the law, he said.
TheatreSquared also agreed to manage, operate and maintain the premises for 100 years in the original lease agreement. Changing the terms could make the city susceptible to legal challenges, Williams said. Additionally, changing the lease would require a new consideration from TheatreSquared, and putting on more performances would not offset the cost and risk to the city, he said.