Opera House Operatics

Nov. 29, 2009

‘Soap’ Opera House
The drama continues over the destiny of TC’s City Opera House
By Rick Coates
The most exciting theatrical performance in the 120-year history of the City Opera House in Traverse City is not taking place on its own stage, but rather in the city commission chambers of city hall and coffee shops around town.
The debate over the future of the City Opera House easily could be a script right out of some nighttime reality soap opera show. It has all the twists and turns and the “he said, she said” and the “she did, he did” that has residents, supporters, user groups and others at the edge of their seats wondering what will happen next.
The cast of this production includes the board of directors from the City Opera House Heritage Association (COHHA), the non-profit 501(c)3 charged with the fundraising and management of the day-to-day operations. Then there is the newly elected Mayor Chris Bzdok and the Traverse City Commissioners who represent the residents of Traverse City who are the landlords of the City Opera House thanks to a generous gift from the Votruba family 30 years ago. New to the cast is the Wharton Center from Michigan State University, one of the most respected performing arts facilities and management organizations in the country.
Add in Oscar-winning filmmaker and Traverse City Film Festival co-founder Michael Moore along with Sam Porter of Porterhouse Productions to the cast -- along with the escalating operational deficit that is projected to be at $250,000 by the end of the year -- and the plot thickens.

THE PLOT
As for the plot-line, it is rooted in the future of the City Opera House and how best to preserve and use the facility for today and for future generations. The Heritage Association currently under contract with the City of Traverse City to manage the City Opera House has been in negotiations with Wharton for a about five months. The purpose of the negotiations is for this East Lansing-based non-profit performing arts organization to take over the management and the programming of the Opera House.
What is being proposed is a three-year management agreement where Wharton will assume day-to-day operations and programming for a $75,000 annual fee and 20% of the profits if the operation operates in the black (currently the Opera House has been operating in the red).
The proposed agreement places all operational financial risk on Wharton, so if the Opera House were to lose $100,000 in an operational year, not only would Wharton not receive its $75,000 fee, but they would be responsible for and absorb the loss, not the taxpayers of Traverse City.
Every good drama has conflict and at the core of this conflict is a debate over “how” the City Opera House should be managed and by “whom.” But to understand the present and to speculate the future one must first understand the past.

WHO’S DOING WHAT?
The cloudiness of this conflict is in part due to the confusion over exactly how the City Opera House is structured. Even the City of Traverse City is somewhat confused. A call to the City Clerk’s office and the staffer in response to the question “who oversees the Opera House?” responded the “Downtown Development Authority (DDA).” But the DDA responded, “we have not managed the Opera House in a few years.”
Even newly-elected Mayor Bzdok and the City Commissioners have been unclear as to their role in overseeing the operations of the Opera House. At the heavily attended City Commission study session of November 23, Mayor Bzdok stated: “We (City Commission) were first told that this matter of the management of the City Opera House would not come before this Commission.”
The reason for the confusion is because unlike other City departments that oversee parks or historical properties where the City Commission appoints residents to serve on commissions, the City Opera House is structured differently.
In order to be eligible for tax incentives and federal funding a private LLC corporation was established. This LLC in turn in 1981 sought out the creation of a 501(c)3 nonprofit organization to be formed to raise the $8 million to restore and preserve the City Opera House. That board led by the efforts of Karen Smith and others, who raised not only the money, but also oversaw the complete restoration of the building; and, in December of 2004, the City of Traverse City saw the reopening of this historical and cultural treasure.
According to Bryan Crough who was the executive director of the DDA at that time (now on loan from the DDA to City of Traverse City as the new community development director) the transition of the COHHA management took place as “the DDA moved its offices from the Opera House to its current location at the City Parking Deck and COHHA moved its offices into the Opera House. it seemed to make sense for them to manage the day-to-day operations.”

BATTLE LINES
This is where the plot thickens. While CCOHA was successful in managing an $8 million capital campaign and overseeing the restoration of the City Opera House, it found itself ill-equipped to manage the day-to-day operations of a performing arts venue.
So the community, and in particular people passionate about the City Opera House, find themselves at odds over its future. The battle lines have been drawn with two sides being formed: Those in support of the COHHA board and its proposed management relationship with Wharton and others in support of some of the user groups who are concerned over “local access” and the “backroom dealings” that led to a proposed Wharton management deal on to be on the table.
The war of words is flying as both sides are trading jabs and propaganda with each casting themselves as the victim and the other as the villain. While much of this has taken place behind closed doors and casual discussion at cocktail parties and coffee shops, the first public discourse took place at the November 23 City Commission study session (there was a public gathering a week before with area arts organizations where Wharton and COHHA gave an overview of their proposed collaboration). Supporters on both sides filled the commission chambers and overflowed into the hallway.
The discussion was civil but the under-the-breath comments and head-shaking suggested there is a lot of tension in this debate.
For outsiders watching this drama unfold there is somewhat of tragic plotline developing to all of this as two sides passionate about the City Opera House collide over this community “cultural anchor.”
The reality of the situation is that hard working civic-minded community members, many who have successful businesses in the area or are respected professionals in the region have somehow forgotten how to communicate resulting in hard feelings and the “he said, she did” bantering that has taken place in recent weeks.

BACK ROOM DEAL
Now as Mayor Bzdok puts it “we are being asked at the 11th hour to make a decision.” Bzdok’s facial expressions showed a person perplexed by the situation and made it clear that over the next “102 weeks” reaming in his term “the City will no longer do business in this manner.”
Exactly what does the mayor mean by “doing business in this manner?”
It comes from the perception that COHHA structured a “behind-closed-doors-back-room-deal” with Wharton.
But did they? The answer is both yes and no.
“We are simply volunteers,” said Angela Schuler, co-chair of COHHA board of directors. “All of us putting in countless hours trying to protect and preserve the City Opera House and we are not getting paid for any of this. All of us are simply trying to make the Opera House a viable performing arts venue for our community to the best of our ability.”
Schuler is frustrated that some have painted COHHA in a negative light or that they are “signing away” the future of the Opera House to some downstate entity and essentially losing local control.
“Our board is not only responsible for the management of the Opera House but we are financially liable for it as well. We, not the taxpayers, are burdened with the operational losses incurred,” said Schuler. “We will have to pay for these operational loses by fundraising and through donors. We are able to sustain these losses currently because we have established a line of credit. But being fiscally responsible we cannot continue to sustain losses year after year. So we began looking for solutions.”

SEEKING HELP
That process began last spring when the COHHA board began meeting with Debra McKeon, executive director of North Sky, a local nonprofit organization that specializes in helping nonprofit boards and organizations develop efficient operating models. McKeon, an Elk Rapids resident, is nationally respected in the performing arts community and has a proven track record in understanding the nuances of performing arts management.
“In our meetings with Debra we explained our current situation and we openly admitted that our expertise was not in day-to-day operational management,” said Schuler. “As we worked through the best case scenario as a board it was that our focus should be on the fundraising aspect essentially returning to why we were established and finish raising the $1.5 million needed to complete the final restoration of the Opera House and get out of the management aspect of it. Debra mentioned to us that Wharton was looking to expand its performing arts management to other venues in the state and that is how this discussion process started.”
For Schuler and her colleagues on the COHHA board, Wharton quickly seemed to be the solution. Wharton already had positive collaborations in the area with the Dennos Museum, The Old Town Playhouse and Interlochen Center for the Arts. As negotiations continued Wharton put forward a deal that COHHA felt they could not turn down.
“It is a three-year agreement, that either party is allowed to break with 12 months notice,” said Schuler. “Wharton is taking on all of the financial risk. Our board will be able to focus on fundraising. We will still oversee and approve the annual programming.”

LOCAL ACCESS
This is where Schuler feels frustrated.
“Some are painting us (COHHA board) as outsiders, even evil. But we are locals; people who live and work in Traverse City many of us own businesses here. These questions of ‘local access,’ and the other tough questions about programming we asked in the negotiation process,” said Schuler. “People are somehow suggesting that we don’t care, but we are passionate about the Opera House. We were asked to manage it, we tried. I think it takes courage to step up and say we are not capable of managing it, it is not our area expertise, it is not what our board was originally established to do.”
But Beth Milligan, a collaborator with Porterhouse Productions who has been one of the user groups over the past year, expressed concern over the “back-room” deal and secrecy of the proposed agreement during her public comments at the City Commission study session.
Milligan and others questioning the proposed agreement also wonder why a “request for proposals” was not asked for.
“There has been a long history in Traverse City of these backroom deals,” said Milligan, who noted how one parking deck project failed after city residents learned of backroom deals and another parking deck project that had transparency and community involvement in the process passed.
Schuler argues that this was not some back room deal being kept from the residents.
“This process simply evolved and presented itself to us. In order to structure a deal we had to sign confidentiality agreements because financial information would be shared and this information is proprietary,” said Schuler. “If we were to go out and hire an executive director the interview process would have been confidential. Our board saw this as the same process. We see the role of Wharton as that of an executive director.”

BOTTOM LINE
COHHA was under the impression that if they were to hire an executive director and in turn sign a contract with them that this would not need City Commission approval, hence entering into a management agreement with a second party would not either.
“We didn’t know, the City didn’t know, and it was Bryan Crough who is a member of the LLC and our board who suggested that we get a ruling from the city attorney as to whether we could sign a management agreement with Wharton without city commission approval,” said Schuler. “The bottom line is it all happened so fast. In our defense we are simply trying to do what is right for the Opera House.”
However, some user groups and city residents have expressed concern about “local access,” and what a Wharton management model would look like for the Traverse City Film Festival and Porterhouse Productions, both of which present popular events, with the latter presenting concerts that appeal to the young professional demographic in the region.
Michael Moore spoke briefly at the study session, praising Wharton for their professionalism as a result of his own appearance at their auditorium a few years ago. In his typical comedic style even in the most serious of discussions Moore announced that he was “turning over the management of the State Theatre in 2010 to Wayne State University.” The audience seemed stunned and remained silent. Moore continued. “This statement shocked you, didn’t it? Well imagine the shock that came over my face as the largest single user of the Opera House learned of this deal through an article in the Business News and was never consulted.”

YOUNGER DEMO?
After the session, Moore was asked about his working relationship with the City Opera House over the past five years of the film festival. His response:
“Let me put it this way. It has been a real pleasure and joy to work with the board of the Old Town Playhouse, the board of education in using the auditorium of Lars Hockstead and also the Dennos Museum,” said Moore. “These organizations get it, they told us what they needed to open their doors for us to show films there and they have been cooperative every step of the way.”
At the meeting, Moore and eventually Sam Porter of Porterhouse productions lay claims as being the “largest single user” members and should have been part of the early discussions, the COHHA board members in the audience shook their heads.
“They define their role as largest user by the number of people they are bringing to the Opera House while we define it by rental dollars. We are not suggesting that the programming presented by Porterhouse and the Film Festival is not important but from an operational standpoint. those two users only represents 10 percent of our operational budget,” said Schuler. “I think from both a community perspective and an operational one their programming is viable and Wharton has said they see it part of their plan.
At the core of Moore, Porter and other community members concerned over a Wharton-managed Opera House is “local access” and whether programming will appeal to a younger demographic.
Michael Brand, executive director of Wharton, stated in his presentation to City Commissioners that “Wharton has performing arts venues that have successfully operated for 30 years in the heart of the MSU college campus with 48,000 students,” as his assurance that a Wharton managed Opera House would be diverse and appeal to the community and the youth of the community.

PROVEN TRACK RECORD
“Wharton stands only to gain from this agreement if they are successful,” said Schuler. “They have a proven track record of operating in the black. They do not receive any funding from MSU and they are respected in this industry and have successful collaborations with several arts organizations around the state,” said Schuler. “I know Porterhouse Productions, The Film Festival and other user groups have expressed frustrations with their working arrangements with us in the past. Now they will be working with an organization (Wharton) that speaks their language. The City Opera House will be professionally managed under Wharton. We at COHHA see this as a win-win for the local user groups, the patrons and the viability of the Opera House.
If approved by the City Commission a joint operating agreement would start January 1, 2010 between COHHA and Wharton with both entities sharing financial and management responsibilities. Wharton would take over fully on July 1.
The next step in the process is for the City Manager R. Ben Bifoss to meet with COHHA board members, Wharton, and user groups to assure that the management agreement will be satisfactory to all involved. Going into the November 23 study session COHHA was under the impression that the City Commission would approve and not approve the Wharton contract at its December 7 City Commission meeting. There is some possibility that City Manager Bifoss may not complete his task and have a recommendation for the commission by this date, hence delaying a decision.
“The longer we wait the longer it will take,” said Schuler. “Since this has been made public we have not seen any other non-profit organizations step up and that is what we want. Sure, there are private entities who are interested from down and even out of state, but we know that is not in the best interest of Opera House’s future. So if a decision is delayed, we are at standstill. We cannot book in events because if it is not Wharton, it will be someone else -- another non-profit that we will have to partner with who has the expertise to manage a community performing arts venue.”
Schuler continues with her passionate plea.
“There is confusion over who is bearing the financial burden of the Opera House. It is not the taxpayers of Traverse City it is COHHA. We are paying monthly rent to the City of Traverse City; we are paying taxes on this. Our board is responsible for the financial liability of the City Opera House, not the taxpayers,” said Schuler. “So the bottom line is we at COHHA are not in a position to manage Opera House operations and sustain losses and continue to raise money that should go to capital improvements that will instead go to operational expenses. In our opinion, in this economy no one is going to step up and offer the deal Wharton has offered.
All parties involved stated after the commission study session they would meet with City Manager Bifoss to discuss and resolve concerns.

In part II Express Contributing Editor Rick Coates will explore the conclusion of the City Opera House drama in the December 7 issue. He will look in detail at the proposed deal and exactly what type of programming Wharton plans for the Opera House in 2010 and beyond. Also, whether local user groups (such as Porterhouse Productions and The Traverse City Film Festival) are willing to support the Wharton deal through discussion with the City Manager.