FAYETTEVILLE — A decision on whether the city should pay for a portion of TheatreSquared’s annual operating expenses isn’t likely to come.
Fayetteville City Council members on Tuesday voted 8-0 to indefinitely table a proposal that would shift some of the nonprofit theater company’s ongoing utility bills, insurance premiums and maintenance costs to the city. A council member could bring the item back for consideration before it expires at the end of the year, but the proposal would likely need some major adjustments.
TheatreSquared officials want a change to their longterm land lease agreement with the city, which was approved in 2016 to allow for construction of the company’s new facility in downtown Fayetteville. The 25-year lease can be renewed up to three times, and does not include any rental fees for use of the city-owned land where a 54-space public parking lot was once located.
The rent-free lease was the first of two investments from the city, which later put $3.1 million toward the construction of the new facility.
TheatreSquared executive director Martin Miller said it’s fairly common for local governments to approve ongoing funds for anchor arts institutions operating in city-owned facilities, especially those that contribute to the local economy.
Citing a case study commissioned by TheatreSquared in October 2021, Miller said in Fayetteville’s peer markets, similar organizations receive a total of 5% to 15% of their total annual operating expenses from local municipalities. He said the funds freed up by the change — which amount to a little over 2% of TheatreSquared’s annual budget — would help TheatreSquared offer more educational programs and free or reduced-price tickets to Fayetteville citizens who couldn’t otherwise afford to attend.
TheatreSquared photo: Todd Gill, Fayetteville Flyer
Several council members initially signed on to sponsor the proposal, but were hesitant after hearing concerns from City Attorney Kit Williams.
Williams read a six-page memo he wrote Tuesday warning the council against making any changes to the lease. Responsibility for the ongoing maintenance of the facility was specifically agreed to by TheatreSquared in the original lease, he said, and constituted a substantial amount of consideration for Fayetteville citizens to justify both the rent-free lease and the subsequent $3.1 million gift.
Williams said he was conflicted because he enjoys TheatreSquared and he wants to see the organization succeed, but he believes the city could be sued if the council changes the agreement which could jeopardize the original lease.
“Right now our lease is strong, but if we take out supports for our lease, it may be attacked,” Williams said.
As for Miller’s offer to increase performances, Williams said a small increase in programming is not enough new consideration to justify shifting 94 years worth of operating expenses to taxpayers with no knowledge of what future economies will bring.
Williams said only a judge can make the final determination on whether the lease amendment is legal, but that’s not a risk the council or TheatreSquared should want to take, especially considering that if the original lease is undermined, it’s possible the city’s $3.1 million gift could also be attacked.
“The thing that makes this so dangerous is that this is a 100-year lease with 94 years remaining,” said Williams. “We should not endanger that original lease and our investment by doing this, which is likely to at least result in litigation.”
Thirteen people spoke in favor of the proposal, including Senator Greg Leding and State Representative Denise Garner, who both said TheatreSquared is a vital piece of the city’s creative economy. Garner called the theatre “one of the community’s most distinctive cultural assets.”
Former Council Member Adella Gray said as TheatreSquared grows, so should the city’s support.
“Signing a lease with TheatreSquared was the beginning, not the end,” said Gray. “No relationship is fixed. We all need to change and adapt.”
Former Council Member Justin Tennant, who was the only dissenting vote on the council’s $3.1 million grant to TheatreSquared, said he didn’t vote against the original proposal because he’s against the arts. He said he was uncomfortable because there was no firm plan in place for how the organization would pay for itself moving forward. He urged the council to delay a vote until such a plan is presented.
“It has nothing to do with the service they provide, which is tremendous,” Tennant said. “If we sign a blank check that the citizens of Fayetteville have to pay the bill, it’s similar to a time share agreement in that you have no idea what the costs are going to be in future years.”
Steve Clark, president of the Fayetteville Chamber of Commerce, said the idea has merit, but not everyone is in support of public dollars funding a nonprofit organization. He said the city attorney’s hesitation to support the idea is a red flag, and also urged the council to take pause.
Williams said if the council wants to help TheatreSquared, there are other ways to support the organization besides amending the lease. City staff told the council they are working on ways in which the city can support the creative economy, and they plan to bring forward a proposal in the future.
Council Member Sloan Scroggin said he’s heard from many constituents who are concerned about the proposal. Scroggin said as a landlord himself, he also has a lot of questions about how the city would handle maintenance of a building it doesn’t have access to.
“We absolutely must have a cap on what we’re paying for,” Scroggin said. “I would feel a lot better if there was a price point in place.”
Scroggin said he’d be interested in hearing what city staff comes up with in regards to possible funding for the theatre aside from a lease amendment.
Council Member Teresa Turk said she is a personal supporter of the organization, but has concerns about the proposal. She said changing the lease could set a precedent for other organizations asking for help, such as the Walton Arts Center which also leases city property for its performing arts facility. She said she can’t support the lease amendment.
Council Member Mark Kinion said it’s a tough decision. It’s important to support TheatreSquared, he said, but a lease amendment might not be the way. Kinion said he also shares Turk’s concerns about parity.
Kinion suggested tabling the resolution indefinitely, and the council agreed.