Heed Lessons From The Performing Arts Centers Problems
Written by Michael Lewis on September 22, 2005
By Michael Lewis
The good news is that the Miami Performing Arts Center is going to open in a year or so, offer an outstanding venue for fine cultural performances and be available for other presentations.
It’s almost certain to fulfill some hopes and dreams of the surviving arts patrons who, in support of the project, nearly two decades ago began wearing buttons reading "In My Lifetime."
The bad news is what happened along the way to those hopes and dreams, seismic shifts that upended promises made to the community about the center while fortunately leaving much of the goal intact.
Many of those changes are irretrievable, but it’s still possible to right some wrongs. Reviewing them reveals what we should do in the future – both in relation to the arts center and to public policy.
Perhaps you saw the Miami Herald headline last week, "Cost to build arts center soars again." The new construction cost hit $446.3 million. That excludes millions spent preparing sites, millions in public giveaways of development rights in return for land donations, millions government has spent to review this project and more. The true cost now is over a half-billion.
Soars again? When this project saw light in 1988, a $75 million cost was to be shared equally by the county, the City of Miami and the private sector. It rose to $141.5 million in 1989, $167.7 million in 1991, $171 million in 1996, $198 million when the county commission approved a budget later in 1996, and so on. The last prior hike was to $411 million last year.
You’re going to see the words "soars again" again before it’s done.
In 1996, when the Dade County Commission (that was its name back then) agreed to help fund construction, backers cut their budget $26.5 million to meet the $198 million the county would agree to. Some of what they pulled out, like seating, was restored in $4 million in change orders this month, and other elements were restored earlier.
But one big saving that later became very costly was the agreement not to hire an executive director for the center, after a search had already been launched, and instead leave the county’s cultural affairs department in charge for three more years.
"To say we are not going to hire someone who knows how to do this – that causes me some pause," Chris Dunworth, president of the New World Symphony, said at the time. "Would anybody launch a $200 million project and not hire someone who has done it before?"
We did – and it’s now a $446.3 million job and counting.
And that’s just the construction cost to get the doors open.
When the project began, the county commission was promised – and it pledged – that public money would not be used to operate the center. The center was to be self-funding, backed by a privately raised endowment that was required to be in place before opening day.
You haven’t heard about the endowment in years. Money pledged to keep the center running in the future was shifted to get the center built. Now the Performing Arts Center Foundation, which was raising a planned $85 million in private contributions, has agreed to raise $30 million more over the next 20 years just for building costs.
Private pledges hovered for years near $55 million. Suddenly, the goal is more than double that. Don’t anticipate any endowment aid to fund the inevitable operating losses.
The center will instead rely on more public cash from the Omni Community Redevelopment Area, which was already helping pay construction costs. The center wants more of those funds for construction and more to pay for ongoing losses. Forget that promise of no public money for operations.
We reported last week that the center could get to use three floors of underground parking nearby – if a developer moves ahead and constructs the parking. There is no agreement yet even to build, much less to use the spaces. So the center’s parking task force is scrambling to find temporary spaces for the center’s now-scheduled opening next fall – just five years behind the once-planned 2001 date.
Parking has always been key to the center. The issue arose in October 1989 when the county commission decided to put it in Miami and not Miami Beach.
"We need parking," Parker Thomson, who since its founding has been the Performing Arts Center Trust’s chairman, said in 1992. "It’s been one of the main topics of discussion at our meetings."
It remains one of the main topics at meetings 13 years later.
In 1996, we headlined an article "Parking garage could open 3 years ahead of facility" after Mr. Thomson said, "It does appear we can put together a parking garage in the area."
It still appears possible, but perhaps three years after a 2006 opening instead of three years ahead of a 2001 opening.
Part of the parking problem is the location chosen for the center, a third-rate site straddling Biscayne Boulevard near the failed Omni shopping center. The spot was chosen because the county wouldn’t have to buy the land – it would be donated by Sears and Knight Ridder, owner of the Miami Herald, which editorialized for the site choice. Unfortunately, it cost more to clean the contaminated Sears land and hand over public streets and development rights to Knight Ridder than to buy a far better site.
While the site choice recently allowed Knight Ridder to sell its surrounding land for an incredible $190 million to a developer, the long wait by the arts-center team has made it almost impossible to find an affordable site to build parking.
Perhaps that’s why a Performing Arts Center Foundation official suggested some time back that arts patrons could park in office towers in the heart of downtown and just walk over – it wouldn’t be more than a 15-minute walk.
Unfortunately, there wouldn’t be more than 15 of them doing it, either.
The change in plans that will most affect the center’s original supporters, however, won’t be an inferior site or impossible parking but what they will see once they sit in the seats that were value-engineered out of the center’s budget and restored in this month’s change order.
The center was promoted as a permanent home for five companies – the Florida Philharmonic, the Miami City Ballet, the New World Symphony, the Florida Grand Opera and the Concert Association of Florida. All five told their patrons that they would thrive in the new center.
One didn’t last long enough: The Florida Philharmonic folded while waiting.
None of the other four has signed a contract to use it: They say they’re months from signing – if they do. Some complain bitterly that rent will be far higher than they pay now and could break their budgets. Some, like the New World Symphony, will do most of their performing elsewhere.
But even if all four sign, the kinds of performances they give will be the exception.
Arts organizations and patrons who looked at the Broward Center for the Performing Arts years ago were concerned that Broward gave booking priorities to Broadway shows. They were assured that Broadway was for Broward, local groups would get priority in Miami. But Mr. Thomson now cites the importance of Broadway Series contracts, and the Cleveland Symphony Orchestra has three weeks a year set aside for its performances.
The center is not being programmed just for such traditional fare, however. Performances are to range from jazz to rap, pop to hip-hop. And center executives have been looking at dinner theater and business meetings to fill nights in the two large halls and the smaller theater. Expect graduations and conventions, too.
Those who envision arts patrons filling the center must revise expectations. When center executives talk about serving the whole community, they mean it. "Arts" is being defined as broadly as possible.
Despite such changes, this center will open more or less on its new schedule next fall and will offer an outstanding venue for whatever is programmed – perhaps the best acoustics and sight lines any graduation ceremony or business meeting has ever had. It will also house performances that will bring arts patrons intense pride. This is truly a project government has deemed too big to fail, so the public will foot bills we were promised would never be tendered.
What lessons do we draw from this, and what should we do?
The first lesson is that promises that aren’t in contracts are valueless. We were promised government wouldn’t pay to run the center, but nobody put it in writing.
Second, even if it’s in writing, politicians can change a contract as easily as they passed $4 million in change orders this month. If nobody holds them to their word, it’s meaningless.
Third, government should forget fictions. To make its budget, the center team value-engineered lots of vital expenditures out of its plans – seating comes to mind – then got them restored when government was forced into a larger budget. This game isn’t confined to the center: It’s routine in county contracts.
The fourth lesson is that memories are short but major projects are long. Did you remember that this was once a $75 million project? Or that the county commission approved what is now a $446.3 million building cost at $198 million? Or that from the outset, parking was to be a key component? Or that the project was conceived to aid organizations that now find it had to afford the rent? The details and aims of a public project need to be spelled out and held up for scrutiny throughout its course.
Fifth, public-private projects are often thinly veiled real estate deals. The stated aim is a distant second in importance. Sears dumped worthless land and got a huge tax write-off while the public absorbed environmental cleanup costs. Knight Ridder, which promoted the deal, got a tax write-off, too, but the big bucks were in selling its surrounding lands. Landowners nearby have seen the value of their holdings escalate. The center didn’t trigger the development boom on Biscayne Boulevard – it’s part of a countywide explosion – but the center has been a marketing tool for neighboring projects.
Sixth, concerns surrounding the center aren’t unique. They crop up in public-private partnerships in which nobody is in charge.
In this case, a trust, a foundation and government all play roles, but none is in full control, so nobody is responsible for failures and cost run-ups, and nobody is to blame for them. So costs escalate and projects flounder.
Somebody needs full responsibility and full accountability for construction and for assembling funds to build and operate a project. If the center were to open to huge losses, who would be to blame? It wouldn’t be government, which will have no role in programming the center or its operation, but government – under the too-big-to-fail scenario – would have to hand over the money to keep it going. That, in the end, means you and I would be paying.
It’s no wonder that one county commissioner calls the center "the money pit on the boulevard."
Seventh, we are still looking – with less ardor, perhaps – at a baseball stadium the public would substantially fund. We might use the arts center as a textbook case of how not to structure public involvement.
The eighth lesson is that it’s going to be much harder to raise donations for the center when government agrees to bail the venue out regardless.
Given all of this, what can be done now to maximize the center’s probability of meeting its original goals?
First, fund resident companies. They’ve been seeking operating and endowment funds in competition with the center’s campaign, and their rents will rise when the center opens. Their financial health is more precarious than ever.
There’s going to be a building, government is going to bail out losses, but the resident companies have no such guarantees. If we don’t want the center’s halls devoted primarily to non-arts events, the best insurance policy is to keep the performing companies strong.
Second, remember why we wanted the center in the first place. It wasn’t to grab pop concerts that didn’t need a larger venue or for corporate meetings or Broadway shows. They might be able to pay more than the opera or the ballet, but they shouldn’t be first in mind at the center.
Third, and most important, whoever is in charge needs to be responsible for the bottom line. If those who run and program the center can assume that the public will bail them out of losses, the sky will be the limit.
When the center was conceived and when it was approved, operating costs were to be funded by rents and private contributions, not public money. Now that government is agreeing to fund operations, government needs to take charge. Otherwise, we’re handing a blank check drawn on public monies to a private group that, after 16 years of planning for parking, still hasn’t made a deal for where we’ll put the car on opening night or beyond.
Miami-Dade County a year from now will be graced by two beautiful buildings with spectacular acoustics, great sight lines and even seats for patrons who will attend spectacular performances. If we’re smart, we’ll fund the performing groups, make sure we give them priority and put whoever is paying the Miami Performing Arts Center’s bills in charge. Top Front Page About Miami Today Put Your Message in Miami Today Contact Miami Today © Copyright 2005 Miami Today designed and produced by Green Dot Advertising and Marketing