Arts Center Officials To Seek More Public Funding

By Susan Stabley
The Miami Performing Arts Center’s deficit may spike to $70 million to $100 million, prompting officials to seek additional federal, state, county and city dollars for construction and opening costs.

The final price tag of the building is still unclear and will be determined by Miami-Dade County, the center’s chief executive officer, Michael Hardy, said this week.

Solid numbers and a restructuring plan are expected to be given to the county commission Tuesday, Assistant County Manager Bill Johnson said Monday.

The need for more funds is critical, according to a report released last week that cites a shortfall of $27.3 million for furniture, fixtures, capital expenses and pre-operating expenses – about $7.9 million of which could be deferred. The money would restore $5 million worth of items – from telephones and video surveillance to door locks and dressing rooms – cut from the project in 2001 to secure a $255 million contract.

That shortfall is in addition to added construction costs, a figure that has been reported to be from $43 million to more than $90 million – including overrun claims filed or pending from the center’s builders, a joint venture among Odebrecht Construction, the Haskell Co. and EllisDon Construction.

The current target date for opening is May 2006, said Mr. Johnson. When the project was approved, completion was slated for this fall.

County Commissioner Katy Sorenson said Tuesday that she will "hold the contractors’ and architects’ feet to the fire." As far as dedicating additional public funds, she said, "We’ll cross that bridge when we get to it."

But center officials have put their needs in writing.

"We renew our call for support from the public sector," states this month’s report from the center’s trust and foundation, the operator and fundraiser for the facility that straddles Biscayne Boulevard in Miami between 13th and 14th streets.

Mr. Hardy said center officials are considering asking for $3.4 million in federal funds for next year’s budget, with $420,000 already secured. Up to $2.5 million was requested from the state this year, but cuts decreased that amount to $500,000. The local legislative delegation likely will push for the remaining $2 million or more next year, he said.

The trust has not had direct discussions with the City of Miami, Mr. Hardy said, but looks to the Omni District, created in part to help defray the cost of construction bonds for the center. Through that taxing district, the agency pays the county $1.43 million annually to help retire debt service, Community Redevelopment Agency Executive Director Frank Rollason said.

For next year’s budget, Mr. Rollason said, he would ask the agency’s board to approve $3 million for infrastructure upgrades, leaving few additional funds for the center.

Miami Mayor Manny Diaz, City Commissioner Johnny Winton, City Manager Joe Arriola and Chief Financial Officer Linda Haskins said last week that they had not been contacted about more funds for the center. She said no funds are likely to be available.

Of $54 million raised by the center’s foundation toward a goal of $80 million in private contributions, $21 million will establish an endowment for the operations of the facility. But due to legal restrictions, Mr. Hardy said, endowment funds cannot be used for construction.

You can win donors if you can get them in the door, says Miami Performing Arts Center CEO Michael Hardy.

The center’s foundation has a contractual obligation to Miami-Dade County and the center’s trust to bring in $63.2 million from the private sector. "Obviously, the delays and some of the negative media have made it harder," Mr. Hardy said this week.

The trust has been able to counteract that by taking potential donors on tours of the facility.

The trust has raised $54 million of its $80 million goal through the Second Century Fund launched in 1994. Of that, $21 million will establish an endowment for operations of the facility. "The endowment doesn’t exist until we open," Mr. Hardy said.

Due to legal restrictions, endowment funds "cannot be used" for construction regardless of cost overruns, he said.

The money raised so far has been held in escrow or is in the form of pledges that will come in installments over four to five years. Any interest generated has contributed to the account, he said.

Of the $80 million the foundation hopes to raise, $5 million would be used for the trust’s pre-operating expenses, according to a June report from the foundation. Operational costs for the foundation over 12 years, from 1994 to 2006, will cost $11.8 million. The remaining $42.2 million will support the county’s construction budget.

Pledges have been sought at levels of $100,000 or more, Mr. Hardy said. The trust also is working on programs sponsored by corporations.

A later stage of the fundraising campaign will target lower levels of gifts – typically sought about a year to two before a center opens. The trust is designing that stage of its campaign.

The center has been soliciting naming gifts and expects to raise at least $20 million through them, Mr. Hardy said.

Challenges to the project’s completion have come from construction-cost overruns and deficits, delays and squabbles among the center’s builders and architects and Miami-Dade County.

The majority of large performing-arts facilities have had similar problems, Mr. Hardy said. In hindsight, it’s clear where mistakes were made, he said.

Mr. Hardy credited County Manager George Burgess for dedicating an "incredible amount of time on the issue." Mr. Burgess plans to give an update to Miami-Dade County commissioners Tuesday.

Assistant County Manager Bill Johnson said Monday that commissioners would look at four options – maintain the status quo, terminate the contracts of the builders and/or architects for cause, terminate them for convenience or restructure the agreement.

Mr. Johnson said the new plan should not "sacrifice quality, and the numbers are realistic to provide for completion."

The current quality of the center is not the major issue – instead, it’s a matter of getting the project "back on track," Mr. Hardy said.

"To stop now is a financial and political impossibility," Mr. Hardy said. He did allow that "substantial changes" still could be made to plans for the center.

A new management structure for the project, which Mr. Johnson said he plans to propose next week, would create a "more harmonious working relationship," he said.

"The architect (Cesar Pelli & Associates of New Haven, CT) will go forward with no fee," Mr. Johnson said. "The longer this goes on, the longer the architect and the contractor lose money"

The incentive for early completion is a savings of more than a $1 million a month, he said. "This arrangement allows for a complete resolution of past issues," he said, "and certainly of past mistakes."

A restructured plan would bring in consultant URS Corp. of California – hired last fall for $750,000 – as project manager under a contract worth millions, Mr. Johnson said.

If commissioners accept changes, a contract for URS would be presented July 13, Mr. Johnson said.

Dipping more into the county’s Convention Development Tax funds will be considered, Mr. Johnson said, and a new deadline for completion of the center of May 2006 will be established.

Mr. Hardy said that although he did not know all the details of Mr. Johnson’s proposal to restructure, it would be a "better way than to terminate."

Mr. Hardy said he was confident that the center would be ready for the 2006-07 season with a soft opening planned 60-90 days before the formal opening concert.