Treasurer describes financial situation as ‘very serious’

A written report from Bob Schultz, treasurer of the Turnage Theaters Foundation to his board, appears to cast doubt on the nonprofit’s ability to pay its bills.

“The Theater is in very serious financial trouble in 2011 and I have not been able to figure out the means to address this problem,” Schultz wrote in the report, dated Oct. 25. “Additionally, the financial plans for 2012 and beyond that I developed do not present a financially sustainable business for the Theater.”

Schultz reported that, in October, the foundation had outstanding bills of around $33,000 with $6,000 cash on hand.

“I intend to use $3,400 of the available cash to cover our next payroll due on October 28,” he wrote.

In an interview Tuesday, Schultz disclosed the theater had generated some additional money since late last month, including about $3,000 taken in during a fundraising variety show Saturday.

In his earlier report, Schultz foresees further troubles ahead for the theater in November and December, when “our outlays for Overhead Expenses and Loan Payments/Fees are projected to be $32,360 and $29,065, respectively.”

Schultz forecast fundraising during those months to equal $4,000 in November and $8,000 in December, “excluding the proceeds from our year-end fundraising efforts.”

Later in the document, he proposes deferring the year-end fundraising program “until we have fully evaluated the options available regarding continued operations of the Theater.”

He projected approximately $71,000 in cash obligations for the remainder of the year, with some $14,000 in cash to meet these obligations.

“This situation is even worse when you consider the $21,000 in advance ticket sales revenue that we have used to cover current expenses and the $30,000 outstanding balance on our credit card,” he wrote.

Schultz added the theater does not “have a sustainable financial plan for 2012.”

In the Tuesday interview, Schultz said the foundation is “looking at all the options that are available to us right now.”

The Turnage has always had a cash flow problem, but, “It’s a little more extreme this year,” he said.

He declined to release his Oct. 25 report to the board, which the Daily News obtained from another source.

The foundation is communicating with its bank and the National Trust for Historic Preservation in the hopes of improving its cash flow, he indicated.

According to its website, the National Trust “is a private, nonprofit membership organization dedicated to saving historic places and revitalizing America’s communities.”

“The National Trust has some of their capital commitment to the theater still available, and we expect them to release that momentarily,” Schultz said. “And the banks have limited flexibility in terms of what we have in our interest reserve account, whether we can apply that to cover the mortgage related interest expense now rather than holding that in reserve.”

The Turnage board is scheduled to meet Thursday to consider a draft financial plan submitted by Schultz about 10 days ago, the treasurer said.

“Certainly, within the next two weeks, I’ll be able to give detailed information that will be clear, will be understandable rather than just putting out the financial statement,” he said.

The Turnage has “some big shows coming in December,” he added.

“We intend to proceed with those,” he said.

The shortfalls shown in Schultz’s report are the latest in a series of budgeting difficulties for the Turnage, which is or has been funded partly by contributions from corporations, private individuals, state government and the City of Washington.

In July, foundation representatives said they had exceeded a $78,000 fundraising goal by $8,000 with donations from individuals and businesses. This contributed cash was needed to launch the theater’s fifth season, they said.

The foundation reopened the restored theater to the public in November 2007.

Beaufort County and the City of Washington have continued offering the foundation a tax incentive grant of $8,821 a year as part of a seven-year agreement that defrays the theater’s property taxes, said Matt Rauschenbach, chief financial officer for the city.

The Washington City Council decided to contribute an additional $22,000 in support of the theater in the current fiscal year, he said.

But the city’s support is small compared to the theater’s overall bills, and Turnage leaders have made it known the touring shows booked into the theater aren’t a big source of profit.

In April, Schultz told the City Council the Turnage had $970,000 left to pay on its mortgage.

The theater has a slate of shows booked through December, and its staff plans to move forward with those productions, said Scotty Henley, executive director of the foundation.

“The financial situation is always a constant battle for the Turnage, and we are working as efficiently as we can to shore up the continuance of that theater,” Henley said.

Asked how serious the theater’s financial difficulties are, he replied, “The past two years have been serious. We have just had a fair amount of good luck as well as good treasurers in place to help us balance out our monies.”

He pointed out the Turnage lost some financial support from the city, which had issued grants of $100,000 a year to the foundation for five years. The city’s grant commitment expired during the previous fiscal year, but, as noted, the council did opt to allocate the $22,000 in cash for fiscal year 2011-2012.

The Turnage needs the support of people and businesses to make up the difference from the loss of the city’s annual grant, Henley related.

It was unclear Tuesday whether the City Council would consider providing more money for the Turnage in the short term.

The Daily News asked two leaders in the downtown arts community what Washington would be like without the Turnage.

In short, both suggested that possibility is unthinkable.

“We’ve been trying very hard to create more businesses downtown, and to lose an anchor like that would be very detrimental for downtown,” said Beth Byrd, executive director of the Washington Harbor District Alliance.

The publicly, privately funded WHDA promotes downtown as a destination for visitors and city residents.

“I think it would be devastating not only to the arts community and the arts infrastructure, but it would be a huge gap in downtown; it would be a huge blow to any downtown revitalization efforts, to the economy downtown,” said Joey Toler, executive director of the Beaufort County Arts Council.

“It would not be good,” added Toler, a nonvoting member of the Turnage board. “The Turnage is embedded in all of the selling points for Washington and Beaufort County. It’s what is advertised as bringing people to Washington.”