The money pit

For years, the Lear Theater floated along—hosting a few shows, raising money and expectations—but it never achieved the glory donors imagined. Does Artown ownership offer the building new hope?

PHOTOS BY AMY BECK

Imagine giving away three-quarters of a million bucks.

Donating properties valued at $773,070 to Artown must have felt like a pretty good way for an arts organization to close the books on a 14-year failed attempt to renovate an old church.

Leilani Schweitzer, for one, was elated to pass the damned thing off. She joined the Lear Theater’s board of directors in summer 2010 to assist with the happy job of marketing. Inconceivably, with virtually no experience, she ended up burdened with the task of steering the disabled ship into its final harbor, signing papers as the final Lear Theater, Inc. president, giving the building to Artown. It may have sunk the effort to rehab a structure that has alternately captured the imagination and ire of Reno’s arts community. On the other hand, maybe it’s just the effort needed to finally get people back in that building. Virtually no one has come forward as upset at the change in management.

There are lots of reasons for the failure: an amateur-planned effort to raise money, a worldwide building boom that inflated material costs, constant changes in group leadership for reasons of ideological differences, ennui and incompetence.

There were occasionally serious rumors around town, and sometimes people resigned—there was the report that the organization’s president’s spouse got a $725,000 architecture contract. Or the time $600,000 in restricted funds were possibly spent on unauthorized items. Or the $81,000 property that had to be sold to pay staff and bills—maybe by a boardmember’s spouse who acted as both the buyer’s and seller’s agent.

But this is all just water under the bridge, and it was in August 2010 that the dam began to give way and drowned the Lear Theater, Inc. as a stand-alone concern.

“At that time, no fundraising was being done whatsoever; there was no money coming in, bills were starting to pile up, so we had to sell our assets,” said Schweitzer.

Yes, there were questions upon questions over the years, but finally, one more board president quit, and Schweitzer stalwartly took the job. She felt utterly in over her head.

“This is not my thing,” Schweitzer said in March. “I don’t know anything about this stuff. I didn’t know a lot about nonprofits, but I can smell the coffee. It didn’t take a genius to see that there was no money coming in.”

She and other board members spoke to past donors and other interested parties, like Reno Mayor Bob Cashell, trying to figure a way out. It was in August 2011, after Artown’s month-long July event, that the Lear Theater group began talking to the arts aggregator.

“It was very, you know, ‘open the kimono,’ ” Schweitzer said. “We were very upfront and honest with them. Lots of frank discussions. The [Artown] board decided they wanted to move forward, and December 30th, we signed all the property documents.”

She said those frank discussions included conversations about where things went right with the efforts to reopen the church as a theater, actual operating costs, and the reputation of the Lear theater group in the community.

Nettie Oliverio poses in front of the Lear Theater.

“I think the reputation is well known in the community,” she pointed out. “I mean, people don’t know the details of what went on, but you know, it was kind of a money pit. … We were just trying to figure out what we were going to do because we had a shit sandwich dropped in our lap.

“This is what I think went wrong,” Schweitzer continued. “There was never a realistic business approach taken to the building. I think there were a lot people with creative imaginations and big dreams and big visions but not pragmatic to where we are and what the real purposes of that building could have been.”

Schweitzer, along with many in the Northern Nevada community, point to the influence of Dan Rosenblatt, who became executive director in 2005. It was under his direction that the Lear board moved from a community-based-theater vision to development of a professional theater company. Many said Rosenblatt had refined tastes and an expensive concept, having worked for Disney, and he hired expensive out-of-state consultants, out-of-state theater designers and out-of-state architects. There’s no doubt he had his problems—for example, some sources say he ignorantly dipped into more than a half-million in reserved funds, money that was not intended to be spent for the purposes for which it was spent. According to a board member, Rosenblatt ended up fired—or resigned, depending on who is telling the story—and he filed a lawsuit for wrongful termination. But that was 2005, and there was already plenty of blame to spread around.

Water under the bridge

What’s now known as the Lear Theater has captured the public’s imagination since it was built in 1938 on the banks of the Truckee River by the “Architect to the Stars.” Reno, in 1938, was a world hotspot, with movie stars, gamblers and divorcees attracting international attention to the city. Many of its buildings were designed by world-renowned architects, with artists like Frederic Joseph DeLongchamps contributing to the cityscape.

Paul Revere Williams was another famed architect who added to the city’s mystique. He was born in 1894 and orphaned at 4 years old. He did his schooling and worked for other landscape and building designers mostly in Los Angeles until 1922 when he opened his own architecture firm, according to a timeline of his life at www.paulrwilliamsproject.org. In 1923, he became the first (recorded) African-American member of the American Institute of Architects.

Williams completed his first project in Reno, the Luella Garvey House (589-599 California Ave.) in 1934, then Rancho San Rafael (the Ranch House at the park) in 1938. He also published a rendering of the First Church of Christ, Scientist (501 Riverside Drive) and completed the Loomis Manor (1045 Riverside Drive) that year. (There’s a great history of Loomis Manor in the Nevada Historical Society Quarterly at http://nsla.nevadaculture.org/statepubs/epubs/210777-1993-4Winter.pdf.)

The following year, 1939, the El Reno Apartments (1307 S. Virginia St.) and the church were finished. Services were held at the First Church of Christ, Scientist until its sale in 1998.

(Two fun history mysteries: There are multiple sources that attribute different dates to the completion of some of these structures, for example, the NHSQ document shows the First Church of Christ, Scientist completed in 1938 and the Loomis Manor in 1939. Secondly, the El Reno Apartments, which had a framework of steel, were disassembled and moved around southwest Reno; there are three of the white-with-green-trim buildings near the intersection of Lander and Mount Rose streets.)

Of course, theaters—especially historic churches that become theaters—are more than architects and nails and time passing like water in a nearby river channel. Nettie Oliverio was involved in the switchover from church to community performance space almost since the idea’s conception.

“It was the brainchild of Edda Morrison [in 1993],” Oliverio said. “She was a member of the First Church of Christ, Scientist and an art supporter par excellence. The first First Church of Christ, Scientist had been trying to find a good way to transfer their building. The number of their congregation had reduced to the point that the church was too big for them. It was older, 64 years old at the time, so she thought this would make a great edifice for all performing arts, but particularly the theater. She was noting that we had a great philharmonic, a great ballet company, the opera, but the theaters were treated like poor stepchildren. She thought that if they could come together in a greater grand footprint, it would give them more visibility in our community.”

Oliverio said that Morrison saw an opportunity to help several arts groups with one synergistic effort, and she put together the Reno Sparks Theater Community Coalition, popularly known as the Theater Coalition. Oliverio, who was a founding member, became secretary for the group in 1994. She compiled an informal timeline of the RSTCC/Lear Theater, from 1993-2006, which accompanies this story at www.newsreview.com/reno. She was on the board from 1994-2005.

“Moya [Lear] was at the very first meeting, and she was a member of the church,” Oliverio said. (Lear died in 2001.) “We did a formal ‘ask’ to Moya to gift us with the amount of money it would take to buy the building, which was $1.1 million. She ultimately did that, donated the money to the Theater Coalition, which bought the building. The papers were signed on Tax Day, April 15, 1998.”

This is what the Lear Theater looks like now.

The million and change, of course, went to the church’s congregation, which constructed a new church over on Peckham Lane. “It was the gift that kept on giving,” said Oliverio.

The Theater Coalition immediately began fundraising and hosting events at the church.

“It was open 14 months before the fire marshal came in and said, ‘You know, you guys need to do improvements to the building, you just can’t do this anymore,’” she said. “But during the 14 months, there were over 90 performances for more than 15,000 people.”

After the space closed, the group was able to focus on fundraising, and for a while, they were raising over a million dollars a year.

“You’d think that would be enough to do all the architectural changes and all the internal things you need to do to get the building open, but that also corresponded with a pretty historic time in construction,” Oliverio said. “There was literally a point where if you got a quote for steel, it was good for 24 hours. We were running on the treadmill and never able to catch up. Every time we’d get a big chunk of money … materials would have gone up again.”

They did do some construction. The group felt that the community needed to see work completed, and they also had some grants that had to be used or they’d be lost.

In 2005, Dan Rosenblatt took on the role of executive director. While many people want to scapegoat him as the reason the Lear Theater went over the levee, it’s easy to point at the guy who’s no longer in town. And while there were some plans considered that seem in retrospect unbelievably grandiose—including moving the entire building and constructing a new high-rise theater with condominiums—it should be noted that Rosenblatt could not act without the board of directors’ approval. Rosenblatt left the organization under a cloud in 2008.

The board returned to the original 1994 concept for a community resource that could be a performing arts theater that could be rented for children’s plays, meetings, weddings or film premiers. They hired Mercedes de la Garza, wife of a former board president, Scott Gibson, to do the “new” design. De la Garza said Gibson resigned months before the $125,000 contract was awarded, and he recused himself from any votes that could be considered conflicts of interest.

All those failed plans made it harder to raise money. And having accepted historical grants from the federal government and the state of Nevada limited what could be done with the building. Those government monies included a $400,000 Save America’s Treasures Grant from the National Parks System and $600,000 in matching funds from the state of Nevada. Being on National Historic Register or under the watchful eye of Nevada Commission on Cultural Affairs restricted what could be done to the outside of the building—like no anachronistic murals. The mural there now will be removed.

De la Garza pointed out that some $3 million in government money is still available—even to Artown for the Lear—and since it’s dollar-for-dollar matching funds, the total could be worth up to $6 million.

Down the drain

There are lots of people who’d like to know where the money went. Jessica Miller had an osprey’s eye view, having been a secretary to the board and administrative consultant. She was even the group’s office manager from June 2007 until September 2010.

She said she has no doubt where the money went.

Jessica Miller was the secretary of the board and administrative consultant.

“Our development director [Cathy Blankenship] did a lot of research,” Miller said. “She was able to figure out where all the money came from and where all the money was spent. … It’s all accounted for. … She took all of what we had in our donor database on top of what we had in our Quickbooks, and she was able to figure out where all the money came from and all the money was spent. And that’s what we thought we could take to donors, because that was their biggest question, ‘Where did all the money go?’ That was her biggest priority, to show people where all the money went, and it’s all accounted for.”

While Miller was confident, few others seemed certain as to exactly how much money had been raised over the years, and estimates—even among former directors—ranged from $9-$15 million. Some people said they’d tried to find out, but were unable.

Several sources—including Reno City Council member Dave Aiazzi, who is also the chairman of the Artown board that accepted the “gift” of the Lear Theater, its parking lot, and the house at 528 W. First St.—said that detailed financial information, including a donor list, was unavailable even to Artown.

A quote from the Blankenship document’s introductory page follows. On the original document (the RN&R received a printed version), there appeared to be hyperlinks to a “Detailed Expense Report” and “Detailed Income Report.” Blankenship’s analysis includes information from January 1997 to June 2009. (See chart below.)

Financial history

Successful Fundraising: $10.2 million raised

During the past 12 years, a total of $10.2 million has been raised for the Lear Theater. Of this total, 89 percent ($9.1 million) was designated to the Capital Campaign and the remaining 11 percent ($1.1 million) was raised to support programming and for general operating. For seven years, from 1998 to 2005, the Lear Theater operated numerous successful programs in our local community, such as Journey to the Center of the Arts and the Truckee River Fest.

Good financial stewards

The Lear Theater has also been good financial stewards over the years, monitoring our income and expenses and conducting an annual audit by independent accounting firm. As of our last annual audit, the total of expenses through June 30, 2009, have been slightly less than $9.4 million, of which 82 percent ($7.7 million) has been spent on the capital project.

Only 18 percent ($1.7 million) has been spent on both Programming and General Operations over the last 12 years.

Combined audit details

Financial information from 12 years of annual audits has been combined to provide a historical financial overview of the Lear Theater. The following graphs reflect audit totals from the Reno Sparks Theater Community Coalition and Lear Theater, Inc.

•••

Curiously, there were documents given to Artown, according to Schweitzer, the exiting president, which the tax-preparer, Michael Williams of Strong McPherson & Company, told her to not provide to the RN&R. She did proffer part of a copy titled “Statement of Financial Position, June 30, 2011 and 2010, but the “notes” section was not provided at the preparer’s behest, even though every page of the document states, “The accompanying notes are an integral part of these financial statements.” Williams contradicted Schweitzer, suggesting there must have been a communications error between them, and emailed a copy of the notes to this newspaper.

Schweitzer said that the document shows how the Lear Theater group, which listed net assets and fund balances of $4,806,864 on its 2010 Form 990 (tax exempt organization report to the federal government) could zero out its books by giving three properties worth $773,070 to Artown. Williams said that the $4.8 million included the properties and some of the improvements to them, common accounting practices.

But for those of us who are not accountants, it requires a certain cognitive fluidity to understand how $10.2 million can become $4.8 million and then become $773,000 in real value in a measly 14 years without ever stretching the law. After all, some of this, about $2.6 million, was government money that may have been mishandled. Nonetheless, it’s eddies in the stream to the past and future owners of the building.

Miller is keenly aware of the dissonance.

“I can confidently say that no one has stolen a dime from the Lear,” she said. ”No one has embezzled anything.

“But that’s just my word,” she said, laughing. “I can confidently say that.”

Smooth sailing ahead?

Reno City Council member and Artown board chairman Dave Aiazzi said he tried to look over the books without much success, but the festival was not worried about any irregularities in the first 12 years of the Lear’s management.

“It didn’t matter to us because we got it free and clear,” he said. He was not concerned about the past, even from his position as a steward of tax money. “The city didn’t put that much into it over the years, maybe $50,000, which I know is a lot of money, but [it’s not much] over 12 years. In fact, I even stopped them from putting some money into it.”

The councilmember and candidate for school board considered the idea from the deck at Bibo Coffee near the university. “We did our due diligence in taking over the building. … We went and made sure there were no liens on it. We have rights to all the plans that had been previously planned. We didn’t ever find out how much they raised or how they spent the money. We didn’t get any of that.

“We asked them, and they don’t have a list of donors, so part of the problem is we can’t go back to those guys. We tried to meet with the ones we knew had given them money and asked them if they thought it was a good idea for Artown to take it over. … We knew a couple of them from the newspaper and stuff, so we went to talk to them. And they said, ‘Well, we think it’s a really good idea. Somebody’s going to do it. I’m glad it’s you guys.’”

Aiazzi said, as a member of the Reno City Council, not as an Artown leader, that it’s to the city’s advantage to have the Lear Theater open. He noted that the Lear’s next-door neighbor is doing property improvements. Another neighbor down the block is reconstructing a building.

“Even though we put money into it, we should put a little more into it, if it will get it open,” he said. “That area is starting to build up again. And to have a vacant, big, huge building right in between McKinley and Wingfield, that’s not good for the city, either. So I think it’s in the city’s best interest to get this open.”

As to the future, the new honcho shrugs and says if things don’t work out with the flood-prone Lear Theater and Artown, well, Artown will put a “for sale” sign in the yard. After all, they now own the building next door, which will give the arts festival a permanent home, a luxury it has never had.

“I can tell you what the future [for the Lear] will be in the next six months,” he said. “We’re going to open it up in July on Tuesday nights; it’ll be ‘Tuesdays with Moya,’ where people can go through it and see what it looks like. Some people think it’s just ready to go—just polish the doorknobs and open it up. But I want them to see what’s going on and give us ideas about we should do with it, because there’s a lot of different ideas floating out there.”