Overture deal would cost taxpayers extra $500K a year, study says.

Welcome to the next black hole for Madison property owners and add it to the list I have created in blogs below.  Thank you Mayor Dave!

Madison taxpayers would add roughly another half-million dollars in average annual maintenance costs to the $1.4 million a year they now contribute to the Overture Center if the city takes ownership of the arts center as proposed, according to a report presented Thursday by an aide to Mayor Dave Cieslewicz.

Some members of an advisory committee on the purchase plan are asking if more of the costs could be picked up by private donors who are expected to back a nonprofit group to operate the center.

The report projects maintenance costs of $19.3 million over the next 15 years, with the city responsible for $9.78 million and the operator responsible for $9.54 million, said Andrew Statz, the aide who led a group of experts in cataloging the center’s needs.

At issue is about $4.4 million of the total that the report splits evenly between the city and the operator, pending negotiations over who should pick up the tab for the items.

The “negotiable” items include about $3 million for replacement of carpeting and tile flooring, and more than $1 million in lighting fixtures, theater seats and other equipment, Statz said.

Committee member Jim Garner said the operator of a facility is usually responsible for lighting and flooring replacement.

“I’m not sure where the negotiation comes in,” Garner said.

Another committee member, former Mayor Paul Soglin, urged Statz to investigate how private businesses allocate these costs. Building owners can write contracts that require tenants to cover all kinds of expenses, Soglin said.

Statz acknowledged the argument can be made that the installation of energy efficient lights, for example, should be the responsibility of the operator because the operator benefits from reduced electrical bills.

He said the report’s cost allocations were based in part on how it is done at the Marcus Center for Performing Arts in Milwaukee.

Committee member Deirdre Garton, who also is a member of two of the boards that currently run Overture, said it makes more sense to follow the lead of a performing arts center rather than a multiplex theater or other business.

Statz said part of the problem is that some types of maintenance aren’t likely to excite potential arts donors. He used the example of the cost of replacing machinery used to extract grime from and clean carpets.

“It’s hard to get donors jazzed up about floor extractors,” Statz said.

Building in good condition

The Overture Center is in “very good” condition structurally, the report states. A proposed $1 acquisition would require the city to pay an average of $652,000 in maintenance and upkeep annually over the next 15 years.

The money would be borrowed, and the likely repayment cost would be less — about $488,500 per year — because it would be stretched over a longer period of time, Statz said. The debt payments would peak in 2025 at more than $1 million for the year, the report projects.

Statz said payments appear to “plateau” at that time, but he acknowledged any cost estimates after 2026 are little more than conjecture.

The report lists Overture’s features and systems, and identifies their condition. It concludes the 2004 building is overall in good shape, with some exceptions.

In June, Overture officials announced the center’s lingering $28.6 million debt would be resolved under a plan in which major donors pledge to give $15.1 million and the lending banks forgive the remainder. The deal is contingent on the city taking ownership of the building by the end of the year.

Cieslewicz and the City Council created the committee to evaluate the costs of the plan.

Council President Mark Clear said the maintenance cost estimates were in the range he expected.

“The numbers didn’t shock me,” Clear said after the committee meeting. “But that doesn’t mean I’ve come to any conclusions.”