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$2 million San Jose Rep loan can be canceled at any time
By Monica Heger
The show will go on at the San Jose Repertory Theatre.
The San Jose City Council on Oct. 17 unanimously approved a $2 million loan to the Rep to help dig the theater out of its financial woes.
The $2 million will be paid out over five years, and the loan will be paid back in full after 10 years. Conditions of the loan require the Rep to submit a business plan to the city by the end of this year and to bring in approximately $1.5 million in income during the current fiscal year. Should the Rep fail to meet any of the outlined conditions, the city can cancel the loan at any time.
To further safeguard the agreement, the city will have significant oversight of the Rep's financial operations, including having a city official sit on the Rep's board of directors as a non-voting member, and a city official on the Rep's audit and finance committees. The city is requiring the Rep to explore ways its can partner with different organizations, such as Team San Jose, a public benefit corporation made up of labor and business interests, that manages and operates the Convention Center. The Rep's board and Team San Jose's board have been discussing a potential partnership to see if that would help the Rep save money. The Rep is also looking at the possibility of partnering with the American Musical Theatre of San Jose to merge similar office functions. Such a merger is projected to save between $200,000 to $300,000 annually for each group.
The American Musical Theatre is also in financial trouble and has asked the city for a $1 million loan.
The Rep had originally requested a loan of $1 million from the city, but after city auditor Gerald Silva reviewed the Rep's financial situation, he determined $1 million was merely a short-term fix.
Silva said the Rep would need $1.4 million to survive the current fiscal year, while $2 million would enable the Rep to have a chance at solvency provided the group also implemented a new business plan.
The $2 million loan to the Rep will come from the newly created arts stabilization fund that the council approved in a 9-1 vote. Mayor Ron Gonzales dissented, and Councilman Dave Cortese was absent. The $4 million arts stabilization fund was established after San Jose City Manager Les White recommended the fund be formed from the city's $34 million end-of-year budget surplus.
White said he came up with the figure of $4 million because that is the estimated total of the loans requested by the Rep, American Musical Theatre and the Mexican Heritage Plaza.
"All this could be appropriated in the next three to four months," White said.
He said all monies paid out of the arts stabilization fund would go back into that fund as it was repaid.
