Town of Hilton Head to arts center: Don't count on bailout

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Town of Hilton Head to arts center: Don't count on bailout

By GINA SMITH
gsmith@islandpacket.com
Published Saturday, December 15, 2012   |  1459 Words  |  

Hilton Head Island leaders put the financially troubled Arts Center of Coastal Carolina on notice this week: Identify ways to save money now and start developing a business model that does not assume significant money from the town.

"(T)here are many competing demands on public resources; and our role must necessarily be limited," read a letter Hilton Head Island Mayor Drew Laughlin sent Thursday to the art center's board chairman, Fred Beard.

Toward that end, the arts center, operating in the red and hobbling through the winter only because of a $346,000 advance in accommodations tax money from the town, is:

  • Undergoing an energy audit, provided at no charge by Palmetto Electric Cooperative. The center hopes to find ways to reduce its $105,000 annual utility bill.
  • Trying to get contributions to fund day-to-day costs. A contract with a fundraising group raised $5 million last year, half of which is not immediately available because it's pledged. The other half will go toward debt reduction and building improvements, and more is needed, said Kathleen Bateson, the center's president and CEO. The fundraising company taught Bateson and her staff how to seek contributions more effectively, and she plans to use a handful of staffers to phone patrons and ask for donations.
  • Making money off of its currently running musical, "Anything Goes." Bateson says the center is making between $5,000 and $6,000 each night.
  • It's anyone's guess whether such measures will keep the center afloat until the town decides whether to provide more money. During the fiscal year that ended Aug. 31, the center continued losing money. It's net income loss was about $230,000, according to unaudited financial data provided by the center.

    Bateson said the center can borrow more money if necessary. That, however, would add to its nearly $2.6 million debt, according to financial data provided by the center.

    Even if the stop-gap measures for saving prove effective, they won't be enough for the long term, Bateson said. She wants the town or some other entity to buy the 16-year-old building and assume the costs of maintenance and the many repairs and improvements it needs.

    Laughlin said he and other members of Town Council are hesitant to buy the Shelter Cove facility because it would likely mean taxpayers ponying up money.

    "It's a lot of money, and it becomes an ongoing commitment that would be substantial," Laughlin said Friday.

    Bateson's rough estimate for needed repairs and improvements, including a new roof and new exterior stucco, is $2.5 million. About $400,000 is spent annually to maintain the building, records show.

    To get a more precise estimate for repairs, the center is working with a South Carolina company, The Gordion Group, whose owner is a patron. The Gordion Group will conduct a free evaluation for the center and determine the costs and timeline of improvements and repairs.

    "Maybe it's not $2.5 (million in needed repairs.) Maybe it's $2.2 (million)" Bateson said.

    THE FUTURE OF HILTON HEAD

    More funding for the arts center represents a sea change for a town government founded as a "limited-services" municipality. Taking over the building would set a precedent for using taxpayers' dollars to support the arts and would open the door for more fundings for other services and causes.

    "We have no history of supporting the arts with anything other than A-tax money," said Laughlin, referring to the state 2 percent tax on overnight lodging, which the town distributes annually to the arts center and other nonprofit groups. The A-tax dollars are currently the only town money the center gets. The annual grants have ranged from $346,000 to $350,000 since 2002.

    "It would be a significant policy change," Laughlin said.

    Unlike most S.C. towns and cities, Hilton Head was only recently incorporated, in 1983. Residents were upset by the pace and type of growth on the island, particularly the pre-fabricated "stack-a-shack" condominiums. Advocates convinced fellow residents that town government would be limited to controlling development, with many other services provided by Beaufort County and other entities.

    That original concept of limited government was an unsustainable marketing gimmick, said Steve Riley, Hilton Head's town manager.

    "The first people who came here wanted to be left alone and to look at nature," Riley said. "But now, people want more. The demands and needs have grown."

    AN ARTS ANOMALY?

    Bateson contends that most arts centers in South Carolina are owned by local governments that cover costs of maintenance and repairs.

    That's true of arts centers in Charleston, Florence, Myrtle Beach and Newberry and perhaps more. But there's no list of who owns each of the state's arts facilities, according to the Municipal Association of South Carolina.

    "I think it's pretty rare to own your own facility," said Betty Plumb, president of the S.C. Arts Alliance, whose office is housed in the Tom S. Gettys Center for the Arts, owned by the city of Rock Hill. The city also pays the musuem's utility bills, she added.

    Because Hilton Head's center enhances the quality of life for residents and draws tourists, it deserves more financial help from the town, its supporters say. The center puts on shows in its 350-seat theater, offers educational workshops for area school students, organizes three community festivals each year and provides gallery space for artists.

    In its 2011-2012 fiscal year, the center generated an economic impact of $14.5 million from tourists traveling from beyond a 50-mile radius, according to data the center recently provided to Town Council. The data was extrapolated by the Visitor and Convention Bureau.

    No other group has conducted a study on the center's economic impact.

    SKEPTICS ARE DOUBTFUL

    Some area residents, like Don G. Carlson, doubt the arts center has much economic impact.

    "I do not believe the arts center is a destination," said Carlson, a 24-year Beaufort County resident who has attended a handful of shows at the center. "It's nice for it to be here, but people don't come here because of it. They still come for the beach, for tennis, for shopping."

    Carlson, who does not live on the island, said he would oppose any effort for his county tax dollars to support the center.

    "It's almost like the powers-that-be knew going into it that it was going to be a money pit," he said. "That's appears to be what happened and now it's becoming a taxpayer boondoggle."

    Others, like Jack Morris, a long-time arts leader who formerly served as the arts center's board chairman, said the center is well-run and deserves more taxpayer support. Museums that Morris previously worked for in both Greenville and Columbia were owned by local government, he added.

    "It would be ideal if the Town Council would consider taking that asset, that property. It's a fine building. It's not luxurious, but it's a fine building that's on a valuable piece of real estate," said Morris, adding that he would support higher taxes to ensure the center's success.

    "The alternative is you simply cut your budget to first provide for the operation of the physical plant and do what (arts) programs you can with what's left, and that may not be much."

    Buying the building is just one option for the town.

    Other possibilities include increasing the amount of accommodations tax money the center receives or making it a line item in the town's general fund budget, meaning it would receive a larger amount of guaranteed money each year from taxpayers.

    "All the options are still on the table," Laughlin said. He said the center and other arts groups are important to the community and deserve more town support.

    The town is beginning work on a survey to determine a path to long-term viability for the arts center and the island's other arts groups, many of which are also struggling.

    "But it will be awhile before that is complete," Laughlin said.

    Follow reporter Gina Smith at twitter.com/GinaNSmith.

    Related content:

    Tax returns, financial statements, paint gloomy picture of arts center finances. Nov. 17, 2012.

    Arts Center gets $346K bed-tax advance: Nov. 7, 2012.

    Arts center seeking relief from debt, maintenance woes: Nov. 3, 2012.