By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
On a chilly afternoon twelve months ago, with a huddle of dignitaries and assorted gawkers in attendance, Minneapolis City Council president Jackie Cherryhomes blessed the Shubert Theater's one-block slog down Hennepin Avenue with a bottle of frozen Champagne. The superstitious might have taken it as an inauspicious sign that the bottle did not break on the first, or even the second, hurl. When Cherryhomes did finally manage to shatter it, a small cheer went up from the shivering crowd. The long-derelict Shubert had taken its first plodding step to new life, Block E was cleared for a long-awaited retail development, and the city was writing itself into The Guinness Book of World Records for moving the heaviest building ever (5.8 million pounds, to be precise) on rubber tires. It was a moment of civic pride, and, not coincidentally, a fabulous photo opportunity.
Still, there were those who questioned the efficacy of the Shubert move. With a price tag of $5 million and no guarantee that the theater would ever open its doors to the public, the endeavor looked to Cherryhomes herself like a "leap of faith." The city's finance officer, John Moir, advised in a memo to the city council that "from a purely economic perspective, the Shubert Theater Project is not viable."
The crux of Moir's apprehension was this: Artspace Projects Inc., the developer picked to renovate the Shubert, had three years to raise the approximately $22.5 million required to complete the remodeling. "If fundraising is unsuccessful," warned Moir, "Artspace is obligated to demolish the theater. Demolishing the Shubert, after spending $4.7 million to move it, would probably make the demolition the most expensive such event per square foot in the history of Western civilization."
Despite Moir's reservations, city politicos were convinced that Artspace could come up with the requisite cash. After all, the group had promised that once the city financed the move, it wouldn't need to spend another dime. Instead, Artspace's fundraising experts would recruit philanthropists, the State of Minnesota, and local foundations to underwrite the project. If luck held, Minneapolis would soon have a revitalized entertainment district featuring a glamorous new multiplex-and-retail development on Block E, plenty of themed restaurants, and another historic venue to round out its theater corridor.
A year later Block E still lies fallow. The squat and boarded Shubert is now moored adjacent to the Hennepin Center for the Arts on the opposite side of Sixth Street. Artspace has raised only $2 million in private donations to date; and, at the capitol, the project's biggest hope for a cash infusion--$8 million in state bonding money--is considered a long shot at best. To some city officials, Moir's original objections now seem less like naysaying than augury.
"It's a tremendous amount of money," says Tenth Ward council member Lisa McDonald, who cast the swing vote in the council's 7-6 decision to move the theater. In her view, there are three possibilities for the Shubert's future. Artspace could fail to raise the $6 million required to purchase the parcel where the theater now sits; that, explains McDonald, would trigger demolition. Or the group could fall short of its $22.5 million goal and, McDonald says, the city will be expected to pitch in. "Third," she prognosticates, "we'll end up owning the damn thing. And I, for one, really don't want to own another theater--especially one that needs shoring up."
When the Shubert opened its doors in 1910, Minneapolis's theater district was enjoying its first boom. Hennepin Avenue was lined with more than two dozen stages offering mostly vaudeville and burlesque diversion to the city's burgeoning middle class. Strolling southwest from the river in the Twenties, through an impossible traffic snarl of trolley cars, wide-eyed farm boys just off the train from North Dakota, workers from the milling district and the rail yards, street preachers, smartly dressed ladies out for the evening, and cops walking the beat, you'd pass first by the Antique Theater. You'd come next to the Great Northern Market on the corner of Sixth and Hennepin, where Al and Harry Shinder, the streetwise newspaper boys who would eventually found a Minneapolis institution on the same spot, hawked the day's headlines.
The Shubert would have been on your right, its Classical Revival façade dominating the architectural jumble around it. Past the Pantages Theater and the Walter Short Owl Cigar Store, past the low-rent residential hotels and restaurants and speakeasies buried away from the street, you'd come to the State and Orpheum theaters--where, if you were fortunate, Mae West or the Marx Brothers or Sarah Bernhardt might be gracing the stage.
If you'd walked the same route a few decades later, you'd have seen the grand old houses fading into disrepair. The Depression hit the downtown business district hard, and Minneapolis's Great White Way dimmed considerably. After a second boom in the postwar years, the area became a shabby playground for the city's seedier element. By 1987, according to Minneapolis Police Department statistics, 25 percent of all downtown crime took place on what is now Block E.
Perplexed city officials dealt with the blight as they had with that of the Gateway District a decade earlier: At a cost of $9 million, the businesses on Block E were relocated and the buildings razed. Only the Shubert, which had closed its doors in 1983 after a stint as the Academy movie theater, was left unmolested. The city's vision for the site included a retail and entertainment complex not unlike City Center on the other side of the avenue.
The grandest proposal for the site, delivered by Loon State Ventures in 1995, posited a three-block "entertainment" complex that included a renovated Shubert as a community theater; the developers warned, however, that the structure was in such bad shape that it would become unsalvageable if not soon renovated. Their warning fell on deaf ears, however, and the city settled on the less ambitious one-block complex proposed by Brookfield LePage (now Brookfield Management and McCaffery Interests). Brookfield had no interest in reusing the Shubert, and it was assumed that once the development got under way the theater would simply be bulldozed.
But preservationists weren't quite ready to give up. In 1995 the theater--already on the city's official list of historic properties--was added to the National Register of Historic Places, complicating the prospect of a demolition. The Minneapolis Heritage Preservation Commission generally denies demolition permits for designated historic buildings, according to longtime member Bob Roscoe, though the city council can override its decisions.
As the Block E development deadline approached, a group of preservationists dubbing itself "Save Our Shubert" began agitating for reuse of the theater; in 1997 their campaign got a boost from a Minneapolis Community Development Agency (MCDA) study that determined the Shubert to be an ideal venue for touring dance and theater performances.
Fortuitously, Artspace, a fast-growing nonprofit developer headquartered in the nearby Hennepin Center for the Arts, had in hand a study commissioned by the Jerome Foundation, indicating a need for a "midsize" theater serving those same shows. "The impetus for the Shubert project came from us rather than from the city," asserts Artspace president Kelley Lindquist. "We'd been talking with people in the arts community about a dance space around the Shubert for decades."
The vision Lindquist's group eventually proffered to the city posited the Shubert as part of an urban revival analogous to that of 42nd Street in New York. Artspace's proposal pointed specifically to the example of the New 42nd Street Corporation, an independent nonprofit redeveloper founded by New York state officials in 1988 and charged with revitalizing the blighted Times Square area (theretofore the nexus of an entirely different stripe of entertainment district) by reclaiming historic stages.
Ambitious though it seemed, the plan dovetailed nicely with Minneapolis officials' vision for the area. The city had already spent close to $24 million buying and rehabbing two other historic theaters, the State and the Orpheum, and another $1.2 million financing a stage for the privately operated Hey City Theater. When planners looked into the future of Hennepin, they saw something very much like the past: an avenue of theaters casting a warm glow over a middle-class throng drawn downtown to shop, eat, and catch a show.
But renovating the Shubert where it stood, officials determined, was not an option: Because Brookfield held development rights for Block E, the city faced a potential lawsuit if it didn't clear the block. And so it was that in February 1999 the venerable venue was hoisted--sans foundation, stage house, and one wall--onto 570 rubber wheels and carted across Sixth Street. For better or worse, the theater's fate was now in the hands of Artspace.
Inside the derelict Shubert, a thick layer of plaster and dust has settled. It is cool and dry, and the only light comes from pale construction lamps. A mildly treacherous wooden staircase zigzags up past what was once luxury box seating, to the steeply raked second mezzanine. The unadorned ceiling arcs over the space where evangelical meetings once thundered, burlesque shows capered, and cinemagoers stared goggle-eyed at Birth of a Nation.
The stage house is gone now, as is the floor. From the detritus-strewn balcony, one misstep could mean a 40-foot tumble into the pit below. Clambering about the dimly lit hall is rather like climbing into a bombed-out cathedral: The ruin is picturesque as well as pervasive.
When Artspace's experts look at the venerable theater, they see nothing but potential. The array of balconies, points out vice president William Law, means that even the seats farthest from the stage have an unobstructed view. Although the interior is nearly devoid of ornamentation--"It was never a gilded lady," Law says--the superior sightlines and turn-of-the-century ambiance make the 900-seat auditorium ideal for dance performances.
In theory, at least, the theater is a perfect fit for Artspace's métier. The organization was founded in 1979 by the city-instituted Minneapolis Arts Commission as an advocate for artists displaced by the gentrification of the Warehouse District; it has since become a gentrifying force in its own right, with $42 million in real estate held solely or in partnership. Artspace's specialty, according to a 1999 annual report, is rehabbing old industrial buildings in "diverse and economically challenged neighborhoods" as living/studio spaces. Its list of successes includes the Tilsner and Northern Warehouse buildings in St. Paul's Lowertown; the Hennepin Center for the Arts and the Traffic Zone Center for Visual Art in the Warehouse District; and the Calhoun building in the Lyn-Lake area of south Minneapolis. The latter--the site, incidentally, of a well-publicized 1999 raid on a meth lab run by an enterprising tenant--is the only Artspace project developed without public or private subsidy.
Among city officials, Artspace has a reputation for putting together creative financing packages to renovate buildings that would otherwise languish. According to vice president Thomas Nordyke, that financing generally comes from a mix of historic tax credits, federal low-income-housing credits, private donations, and foundation grants. "We make it up as we go along," he says half-jokingly. "You literally just try everything."
Artspace's offices are located on the fourth floor of the Hennepin Center for the Arts, separated from the Shubert by a narrow gap that under the renovation plan will one day be filled with a glass atrium. But for the Block E view and some large abstract paintings on the walls, Artspace's suite--recently redone in tasteful blond wood and outfitted with translucent iMacs--is hardly distinguishable from the quarters of any other local nonprofit.
So too the group's chief, Kelley Lindquist, looks every bit the part of the savvy arts manager. Dressed in a red sweater and exuding amiability (he bears more than a passing resemblance to Garrison Keillor), he settles with several co-workers around a plate of cookies and begins to explain his serendipitous entrée into the real estate development business.
"The reality is, I was working as a facilities manager at the Guthrie and my mentor over there told me, 'Kelley, you're the type of guy who deserves to run an arts organization.' At that point, it was between that and a job in the Forestry Service at Glacier National Park. I've always had a tremendous interest in camping and the environment, and at the time I considered that my greater calling."
A month after he took the job at the then-embryonic Artspace--he was the sole full-time employee--Lindquist got a call from the National Park Service offering him a cabin in the mountains if he would agree to check fishing licenses and "watch out for grizzly bears." "I went in to the head of the board and told them I was going," he recalls. "She convinced me that that was a greater calling I could pursue in my later years. She also said, 'This is a chance to develop a family.' I was always kind of a loner--my father lived here, but we weren't really close at the time--so that really caught me."
The first addition to Lindquist's new family was Nordyke, then fresh out of the University of Minnesota's Carlson School of Management. "I'm not any financial whiz--far from it," Lindquist explains. "What's refreshing about the people here, though, is if something doesn't work at first, we don't hit a wall. A lot of people we work with tell us it's refreshing after having done business with developers who just pick up their toys and go home when things don't work out."
Doping out the nuts and bolts of financing falls to vice president Wendy Holmes Nelson--a veteran of the Science Museum's hugely successful $100 million fundraising campaign--and Nordyke, now Lindquist's younger, quieter lieutenant. Perhaps Artspace's shrewdest innovation, Nordyke ventures, has been the use of federal low-income-housing credits to develop apartments for artists. "You have to accept artists as a subset of the low-income population before you can really be comfortable with that," he explains, thoughtfully leaning back in his chair. "Like janitors, they're really always going to be low-income based on what they do for a living."
The notion that Artspace ought to act as an advocate for bohemian enclaves runs through much of the developer's rhetoric. It is also a constant source of worry when projects falter. "The Traffic Zone [building] almost killed us," Lindquist sighs. "Our for-profit partner went bankrupt almost right of the gate and it looked like the artists who supported the project were going to get thrown out. At the time, our major funders were quietly telling us we were taking on too much. It was painful to walk in there and have the secret feeling in my soul that I couldn't do this."
Lindquist evinces no such tremors with regard to the Shubert. Yet he and Nordyke concede that funding the project may be Artspace's greatest challenge to date. According to Nordyke, the organization's largest fundraising campaign has been for a loft renovation in Galveston, Texas, that cost $3.3 million--one-seventh the estimated cost of the Shubert. In addition, he notes, the theater project differs from Artspace's previous endeavors primarily because neither low-income-housing nor historic tax credits are applicable.
Difficult as it may prove, however, Lindquist says he is convinced that the Shubert is worth fighting for. It was there, the 46-year-old recalls, that he first saw Easy Rider and Around the World in 80 Days. "The city should realize that Hennepin is their arts avenue," he says. "This is where to pour your interests. [Hennepin] is where the heart-line of the city is, and has always been. Now you get a sterile sense, at best, when you walk around here."
Asked what he pictures seeing from this spot five years hence, he replies wryly, "Hopefully, the Shubert." Three or four sets of knuckles rap simultaneously on the wood surface of the conference table.
Certainly, Artspace is no neophyte developer. Since Lindquist's arrival in 1987, the organization's annual budget has grown from less than $40,000 to $2.6 million in 1998; the group now has 13 employees, engages in redevelopment and consulting in cities around the nation, and garners more than $1 million in contributions annually. The board of directors is stacked with local heavy hitters, including Peggy Lucas, a principal in Minneapolis-based Brighton Development, and Rebecca Yanisch, the former MCDA head now running for Rod Grams's U.S. Senate seat. Artspace also has close ties to city council president Cherryhomes: One employee is her former campaign manager. Another is her sister.
Artspace's relationship with the city is a point of concern for at least one city council member, First Ward representative Paul Ostrow, who suggests that the developer's "stranglehold" on arts-related development projects may ultimately prove detrimental. "It would be much healthier if there were some competitors," he says. "We need to find creative developers in the arts world who can do cost-effective rehabs. We need some new entries into the market."
Cherryhomes, who has championed a number of Artspace projects, disagrees, saying the organization simply fills a void. "It's like no one else is doing this," she explains. We would welcome anyone else if anyone else were taking on these sorts of projects."
Ostrow worries, however, that Artspace is taking on much more than it can handle. Lindquist and company will not be able to raise the necessary funds, he fears, and thus will "inevitably" come back to the city looking for more money--at which point, he maintains, the council will be forced to choose between demolition and a substantial refinancing arrangement.
Artspace's Lindquist insists that the group has no intention of making such an entreaty. But he acknowledges that the Shubert project "is, and should be, a challenge for us." According to the proposal Artspace submitted to the MCDA, the developer has captured $7 million in grant support since 1987. For the Shubert project to succeed, it would have to raise thrice that amount in the next three years. Lindquist maintains that the projections are realistic and points to $2.1 million in donations from two anonymous philanthropists as evidence of public support.
Yet Moir, who reviewed Artspace's feasibility study, contends that the developer's goals are "wildly optimistic." "It is highly unlikely that Artspace will be successful in its fundraising objectives," he wrote in an August 1998 memo to the city council. "It is reasonable to assume that the City would be asked to 'save the Shubert Theater' again in three years [by] assuming a significant portion or all of the renovation costs."
And that was not all, Moir noted: Chances were taxpayers would have to subsidize the Shubert's operations after it was restored. In Artspace's vision, the Shubert would lean heavily toward dance, identified as an underserved segment of the local arts community in feasibility studies commissioned by the developer. But a 1998 report compiled for the MCDA by local consulting firm Maxfield Research Inc. predicted that the Shubert would not attract as many dance performances as expected and would have to "vigorously pursue local theater uses"--making it a potential competitor with the city-owned State and Orpheum theaters.
Artspace's Nordyke acknowledges that lack of cohesion among local dance troupes is "the big catch-22" in the Shubert project. "From the need standpoint, it's a relatively easy sell," he explains. "Yet, historically, because the dance community doesn't have that kind of organization, the resources aren't there." Even with both balconies closed, the Shubert's auditorium is more than twice the size of the Southern Theater, which only a few local troupes can sell out on a regular basis.
"It's a strange thing in this town, as culturally active as it is, that dance has been the poor stepchild of theater in getting attention and audiences," offers Twin Cities-based arts consultant Bradley Morison, who worked on the Maxfield study. In his view, the Shubert could become "a kind of showcase for the dance community"--but not without substantial public subsidies.
Indeed, Artspace's proposal to the city forecasts that a reopened Shubert could generate operating deficits of up to $3.35 million over the first five years. "That's a problem," Moir notes dryly. "They proposed that their fundraising campaign would create an ongoing endowment to subsidize their operating deficit. If that doesn't happen, we'll have a worst-case situation where, by the terms of the agreement with the city, they would apply for a demolition permit."
Given that the city council would probably be uncomfortable throwing $5 million "out the window," the finance director continues, it only makes sense to expect a push for the city to assume financial responsibility for the renovation.
And it would be a hard push to resist, admits 13th Ward city council member Barret Lane, who was elected after the council decided to move the Shubert. "I probably wouldn't have voted for it on my watch," he avers. "But now it would behoove us to recoup as much of our investment as possible. My quandary is that I don't want to see the city's investment increase, but we're in a situation now where if we're in for a penny, we're in for a pound."
The Tenth Ward's McDonald is less circumspect on the possibility of a city bailout. "I don't want to end up owning the damn thing," she says. "We need another piece of real estate like we need a hole in the head."
If, as Moir speculates, the city were to eventually pay to keep the wrecking ball away, Minneapolis could end up financing four theaters within a three-block radius: Taxpayers have already paid for rehabbing the Orpheum and State theaters (to the tune of $11.3 million and $12.3 million, respectively). The city acquired the nearby Mann Theater for $1.3 million in 1998 and is considering a plan to renovate it for an additional $11.2 million. According to the MCDA, if the council proceeds as planned, the Mann could accrue operating deficits of up to $267,000 a year.
Some MCDA analysts have warned that the city may be getting in over its head. A recent report by the agency's staff suggests reevaluating the theater district, noting that a Mann subsidy could add millions to the city's existing liabilities. "Our theaters are currently not exactly creating revenue to cover their expenses--or making any sort of profit," Moir notes. "Obviously the private market can't support these things. That's why the city has to step in."
Though Moir points out that he is not an elected official and therefore not in a position to comment on policy issues, he suggests that the key concern for city officials might be when the city's investment will approach a point of diminishing returns. "It makes perfect sense to have a theater district," he offers. "The question is: How much do you want to spend on it?"
Whether the city's faith in Artspace proves well-placed may depend largely on the developer's pending request for bonding money from the Legislature (which, if approved, would allow Artspace to finance the renovation via state-sponsored tax-exempt bonds). And given Gov. Jesse Ventura's professed aversion to state funding for projects of local interest, this could be a difficult year for metro arts organizations at the capitol. According to Sheila Smith, executive director of the lobbying organization Minnesota Citizens for the Arts, the Shubert and like projects face problems because of the governor's proposed $462 million cap on the bonding bill. "The climate at the session will make it extremely difficult for these projects to get through the Legislature," she explains.
The Shubert renovation is a particularly hard sell because of a bill, passed last session, under which projects seeking state bonding must demonstrate that they "fulfill an important state mission" and must not "create inequities among local jurisdictions."
Judging from a Minnesota Department of Finance analysis of Artspace's bonding request, the Shubert could create a dilemma for the state: If bonding for the project is approved, the document notes, "other communities would inevitably seek similar state funding. Theater projects in Hopkins and St. Cloud have recently received modest state capital assistance, which has caught the attention of project sponsors in Minneapolis. Other cities will likely follow if this project receives state financial assistance."
Andrea Hart-Kajer, the city's chief lobbyist, explains that as more and more cities apply for state bonding, they are competing for pieces of a shrinking pie. Though she will not speculate on Artspace's chances at the capitol, Hart-Kajer says the city's first bonding priorities are the "empowerment zones," an estimated $9 million redevelopment project for the Near North and Lake Street areas; the city's wish list also includes a $25 million boost for a riverfront Guthrie Theater and a $3 million down payment on a new downtown public library. The Shubert is not technically a city project--Artspace has proposed Minneapolis Public Schools as the requisite "public partner" for state bonding. Still, says Hart-Kajer, lawmakers may look at the total of Minneapolis-related bonding requests as a rather hefty lump sum.
If the schools were to act as fiscal agent for the Shubert Project, they would own the theater. According to city council member McDonald, last week Artspace also approached the city council about filling that role. In McDonald's opinion, the request is evidence of "pretty serious cash issues" on the developer's part; Artspace's Holmes Nelson asserts that an arrangement with the city represents only "plan B" should a deal with the schools fail to materialize.
Whether sponsored by the city or the schools, notes consultant Morison, state bonds are critical to Artspace's capital campaign because public support "leverages" private and foundation contributions. "I'm not saying they necessarily can or can't raise it," he says. "I think you need to have a good mix of corporate, individual and government [sources]. And there are an awful lot of theaters lying in the weeds waiting for money right now."
Artspace's Nordyke also concedes that the project may be impossible without some measure of state support. "Aside from the monetary side, major patrons expect to see some sort of public/private partnership," he says. "Frankly, the city's leap of faith was very important to getting this off the ground."
Convincing the state to take the same plunge may prove more difficult. Wy Spano, a veteran lobbyist and coeditor of the newsletter Politics in Minnesota, expects that unless the bonding bill ends up in the $600 million-$650 million range, the Shubert will have a slim chance at best. "If I were the lobbyist for them and I got it," he chuckles, "I'd give myself a week off."
According to Spano, Artspace's best bet may be the patronage of Sen. Linda Higgins, the influential first-term legislator who is sponsoring the group's bonding request. Higgins herself is guarded about the bill's chance of passage: "It's in the mix," she says. "We'll sort it out as time goes on, but it's way too early to say right now. I hope people will like the project; it's a great project, and I think we can show statewide significance. But right now it's in the mix with everything else."
If Artspace doesn't make good at the capitol, it will face the daunting prospect of trying to squeeze the entire $22.5 million from private and foundation sources. "The problem with asking 'Can they?' is that they never have before," notes Neal Cuthbert, program officer for the arts at the Minneapolis-based McKnight Foundation. "They're a really smart and creative bunch, and they're not interested in flights of fancy, so clearly they've come to the judgment that this is realistic."
But, Cuthbert continues, the scope of the Shubert project is equivalent to the Guthrie's $26 million endowment campaign in the early 1990s--a campaign that proved "a challenge" even for the flagship of American regional theaters. And unlike the Guthrie, Cuthbert notes, Artspace can only offer a vision of what its theater might someday be. "It involves a leap, because they're not just moving into a better house or expanding a program. Funders will have to imagine something that doesn't currently exist."
The Artspace bunch nonetheless remains optimistic that the requisite cash will materialize. "We're going full steam ahead as if we're going to get the money from the Legislature," Holmes Nelson says. "It's not a slam-dunk, but we have faith in our ability to be creative."
Moir, meanwhile, says he hopes the leap of faith won't end in a hard landing. "I get over things," he says, recalling his 1998 prediction. "And it's okay if they don't listen to me. But any time you have a project that doesn't work financially, it's going to be hard to convince people to give more money to it. I'm rooting for them. I hope they prove me wrong."