Mann Over Board?
The western corner of Hennepin Avenue and Seventh Street South in downtown Minneapolis isn't one you'll find on any postcards. Storefronts that once housed the Northern Lights record store and other shops are now covered with drab plywood boards, and the old vaudeville theater has been dormant for more 15 years.
But when Minneapolis officials look at the spot, visions of splendor dance before their eyes: They picture a rehabbed Mann Theater as the latest addition to a district that also includes the city-owned Orpheum and State Theatres. Only problem is, the vision requires what the city's financial gurus say will be at least $11.2 million--and right now no one knows where a good chunk of that money would come from.
The Mann opened in 1916 as the Pantages Theater; it closed its doors permanently in 1984, after a stint as a movie house. In 1998 the city bought the theater and the two-story structure surrounding it, known as the Stimson Building, for its assessed value of $1.3 million (a final, possibly higher, purchase price is still being negotiated). Since then taxpayers have kicked in an additional $900,000 for improving sidewalks and approximately $600,000 to relocate office and retail tenants; in all, $2.8 million has gone into the project.
Last May the city council voted 10-2 to hand exclusive development rights for the site to the Historic Theatre Group (HTG), which also operates the Orpheum and State. HTG president Fred Krohn says he hopes to turn the Mann into a 900-1,000 seat venue for "edgy" off-Broadway touring shows, such as Hedwig and the Angry Inch or Margaret Edson's Pulitzer Prize-winning Wit.
In endorsing Krohn's plan, the council went against the recommendation of Minneapolis Community Development Agency staffers, who had suggested calling for competitive bids. Council member Jim Niland says the idea was to give the local firm a chance before inviting in national contenders like the House of Blues, then rumored to be sniffing around. While HTG was granted rights for one year, the council demanded a workable financing package within 60 days.
More than eight months later, the financing has not come together--and now MCDA staffers are recommending that the council pull the plug on HTG and put the project out for bids. A December 6 report by MCDA project manager George Kissinger contends that the group's financing package is $3.2 million short of the $11.2 million needed, with "no identifiable source of funds for this gap." Council discussion of the matter has been held over several times; the Community Development committee, chaired by Niland, is now scheduled to take the question up February 7.
Krohn says his group has asked for more time to work out the details. "It's going to have to be a creative financing package in order to make it work," he acknowledges, adding that in his view the MCDA is overestimating the cost. He figures the Mann (which would be renamed the Pantages) can be rehabbed for $7 million. Much of the money, he says, would be obtained from increasing ticket surcharges at the other city-owned theaters (from two to three dollars on a fifty-dollar ticket) and by refinancing the city's existing theater bonds. He also says his group hopes to privately redevelop the Stimson Building, filling it with restaurant, retail, and office tenants. That $3 million investment, he argues, eliminates what the MCDA calls a funding gap.
But the MCDA's Kissinger doesn't sound enthusiastic about that plan. "It makes absolutely no sense to parcel off the Stimson Building separate from the Mann Theater," he says, noting that the city would prefer using any revenues from the building to offset the theater's projected losses.
Either way, Krohn says, city subsidies are essential to make the project work. "If you could operate these theaters under private ownership, somebody would come forward," he insists. Both the State and Orpheum theaters were redeveloped entirely with public money, he notes--$11.3 million for the Orpheum, $12.3 million for the State. As with those theaters, Krohn says, his plan calls for the city to own the Mann and his group to manage it.
It's not the first time the city council has seen criticism of Krohn's plan. After buying the Mann, the MCDA commissioned a report from planning consultants Maxfield Research Inc. on how its new holding should best be used. The report, issued in January 1999, recommended an $11.8-million overhaul that would turn the theater into a venue for corporate and music events. Such a project, the consultants believed, would probably lose money--as much as $210,000 a year. But at least the loss wouldn't be as large as it could be if the city chose to run the Mann as a theater-only venue. In that case, the consultants estimated, the public coffers could be out up to $267,000 a year.
Part of the problem, says Minneapolis-based arts consultant Bradley G. Morison, who worked on the Maxfield study, is the Mann's "shoebox" design, which makes for a bad view of the stage from the back of the hall. "In my opinion the Mann Theater is of no use whatsoever as a legitimate theater venue," Morison says. "It is not suitable for any kind of contemporary theater productions. I think it was very unfortunate the city decided to buy that property."
Krohn, however, dismisses the Maxfield findings. "Without being too harsh," he offers, "I don't think there was anyone working on that report that actually understood the actual theater and music business very well."
The December MCDA staff report also raised questions about the city's theater operations, noting that "the theaters, in general, need to be reevaluated in terms of their economics." Since the State and the Orpheum reopened in the early Nineties, the document said, no capital reserves have been built up "due to lack of appreciable net revenue." As a result the structures have accumulated $2 million worth in deferred maintenance, a figure the MCDA now includes in its $11.2 million estimate for the Mann project. The report also pointed out that to date, the MCDA has covered $500,000 in operating deficits for the two theaters. And, it concluded wryly, "This has all occurred during the best of economic times."
Krohn defends his record. "Since the time I've managed [the theaters], we've been able to come very close to breaking even," he says. For 1999 "we'll be very close to being in the black." MCDA documents show that the stages were nominally profitable on an operating basis in 1997 and 1998, after losing more than $379,000 in 1996. For 1998--the most recent year for which audited statistics are available--the theaters were $65,000 in the black on revenue of just over $1.98 million.
That same year, the city paid $572,000 in management fees to HTG, accounting for roughly 30 percent of the theaters' total expenses. A 1993 report from the State Auditor's Office criticized Krohn's financial management and charged that his group was overpaid. But today's city council seems largely supportive of HTG. "They've done a good job," says council member Lisa McDonald. "I'd rather plug a very small hole in one of their projects than go out on a limb with someone that I don't have any experience with."
Niland, for his part, says the solution for the Mann may involve a broader look at the block it sits on, known on city planning maps as Block F and home to the First Avenue nightclub. "I think we have to be conscious of the fact that whatever happens with the Mann affects First Avenue," the council member warns. Niland says the club's lease is up July 1 and that the building's owners, the Minneapolis-based Hollywood Theater Company, are looking to sell.
First Avenue manager Steve McClellan declined to comment for this story. Property manager Garfield Clark also won't comment on the lease, but he says the building is not being offered for sale on the open market. "There is an interest on the part of First Avenue in acquiring the property," Clark adds. "They're trying to figure out how to buy it."
"We definitely have to make sure we find a way that First Avenue stays," maintains Niland, who once intervened to save Lee's Liquor Lounge from condemnation and now serves as the booker for that bar. Though the city probably wouldn't buy the building, he says, it could help finance a deal. The MCDA, he notes, is working on drawing up development objectives for Block F, which should outline a vision that includes First Avenue staying put.
At least one council member, however, says the city should heed the MCDA's advice, yank HTG's exclusive contract, and review the theater operations. "It seems to me that we as a council have to make a policy decision as to whether this is worth the ongoing losses that we've suffered," 13th Ward council member Barret Lane argues. "We need to make sure that the situation isn't exacerbated by whatever our next move is."
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