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Thursday, April 24, 2008
Band of civic saviors pays off Kimmel's debt
More than six years after opening night, the $275 million Kimmel Center for the Performing Arts is finally paid for.
In the largest arts bailout in the city's history, several large philanthropies have opened their silk purses to help eliminate the $30 million debt left over from the Kimmel's construction phase, while dozens of individual donors are pitching in to boost the center's endowment to $72 million.
The complex deal - involving the Pew Charitable Trusts, the Lenfest Foundation, Sidney Kimmel, the state and other sources - brings almost $74 million in total assistance to Philadelphia's arts center.
"I think this is a giant step for the Kimmel, and now it's truly out of the woods," Gov. Rendell said yesterday. "Now it can look forward to doing new things and creating new momentum. The debt sort of hung over the center like the sword of Damocles," forcing the Kimmel to incur deficits, curtail operations, reduce staff and defer maintenance.
"I'm just very happy and very relieved," said Kimmel board chairman William P. Hankowsky.
How does the milestone make Kimmel CEO Anne Ewers feel?
"Ecstasy doesn't begin to say it," said Ewers, whose primary focus upon starting the job nine months ago was dissolving the $30 million debt.
Now that the debt has been dealt with, the Kimmel hopes to tackle other hurdles - like improving Verizon Hall's much-criticized acoustic, and enlivening the center during non-performance times.
The cash infusion comes from the city's largest philanthropic forces, and is to be applied in a variety of ways:
The biggest single chunk comes from the center's namesake, clothier and film producer Sidney Kimmel, who has agreed to give $25 million toward the endowment over a number of years, bringing the total amount he has given to the project to $60 million.
H.F. "Gerry" Lenfest, the William Penn Foundation, the Neubauer Family Foundation and Pew collectively have provided $25 million to relieve the debt in a financial deal with Wachovia and Citizens banks.
Rendell is committing $5.5 million in new state money - contingent on the General Assembly's approving new funds for the Capital Redevelopment Assistance Program. The city is kicking in $2 million. These monies will help fund future physical improvements.
Dorrance H. Hamilton has contributed an additional $2.5 million, raising her total commitment to $10 million, to pay down debt and create a cash reserve.
Passing the hat among Kimmel board members produced $13.7 million in contributions from them, and in some cases the corporations they represent.
"It was kind of like a house-closing," said Ewers. "Everyone came to the table at the same time with something - the banks, the board, donors, foundations."
Some came to the table making exceptions to long-standing practice, as Pew president and CEO Rebecca W. Rimel admitted yesterday.
"It's unprecedented for us to come in this way after a capital campaign has closed," she said, "and certainly this debt burden was crippling the Kimmel. But this is an extraordinary community resource and a worldwide asset, home to many performing arts organizations with which we have relationships. So it wasn't just about the Kimmel and its future. It was about all these organizations."
The Kimmel's 2,500-seat Verizon Hall is full-time home to the Philadelphia Orchestra between September and May, and Verizon and the 650-seat Perelman Theater are full- or part-time home to seven other organizations.
The project started life solely as a concert hall for the orchestra, but after years of stop-and-go fund-raising, a new board chairman, Willard G. Rouse 3d, reconfigured the vision as a larger arts center, and promised that the building would be completed and paid for on opening day in December 2001.
Neither promise came true, and the Kimmel has been playing financial catch-up ever since. (Rouse died in 2003.)
"This has been a big cloud over all of us," said Judge Marjorie O. Rendell, a Kimmel board member and one of the project's most persuasive and stalwart cheerleaders. "The fact that we've removed that cloud is a great morale booster as well as a boon to the bottom line."
Contributions to capital campaigns so long after their close are unusual in the arts and culture realm. Other groups, such as the Franklin Institute, have ended capital campaigns without having met their goals and turned the gap into long-term debt, as the Kimmel did. But in the Franklin's case, no foundation has come along with late-in-the-day munificence.
Fund-raising for new buildings typically falls off precipitously after opening day. The Philadelphia Museum of Art has raised $2 million for its Perelman annex since opening the doors in September; it still has $20 million to raise on the $90 million project.
In this case, Rimel worked with Wachovia and Citizens banks to structure the $30 million debt-relief portion of the deal.
"Basically the banks are taking the $25 million" the foundations are providing "as satisfying the [$30 million] debt. The Kimmel will now be debt-free," Rimel said. "The banks are going to invest that money over a period of time and hopefully the wind will be at their backs and they will realize the full amount of the debt obligation. If that doesn't happen it will not come back to the donors. The debt is satisfied."
Janice C. Price, the former Kimmel president under whose watch this effort began several years ago, said she was "thrilled to see it have this outcome. It was a huge challenge to get it kicked off, and this was a critical step for the center in really being able to move fully past that building stage to now focus on the programming and service to the community."
And the financial assist comes along just as another is expiring - an aid package from the Pew, Lenfest and Annenberg foundations that provided millions to the Kimmel and resident companies each year.
Several donors to the current funding package stipulated that their gifts were contingent upon the Kimmel's retiring its debt.
Now that the debt is gone, Ewers said, the Kimmel will concentrate on two other ambitious efforts: enlivening the public spaces of the center, which are currently populated only around performance times, and undertaking an acoustical remake of Verizon Hall.
Questions about the acoustical work involve not only how to fund it, but also whether the hall's original acoustician or another firm should undertake the effort. Strategies for enlivening the public spaces were unveiled last week in a series of ideas crafted by PennPraxis, the University of Pennsylvania planning authority, proposing physical changes to the building.
Ewers said that the Kimmel's prospects for raising money for both acoustical and civic-space improvement have been brightened.
"What's best of all is the ability to reach out to new funding sources for annual support and some of the capital things we're looking for. It's so much easier when you do not have a debt hanging over your head."
By Peter Dobrin
Philadelphia Inquirer; April 23, 2008