UPDATED Wednesday, January 14, 2009 --- 9:00 a.m.

At its meeting Tuesday evening, the Madison Cultural Arts District Board of Directors, which oversees operations of Overture Center of the Arts, unanimously approved the following letter to be sent to George Austin, president of Overture Development Corporation, which owns the building:

Dear George:

We write in response to your letter dated December 23, 2008, in which you propose a plan to resolve the remaining debt owed under Overture Center financing. Your plan represents a “share the pain” approach, in which Madison Cultural Arts District, Jerry Frautschi, the City of Madison, and three lenders each contributes assets toward retirement of $28 million in outstanding debt. Specifically, you propose MCAD pay $4 million from its reserve funds toward immediate reduction of term loan debt, and MCAD’s annual payment in lieu of taxes (PILOT), which in 2009 is approximately $500,000, be redirected to payment of debt service.

The MCAD Board believes that the plan you propose provides a useful starting point for discussion among the parties involved in Overture Center’s financing, and we look forward to participating in those discussions. We recognize that time is of the essence, and discussion leading to action on the plan you propose should begin immediately. This is in part because funds that could be used for debt retirement are now being depleted by payment of loan interest of approximately $200,000 per month. Also, in response to recommendations by an independent group of citizens in October 2008, MCAD is developing plans to reorganize its governance and launch further fundraising efforts. However, neither of these initiatives can move forward until a plan to retire the existing debt is in place.

It is in MCAD’s interest to cooperate in every way possible with the lenders and the City to retire the debt. The MCAD Board is willing to use $4 million of its reserve funds for this purpose, even though this would all but exhaust MCAD’s reserves, leaving little or nothing for capital repairs as the need for such repair arises.

We understand that the recession in which we find ourselves will make it difficult for the lenders, the City, and Mr. Frautschi to find the resources for debt retirement that your plan would require. But in part because of the recession, the cost of retiring the debt cannot reasonably be borne by any one party. Our circumstances are such that all of us—MCAD, City government, the lenders, and citizens who value what Overture Center provides—must cooperate to address this debt. Despite the opposition voiced by some city leaders, we remain committed to this collaborative approach. MCAD has been a partner with the City of Madison in Overture Center from the very beginning, working together on issues of management, governance and financial operations. We hope this history of cooperation will continue as we work together to forge a path forward. We look forward to meeting with you, and representatives of the City and the lenders at the earliest possible time.

Sincerely yours,

Board of Directors
Madison Cultural Arts District
Linda Baldwin, Chair

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UPDATE: Wednesday, January 7, 2009 7:51 p.m.

Statement of Overture Center CEO Tom Carto Regarding Overture Development Corporation Debt Restructuring Proposal:

(Madison, Wis.) Overture Center for the Arts President and CEO Tom Carto today released the following statement in response to the Overture Development Corporation’s proposal to restructure and retire the $28 million in remaining construction debt:

“The Madison Cultural Arts District has received the proposal from our landlord, Overture Development Corporation, which asks MCAD to dedicate its entire reserves, roughly $4 million, toward paying down the outstanding debt left by the dissolution of the trust fund last September. The executive committee discussed it briefly this morning and the entire board will formulate a response at its next meeting on Tuesday, January 13.

“The proposal speaks to the urgency of forming a plan to address Overture’s long term financial strategy. One thing we can all agree on is that sitting on our hands is not an option, and this proposal will at the very least get the conversation moving forward. Whatever mechanisms and machinations end up paying off our debt, I am confident Overture Center and world-class performing arts are here for the long haul.

“It’s also important to clarify that no one is hanging a ‘for sale’ sign out front. It’s been part of the cooperation agreement all along that after the debt is retired, the City would have the option to buy the building for $1, and if it declined, MCAD would have that option. It was anticipated, of course, that this would not happen until 2036, but obviously, times have changed. The ODC proposal simply reiterates that the building’s title will transfer to the city, MCAD or some other entity once the debt is repaid.”

About Overture Center for the Arts

Overture Center fills a city block in downtown Madison, Wis., with world-class venues for the performing and visual arts. Overture presents hundreds of performances, art exhibitions and educational and community events each year. Visit overturecenter.com for more information.

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Posted Thursday, December 4, 2008 --- 11:30 a.m.

Press Release from the Overture Center for the Arts.

(Madison, Wis.) The Madison Cultural Arts District Board of Directors, which operates Overture Center for the Arts, today approved a $5.6 million operating budget for the period Jan. 1-June 30, 2009. The approved budget includes deep cuts to administrative costs, scaling back some programs and the elimination of 14.8 full-time positions, four of which are currently vacant. The budget does not affect resident organizations.

Layoffs will take effect Jan. 16, 2009. Those affected are being notified today. Most of the staff affected will have the right to move into other City of Madison jobs.

The approved budget shows wages and benefits dropping from 43% of total expenses to 39%, still higher than many comparable performing arts centers. Without staff cuts, wages and benefits, set by the City of Madison, would have increased 8% from 2008 to 2009. The city’s subsidy of Overture Center went up 4.3%.

“Nobody takes these cuts lightly, but this is the reality of the current economy, and it is further exacerbated by the failure of the trust fund,” said Overture Center president and CEO Tom Carto. “Businesses, governments, families – we’re all being hit hard. But we are firmly committed to preserving our mission of providing the quality of entertainment, arts, education and community engagement that Madison has come to expect. I remain confident that we can navigate this difficult period and come out stronger. Overture Center will be an integral part of the Greater Madison community for a long, long time.”

Among the program cuts are the cancellation of the Children’s Arts Festival, the cancellation of the May 7 performance of the Orpheus Chamber Orchestra, minor reductions in the number of Kids in the Rotunda, OnStage, Duck Soup Cinema and Overture After Work performances, and other program changes. The budget also plans for increasing certain revenue streams, such as more aggressively selling room rentals for private events.

Talks are ongoing related to making changes to Overture Center’s governance, organizational and financial structures. This budget reflects one financial structure change, as Overture Center moves its finances from a fiscal year based on the calendar to a fiscal year based on performance seasons. The budget approved today carries through June 2009, and the next will cover July 2009 – June 2010.

Overture Center leaders recently held two facilitated meetings with stakeholders, including board members, current and former civic leaders, resident organizations and concerned citizens to discuss other potential changes. The combined Overture Center boards then met for a full day to develop plans based on those conversations.

“A number of options are on the table regarding the long term,” Carto said. “We’re looking at how to hold the line on expenses and increase revenue beyond this budget, well into the future. It is clear that fundamental changes to our governance structure and funding matrix are required for that to happen. That’s our next big step.”

Overture Center leadership will host a series of “community conversations” at various places around Dane County through the spring, inviting people to share their thoughts regarding Overture Center’s future. More information will be available when the meetings are scheduled.