Donations to the AT&T Performing Arts Center in downtown Dallas have "virtually stopped" in recent months, the organization's chief financial officer says. Yet, as the region continues to cope with the weak economy, Randy Kurtz remains confident about raising the additional $25 million to $30 million needed to completely pay for the project.
"I am very pleased and as comfortable as any conservative CFO could be about where we're at," said Kurtz, who joined the center on an interim basis in August 2008 and became permanent CFO last year.
Kurtz sat down recently with The Dallas Morning News to discuss details of the center's finances after its board of directors reviewed audited fiscal 2009 results. With an opera house, theater and other venues, the center, which opened in October, has been hailed as one of the most ambitious civic arts projects in the country.
"That's our crane," Kurtz said, pointing out his sixth-floor office window to construction of the center's parking garage, across Ross Avenue.
Through the beginning of this year, Kurtz said, more than $330 million had been collected or pledged toward the $354 million center. The organization's foundation, which was established to design, build and operate the center, has received about 130 gifts of $1 million or more.
Of the pledges, about $90 million remains to be collected, Kurtz said. Payment agreements with donors can extend nearly 10 years.
So far, Kurtz said, the economic downturn has had minimal impact on the ability of donors to fulfill their pledges. In fiscal 2008, the center determined that $1 million was uncollectible and wrote it off, according to financial reports. It was the first time the center wrote off pledges.
In fiscal 2009, ending July 31, the center didn't write off any pledges, but it did increase its reserve for bad pledges by about $2 million to $2.7 million. These are pledges it may have to write off in the future.
"We have been extremely fortunate," Kurtz said of the recession's impact.
The 2008 write-off involved a pledge made in 2004. A husband had wanted to honor his deceased wife, Kurtz said, but her children wanted to honor their mother in a different way.
"In a case like that, it's gone," Kurtz said of the pledge.
The increase in the 2009 reserve includes two cases where there is doubt about collecting. One involves a remarried spouse and another involves two elderly donors.
Kurtz did confirm, without offering any details, that real estate developers Eric and Christine Brauss have not fulfilled their $1 million pledge. Brauss closed his company, Today Realty Advisors, late last year and apparently left town. Court documents related to lawsuits against Brauss indicate that he might be in South America.
In fiscal 2009, about $25 million in new donor pledges and contributions were received by the center. But since then, only $4 million in new pledges and contributions have been made, Kurtz said.
"In the last six months, contributions have virtually stopped," he said.
According to the center's $150 million 2008 bond offering, the center had hoped to complete its construction fundraising campaign by December 2009. Kurtz said that campaign continues. Under an agreement with the city, when the venues are completed, the city takes title to them.
The center's foundation also has an endowment campaign, with the goal of raising $50 million by 2019, according to the bond offering. Kurtz said the first priority is to complete fundraising for construction, but the center won't ignore someone who wants to donate to the endowment.
The foundation doesn't have to fully repay the bonds until 2041. "I have some time," Kurtz said. He said the foundation had $62 million in cash on hand at the end of fiscal 2009.
Most pledges are on schedule, Kurtz said, helped by the rebound in the stock market. About 20 percent of donors are more likely to use stock to satisfy their commitments, Kurtz said. Center policy calls for noncash gifts to be sold immediately so the center doesn't bear any market risk.
Kurtz said expenses for the first full year of operations will be about $25 million. About 80 percent of that will come from performance-related revenue, such as ticket sales and facility rental. The remaining 20 percent will come from donations and sponsorships, Kurtz said.
He declined to reveal how much AT&T is paying for the naming rights to the center. As a sponsorship, it would be included in the "20 percent." That indicates that AT&T's first-year amount is no more than $5 million and probably less.
Under their agreement, the city of Dallas contributes $2.5 million annually to center operations. Because of the city's budget crunch, the center doesn't expect to receive the money this year.
"We will be able to work with that," Kurtz said.