Wayne Theatre funds in danger

Doubt hovering over the controversial Wayne Theatre project casts uncertainty over hundreds of thousands of dollars in public and private money, the reputations of city leaders and prominent politicians and Waynesboro’s credibility in forging deals with developers.
That gloomy outlook comes from developer Bill Hausrath, who has led the long fight to refurbish the brick movie house that endures on Main Street as an icon of the city’s heyday. In the minds of Hausrath and his supporters, it also is a potential economic driver with power enough to revive Waynesboro’s slumbering downtown.
That is, unless the $7.4-million project to refurbish the theater crumbles, which is a possibility, Hausrath said, because of the new City Council majority’s resistance to investing more taxpayer money in the effort. He recently huddled in private meetings with members of the council’s lead faction seeking to sway their opposition.
“It’s a constant question,” Hausrath said. “How come the city’s not really behind you? If the city pulls their money, it will make additional fundraising very tough.”
All three members of the majority bloc made up of Mayor Tim Williams, Vice Mayor Frank Lucente and Councilman Bruce Allen have said they oppose plans to spend an additional $700,000 in city money over 10 years on the Wayne.
The city, which already has invested $300,000 in the project, earlier this year signed a nonbinding agreement with Hausrath’s Wayne Theatre Alliance stipulating that the extra money be paid if the group meets a series of performance benchmarks.
The first installment of funding under the agreement would be $200,000, which would kick in after the alliance obtains an occupancy permit for the theater. That is projected to happen in about two years.
Without the money or assurance that it will come, Hausrath said, efforts to secure private donations will be hindered, if not crushed.
The financial stakes are high. The alliance already has raised more than $1 million in city, state and federal money and $555,000 in grants and gifts. The WTA’s current capital balance is $982,000.
Hausrath declined to say how the alliance would respond to what he called “the perfect storm,” which he described as the council majority refusing to provide city money, in turn scaring away potential donors and eventually killing the deal.
That possibility is real, Lucente said, to the extent that the project depends on city money.
“[I]f the council doesn’t provide the money, there is no agreement,” Lucente said. “And I’ve never ever supported giving more money to the Wayne Theatre.”
Hausrath brokered the performance agreement with the city’s Economic Development Authority. He compares it to the $6.5-million deal that led to the construction of the Town Center in the city’s West End. That pact provides tax rebates to developers based on performance provisions.
Under the law, the City Council was not bound to honor that deal, nor is it in the case of the Wayne.
“The balancing act is if the city is going to enter into an agreement that binds future councils to spend money, they have a lot of public finance hoops to jump through,” said Mark Flynn, legal director for the Virginia Municipal League. “That’s something that is a factor that a city just can’t avoid because it is a state law requirement.”
Councilwoman Lorie Smith, who backed the initial investment of city money into the Wayne and signed off on the performance deal, said she worries about the consequences of breaching the agreement.
“A lot of parties are involved,” Smith said. “We need to make sure we are examining this agreement and the consequences of not honoring it. Far beyond saying ‘No more city money,’ the repercussions go beyond this. We need to sit down as a council to see what this really means to the majority.
“If we don’t support the agreement, we have to figure out how to support the WTA and in salvaging this project, though I don’t know what that means. The project has state and federal money that has been contributed. There is that consideration, as well. Legislators went to bat for this project.”
That group includes state Sen. Emmett Hanger, who helped the alliance land a $680,000 state grant.
“Always in hindsight we learn from experiences, so there would obviously be some issues there,” said Hanger, R-Mount Solon. “There may be ramifications in future projects. I certainly hope we don’t have to go down that road. I hope we don’t see the project falling apart with the amount of money [the WTA] has been able to raise.”
It is rare for a performance agreement to shatter, said Robin Sullenberger, the CEO of the Shenandoah Valley Partnership, a Harrisonburg-based nonprofit economic development group.
“It is not totally unheard of,” Sullenberger said. “But it is not typical. The concern you always have is that that sends signals to the business community that they [the council] are inconsistent in the leadership of the jurisdiction. There could be future questions or concerns [from potential businesses] about locating there.”
The alliance likely would have few or no legal options if the city failed to make good on the performance agreement, Sullenberger said.
“That would be an assessment by a legal counsel,” Sullenberger said. “In most cases, it is rather difficult to take successful legal action against a political jurisdiction. I would be somewhat surprised if the political jurisdiction would lose a case regarding that. My bigger concern would be the message that would send to the outside world.”
So far, 159 people have contributed $1,000 or more to the Wayne project. The great unknown is what would happen to that money if the effort faltered.
“I know there’s been a lot of work by a lot of people in support of that project,” Hanger said. “I understand the dynamics with the current council and the split there, but I also think those expressing reservations on council – probably, if they see strong community support continue for that project rejected in monies being raised – I think they probably would honor some commitment.”
Hausrath remains hopeful.
“The WTA believes that, when all the facts are presented, our City Council will find a way to keep this project on track,” Hausrath said.
Lucente remains adamant.
“No council can obligate future councils,” he said. “Am I going to support giving the Wayne Theatre any more money? The answer is no.”

Theater funds
Projected funding for Wayne Theatre Alliance
Historic tax credits $1.5 million
State grant (received) $680,000
Federal grant $290,000
Enterprise zone credits $125,000
City contribution $1 million
Other grants and gifts $555,000
Capital campaign (pledged) $2.06 million
Remainder of capital campaign $1,190,000

TOTAL $7.4 million