A $4 Million Misunderstanding

(Illustration by Mr. Fish)

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More About

• Jose Luis Valenzuela
• Tom Gilmore
• Cultural Affairs Department
• Politics
• Local Politics

It was around 9:30 on a recent Saturday nightwhen the mayor of Los Angeles strode into the Bonaventure Hotel’s California Ballroom for a fund-raiser to help the theater troupe Culture Clash. The event was directed by Culture Clash’s friend and colleague of several decades, José Luis Valenzuela, whose theater group, Latino Theater Company, was one of two organizations selected to operate the city-owned Los Angeles Theater Center (LATC) on Spring Street, after a highly contested competition.

That competition ended two days before Christmas, when the City Council, racing through a packed agenda, handed Latino Theater Company a 20-year lease to LATC, in partnership with the Latino Museum of History, Art and Culture, which plans to use the building’s lobby and subterranean alcoves for its exhibits.

The mayor praised Latino Theater Company, mentioning that they had approached him for help in securing control of LATC. Antonio Villaraigosa then remarked, “I said I couldn’t make it happen last year, but I will make it happen this year.

“Some argued, ‘Oh, this is too ethnic,’?” the mayor added. “I say, why not?”

He’s got a point. Ethnic favoritism has been a part of city politics ever since there were cities. Furthermore, 98 percent of L.A.’s theaters are run by Caucasians, who are now a statistical minority of the local population.

What was announced as an open-bid process had become, by the final act, a tainted and disturbing story of the power of political connections. The losing applicant, Tom Gilmore, told L.A.Weekly, “The public process was, without question, an absolute sham.” At stake is the once-prestigious four-theater complex, now in disrepair. In the mid-’80s, the city’s Community Redevelopment Agency invested $32 million to convert an abandoned bank building into a cultural mecca, a high-profile alternative to the Music Center. The city’s strategy was to use the building as a lightning rod to bring back a district plagued by blight and neglect. The five-story building, which includes multiple office spaces and rehearsal halls, now costs $800,000 a year to operate. Ever since the city’s underfunded Cultural Affairs Department took it over from Bill Bushnell in 1991 (closing out LATC’s glorious but mismanaged heyday), LATC has felt like a morgue.

Though LATC wasn’t able to ignite Spring Street’s return from the dead, that return is now evident in the widespread construction of high-density housing. Speaking in their LATC offices, Valenzuela and Stan Sosa, a member of the Latino Museum’s board of trustees, said that both groups are pinning their hopes on Spring Street’s revitalization. Maybe this time, that old story can be true, but they still have to live with the broken process that landed them the contract.

In 2003, the city announceda Request for Proposals (RFP), the start of an open-bidding process for somebody to manage LATC. The next year, the Cultural Affairs Department’s RFP committee gave its highest ranking to the partnership of Gilmore & Associates and LATC’s resident theater, Will & Company. With five raters, the Gilmore/W&C proposal scored 443 out of 500 points (88 percent). The proposal by Latino Theater Company (also an LATC resident theater) came in a distant second, with a cumulative score of 243 (48 percent). A memo from Margie J. Reese, then CAD’s general manager, noted that Latino Theater Company’s “fund-raising plan, as presented, was unrealistic and included little documentation to support the needs of a facility operator.”

How, then, did Latino Theater Company wind up with the keys to the place?

After Valenzuela complained that the Cultural Affairs Department had gotten it wrong (because of Latino Theater Company’s long history with LATC and the neighborhood’s heavily Latino population), the city put the CAD’s recommendation for Gilmore on hold. In stepped Councilwoman Jan Perry and then-Councilman Villaraigosa, plus state Assemblyman Gil Cedillo, to see if there was any way Gilmore and Valenzuela could work together.

During 20 months of these failed negotiations, something else was going on. With the apparent assistance of Assembly Speaker Fabian Núñez, Latino Theater Company applied for a $4 million grant from the state’s California Cultural and Historical Endowment (CCHE), a revolving fund authorized by Proposition 40, which provides money to repair buildings used in the telling of California’s story. Enter the Latino Museum of History, Art and Culture, to flesh out the “California’s story” mandate of that grant application.

The problem is that Latino Theater Company did not meet the guidelines to apply for these funds. Applicants were supposed to possess a building in need of refurbishing. Latino Theater Company reported that they were “in negotiations” for control of LATC, a status that failed to meet the guideline, clearly stated in the grant application: “CCHE grant applicants must certify that they have tenure to the property, and provide satisfactory documentation to support the certification.”

(CCHE executive director Diane Matsuda told L.A.Weekly she had no idea that, at the time Latino Theater Company filed their application, a city panel had officially recommended that a different entity manage the theater.)

Further, any applicant for a $4 million grant was required to have a matching $4 million in assets or real estate, which LTC did not. To meet this requirement, Valenzuela lobbied the city to donate LATC’s building to his company — an audacious request from a losing RFP applicant. Eventually, the city and CCHE settled on the value of the city’s 20-year lease as the equivalent of matching funds. This, too, appeared to contradict the state endowment’s guideline: “Finally, the Board is interested in seeing projects with substantial support from their community to fulfill the matching-fund requirement. This means that the Board is interested in seeing projects make use of resources that are not entirely dependent on city, state or federal public financing.” How does a 20-year lease from the city fulfill that requirement?