A $4 Million Misunderstanding
It was around 9:30 on a recent Saturday night when 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 announced a 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?
Still, in late 2004, Matsuda told L.A. Weekly that the grant had been “earmarked for Latino Theater Company, pending approval of the board.”
When asked whether Assembly Speaker Núñez had been instrumental in directing state moneys toward Latino Theater Company, Valenzuela replied slyly, “Everybody helped me in Sacramento, whoever could help me.”
A secretary in Núñez’s office remarked that “[Núñez] was heavily involved [on behalf of Latino Theater Company’s CCHE grant application],” though further clarifications from Núñez’s office have not been forthcoming.
With the promise of $4 million hanging in LATC’s rafters, in 2005, the Cultural Affairs Department restarted the RFP process from scratch with a notation of “changed circumstances.” The bidding process, however, remained open to Gilmore and others — as open as a preordained process can be.
With the pressure of the CCHE grant deadline looming, the Latino Theater Company proposal swept through the city’s Budget and Finance Committee on December 20 and was rubber-stamped by the City Council on December 23. The CCHE board then approved the $4 million state grant in March. For his part, Valenzuela defends the handling of the contract: “From the public officials, I don’t think there was a single one who was against it. The final vote proves it.”
However, one outraged downtown activisttold L.A.Weekly, “Boss Tweed at the height of his powers could not have pulled off a fraud as big as this in full public view.”
The city, also, was bending its own rules to fit the occasion. An internal memo from Chief Legislative Analyst Gerry F. Miller dated May 6, 2005, states, “Entity must provide a description of funds to be committed for programming and capital improvement.” (The CCHE grant is not to be used for programming.) “Funds must be specifically identified and evidence must be provided that the funds are available at time of proposal submission.” Of the two leading applicants, only Gilmore came to the table with money in the bank, via a letter of credit from East West Bank.
LATC’s contract may have actually gone to the better plan. Gilmore’s old-school approach included renting the facility’s larger theaters to film festivals, dance companies and touring musicals — a strategy with no proof of viability. The leftover spaces would have gone to children’s programming and various resident companies, none of whom provided letters of commitment.
Valenzuela’s homegrown agenda includes installing companies with proven audiences — Culture Clash, East L.A. Classics and Robey Theater Company — plus the critically accomplished Playwrights Arena, and a little-known Asian-American company, Cedar Grove Productions. Valenzuela hasn’t yet determined how the budget will be distributed. To keep the operation afloat, he says he’s counting on fund-raisers and the interest of the Ford and Wallace foundations in L.A.’s “minority” voices.
The challenges facing Latino Theater Company are daunting. The troupe has never run a theater and Valenzuela’s production record is not impressive: three plays in the past nine years. LATC’s lease includes a minimal production requirement (one play per year in each theater), possibly to avoid the plight of the privately held, 1,200-seat Ricardo Montalban Theater on Vine Street, a refurbished venue that has sat mostly vacant in the wake of mismanagement and the forced closure of its operating company.
A city proclamation signed by Mayor Villaraigosa, congratulating Latino Theater Company on their 20th anniversary, now hangs in the LATC central office. “He’s our friend,” says playwright Evelina Fernandez from a side office.
If Spring Street revitalization can move as swiftly as Latino Theater Company’s learning curve, this plan has a fighting chance. Meanwhile, they’re going to need all the friends they can get.
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