H 58°, L 46° | Tomorrow: 
H 62°, L 51°The Overture Center for the Arts announced Friday it will liquidate an important trust fund in the wake of last week’s Wall Street stumble.
The dissolution of the trust fund leaves questions about whether Madison taxpayers will ever have to lend support to the semi-public fine arts facility.
Friday’s decision to liquidate came after the fund’s principal fell bellow $97 million, the minimum to sustain the Overture Center’s loan payments.
The recent dip in the fund is a result of last week’s economic crisis, said Jonathan Zarov, vice president of marketing and communications at the Overture Center.
The trust fund was established to pay construction debt and create a revenue stream for the Overture Center, which first opened its doors in September 2004.
According to Zarov, the fund had been functioning well enough to fulfill both of these purposes through 2008. However, it has been underperforming since the beginning of the year, making only the minimum construction debt payments and providing no revenue.
Zarov said the proceeds from the liquidation would pay off approximately $87 million of the Overture Center’s construction debt.
The center’s primary benefactor, W. Jerome Frautschi, has agreed to give the center $5 million for debt payments, and the Madison Cultural Arts District (MCAD), which governs the Overture Center, will contribute a $5 million reserve to make debt payments.
These funds will carry the Overture Center through 2011, when the current loan agreement expires, Zarov said.
Zarov added it would be premature to make an alternative financial plan at this time because the economy is unpredictable.
It is unclear whether taxpayers will have to financially support the Overture Center when private funds run out.
The Overture Center has yet to establish what it will do to financially sustain itself after 2011, but MCAD will be meeting sometime in November to discuss a strategic plan, Zarov said.
Linda Baldwin, chairwoman of the MCAD board, said the development planning for the Overture Center began in the late ’90s and was primarily funded by Frautschi.
In 2001, MCAD, a sector of city government, was formed making the project semi-public.
Baldwin said Frautschi put a funding structure into place to provide long-term funds for the capital of the center.
Now that the fund has been liquidated, it is time to pull support from the community, Baldwin said.
“The job of the folks that are involved in the Overture Center now is to go out and raise funds for the long-term needs of the Overture Center,” Baldwin said.
Zarov said the recent trust fund liquidation will not have an impact on daily operations at the Overture Center.
“Like anybody in a tough economy, we’re going to be watching costs,” said Zarov, adding the issue at hand is not about day-to-day events at the center but rather the future of the Overture Center’s financial situation.
Numerous University of Wisconsin students and events have used the facilities at the Overture Center, Baldwin said, including last Monday’s goodbye celebration for Chancellor Wiley.
Although the financial future of the Overture Center remains uncertain, Zarov and Baldwin both emphasized the Overture Center will be around for a very long time.
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Diversify!
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don’t worry. any shortfall in the city’s budget will be made up by increasing the fee to access a public street on halloween. also, expect police to be out looking extra hard to bust people on mifflin street and any other time so they can increase ticket revenue.
thanks mayor dave and PD!!!
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As ye sow, so shall ye reap, Dear Liberal Democrat Socialist friends! Here is what you sowed:
The 1977 Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas.
Time tested standards of banking prudence were thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
Enter the Clin-toon administration in 1992. With the help of Donna Shalala (1980’s UW Madison Chancelor) our democRAT friends further demogogued the lending requirements as racist. Think of this as fertilizer for the growing financial disaster crops. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make ever more questionable loans.
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called “CRA rating” that graded how ‘diverse’ their lending portfolio was.
In the name of diversity, banks began making huge numbers of increasingly risky loans that they previously would not have. They opened branches in ‘poor’ areas to lift their CRA ratings. Think of all of this as watering the seedling crop regularly!
Meanwhile, Congress gave Fannie Mae and Freddie Mac the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market. Thus, the ‘subprime’ mortgage market was born. With those changes, the toddling subprime market really took off. From a mere $35 billion in loans in 1994, it soared to $1 trillion by 2008.
Add a Democrat controlled congress in 2004 and a final round of demogoguery that the lending rules MUST be further degraded to ‘help the poor own their own homes’. Another liberal dose of fertilizer to really get the financial disaster to bloom was just what was needed!
These, gentle citizens, are the seeds of disaster that our Progressive Liberal Socialist friends sowed and nurtured over the last 3 decades. The Overture Center trust fund failure is but a tiny dead twig on the rotten-to-the-core behemoth that grew out of the Community ReInvestment Act and the subprime mortgage mess.
These are the facts…. And a disaster of global proportions is what we are reaping for their efforts. How do you like the progress so far? Do you really believe that the same people that promulgated this debacle of epic proportions can be trusted to ‘fix it’ now? The Barney Franks, Joe Bidens, Nancy Pelosis, and Harry Reids were all there, sowing, hoeing, and fertilizing this crop of financial ruin.
Have you had enough yet? Or do you need an even larger dose of financial collapse and ruin? Do you need to add a glib-tongued no-experience lightweight like Barry Obama to the democrat’s disaster, to liberally accelarate the progress they’ve made in destroying our economy? Do you�.. ?
My friends, Our Liberal Democrat Socialist friends may yet achieve their goal of ‘universal equality’. Keep supporting them and we will all be too poor to own a home, go to college, or retire when our humble labors are done.
Ahhhhhh - socialist equality at last!
Invictus Maneo
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More competition for Overture is coming to town. Ironically:
A pair of anonymous donors have made a $20 million pledge in support of the University of Wisconsin-Madison School of Music’s future Performance Center.
The commitments were announced Monday night during an “Evening of Celebration” at the Overture Center for the Arts, which featured student performances in music, drama and dance in celebration of the career of former chancellor John Wiley. Both Wiley and current chancellor Carolyn “Biddy” Martin informed the audience of the major developments, the university said.
http://www.bizjournals.com/milwaukee/stories/2008/09/15/daily19.html
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How do you see this coming since 2003 and have no plan B?