After resolving issues with corrupt leadership last year,
the Overture Center is now facing financial problems due to downturns in the
U.S. economy, an official said last week.?

A special trust fund, established to finance the facility’s
construction debt with the city and provide for its future capital needs, is
supposed to bring in an 8.25 percent return every year over a 36-year term.
According to Tom Carto, president and CEO of the Overture Center, the fund has
earned about 6.5 percent over the past two years.?

Carto said as of mid-March, the trust contained a little
over $100 million, compared to December. 2005 when it contained $108 million.
The fund is supposed to provide $1.4 million annually to a maintenance and
operations reserve, but delivered only $900,000 in 2007, Carto said.?

The trust’s investment strategy, controlled by an
independent board of investment professionals, is guarded and conservatively
invested “so big swings in the stock market won’t affect it,” Carto
said.

The decline in funds threatens the viability to live up to a
complex plan to repay debts from the massive construction project and additions
completed in spring 2006. If the fund continues to fall, the city will go to
the first source in line of safeguards to meet debt payments.?

Taxpayers are not on the hook for any problems related to
the trust, Carto said, as the trust is completely separate from the Overture
Center’s day-to-day operations.?

Carto said the reasons for the trust’s poor earnings lay in
the “sluggish” U.S. economy.?

“When everything is pointing south, [the fund] is going
to lose value. It’s going to be a challenge if the economy continues to
drop,” Carto said. “There will have to be a supplemental effort to
take care of the rest of the debt.”?

Jerry Frautschi, a philanthropist who gave the Overture
Center $205 million for its new construction projects, is the first in a line
of fire walls and would provide $5 million in case of financial problems.?

“The city could come into play eventually, but we’re
pretty far back in the line,” said George Twigg, spokesperson for Mayor
Dave Cieslewicz. “There’s not much the city can do directly at this point
because [the fund is] not controlled in any way by the city.”

InitallyInitially, half of Frautschi’s gift was put in the
operations and maintenance trust while the other half was coupled with a $115
million loan to build the Overture Center’s new structures.?

Carto said the original plan failed because of a major
downturn in the economy, so the city approved a refinancing deal in 2005.?

According to Carto, business for the Overture Center, a
400,000? square- foot facility with seven venues holding between 60 and 70
events per year, has been doing well this year.?

The $13 million the performing arts facility operates on to
bring in artists, pay employees and overhead is not affected whatsoever by the
diminishing trust’s valuevalue of the trust because they are two separate
entities, he added.

“The Overture is not going to go away,” Carto
said. “However, it is figured out to pay off the rest of the construction
debt; that’s going to happen. People read Overture’s financial problems and
equate that to the overall picture. That’s not a fair assessment at all.”