Historic theater confronted with changes
Nonprofit status could save Senator Theatre but shift its focus
"The theater is a sick patient," its owner has said. "Decisive action is called for, and time is of the essence." (Baltimore Sun photo by Algerina Perna / January 28, 2009)
But gaining nonprofit status would likely mean big changes at the historic theater. As a nonprofit, it would not just show movies; it would need to provide educational and cultural programming as well. The new status would also mean a new role for Kiefaber, who would give up day-to-day control of the movie house, which has been run by his family for decades.
"I'm encouraged that the city is responding positively to help the Senator Theatre," he wrote in an e-mail yesterday. "The plan makes a great deal of sense for all concerned."
The city's plan, detailed in a letter by Deputy Mayor Andrew Frank, would give $320,000 in the form of a no-interest loan, provided Kiefaber turns the theater into a nonprofit corporation - something Kiefaber has talked about for years and began exploring in earnest last year.
Fran Holden, executive director of the League of Historic American Theatres, a membership group based in Baltimore, said the key to success will be the plan.
"What do you want to do? What purpose do you want to serve?" she said. "The business plan and passion that Tom [Kiefaber] has had is not sustainable in the community. But you can't say 'Let's become a nonprofit and our troubles are over.' It's not easier to run a nonprofit."
The Senator has struggled financially for years. It received nearly $110,000 in community donations in 2007 to stay in business, and accepted a city guarantee for half of a $1.2 million loan from 1st Mariner Bank in 2002. Even this support did not help keep the theater afloat for long. In a news conference last week, Kiefaber again appealed to community members and government officials for help.
"The theater is a sick patient," he said at the time. "Decisive action is called for, and time is of the essence."
Nonprofit status is becoming a more common path for historic businesses struggling to compete in a tough economy, according to Dianne Chipps Bailey, an attorney at the Charlotte, N.C.-based Robinson, Bradshaw & Hinson who advises nonprofits. She has no connection to the Senator.
Official nonprofit status - an IRS designation as a 501(c)(3) corporation - could give the Senator a significant financial boost by allowing it to avoid paying income taxes and allowing it to collect tax-deductible contributions from the public. But to get the charitable designation, the Senator would have to prove that it serves a purpose other than being historic and that it doesn't look too much like a for-profit company, Bailey said. It would have to offer other programming, such as concerts, plays, art exhibits, school events and even space rentals.
For example, the Creative Alliance has thrived in the Patterson Theater building by converting it into a community arts center.
"That could absolutely be to the community's benefit," Bailey said. "They could suggest uses they'd like to see."
The charitable designation starts with the state's approving formation of a nonprofit corporation. It then would apply to the IRS for the status, a process that could take six to nine months unless it is expedited because of financial hardship or for another reason. The IRS requires a plan that shows what it would offer and where revenue would come from.
The Senator would be run by a board, including people representing the city, neighborhood and corporate community. Bailey said it is appropriate for former owners to serve on the board, but they, and other board members, should not be paid. The board would hire a professional chief executive who is familiar with fundraising and other aspects of running a nonprofit.
City Councilman Bill Henry, who worked with Frank on the city's proposal, said he would like Kiefaber to continue to give input after the theater becomes a nonprofit.
"I'd kind of like to give Tom his life back," Henry said. "I'd like his connection to the Senator in the long run to be a matter of choice and not a matter of obligation."
Kiefaber's home in Sparks, which has been mortgaged as part of previous loans, would no longer serve as collateral.
There are about 5,000 theaters around the nation, including more than 1,400 for-profit, single-screen theaters similar to the Senator, according to Hoovers Online and the National Association of Theatre Owners. But more old theaters, particularly in urban areas, have been going nonprofit in the past 15 to 20 years, said Ross Melnick, co-founder of Cinema Treasures, which works to help preserve historic theaters. But he agrees that it may not be the panacea Senator supporters are looking for because the new nonprofit will still need financial patrons.
He called the Senator "enormously important as a cultural venue," but said multiplexes are capturing the big movies and the big concession profits.