Playhouse board struggles to explain use

of grant

Posted on Thursday, May. 04, 2006

COCONUT GROVE

Playhouse board struggles to explain use of grant

State and county officials want a written explanation from Coconut Grove Playhouse leaders about the use of a state grant as collateral for a loan.

BY DANIEL CHANG
dchang@MiamiHerald.com

The Coconut Grove Playhouse, buckling under an estimated $4 million deficit, may sink further into debt and lose state funding unless the theater's board of directors provide state officials with an explanation about the use of a $125,000 restricted grant.

Members of the Playhouse board met behind closed doors for nearly three hours Wednesday to address, among other things, their explanation, which is due in writing to the Florida Department of State's Division of Cultural Affairs by Monday.

REPAYMENT DEMAND

State officials asked for the explanation in a letter Friday addressed to the Playhouse's board chair, Shelly Spivack, and warned that the theater risks a demand for repayment of the $125,000 and loss of future grant payments if it misses the deadline.

Michael Spring, director of the Miami-Dade County Department of Cultural Affairs, also asked for a written account of the use of the state funds and gave Playhouse leaders until noon today to respond.

Board Vice Chair Lynn Martenstein said the board will ask the state and Spring for more time.

''We want to give them a comprehensive response,'' she said, ``and we need a couple of days to do it.''

ADVISOR HIRED

In other action, the board voted to appoint the South Florida law firm of Berger Singerman as the theater's independent financial and legal advisors.

''They're going to sit down with our creditors and begin to talk to them about restructuring debt,'' said Martenstein.

To further control finances, the board voted that ''no employee will make a financial commitment of any kind on behalf of the playhouse'' unless authorized by the executive committee of the board, said Martenstein, who added that only five employees remain on salary.

The playhouse's sources of income are few but include a lease agreement with the Miami Parking Authority, which pays the theater about $16,000 a month to operate an adjacent parking lot, and donations from board members.

Producing Artistic Director Arnold Mittelman continues to work at the playhouse, but his compensation is being deferred.

Martenstein said the theater's board will hold an open meeting at an undetermined date ``to solicit support and deliver a progress report to the community.''

FINANCIAL CRISIS

The playhouse board announced its financial crisis on April 12, just before its season-ending production of Sonia Flew.

In the ensuing weeks, details of the theater's finances have trickled out, largely from anonymous sources.

According to several board members and others familiar with the situation, the crisis was triggered after Mittelman took a $125,000 loan from Coconut Grove Bank in early April using as collateral a state grant restricted for building improvements and related costs.

Mittelman then used the loan to pay salaries, including his own, said the sources.

Mittelman's compensation for 2003 amounted to more than $220,000 in salary, benefits and expenses, according to the latest IRS filings.

One board member, speaking on condition of anonymity, said she believed Mittelman made ``an honest mistake.''

ASSURANCES

But Mittelman previously had assured state and county officials, both in writing and in conversation, that he understood the grant was to be used only for 'architectural services to complete construction documents and the `hard costs' of construction,'' according to a Dec. 19, 2005 letter that Mittelman wrote to Don Blancett, the state cultural facilities program manager who authored the letter to Spivack, the board chair.

''Please be assured that we will comply with all contractual provisions for the use of these funds,'' Mittelman wrote at the time.

Copyright 2006 Knight Ridder

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