Artists Repertory Theatre To Sell Half Its Building; Parts With Managing Director

This week, Dámaso Rodríguez, the artistic director who propelled Portland’s Artists Repertory Theatre in ambitious new directions, sent a letter to supporters with two major pieces of news: the company is about to sell half of its building, and its managing director of seven years, Sarah Horton, is leaving “to pursue other opportunities."

There are at least two other key pieces of information he left out, though.

Artists Repertory Theatre has a reputation in theater circles as a company that bets big on quality. Its seasons are heavily freighted, averaging eight shows per season of classy, high-octane work by hot playwrights like Pulitzer-winner Lynn Nottage and Yussef El Guindi. They tackle subjects like racism, the Great Recession and climate change. Under Rodríguez’s leadership, Artists Rep has set new standards for equity onstage and off.

The company puts women and people of color in the driver’s seat — directors and actors, as well as playwrights. And with commissions of new works — from the original 2015 musical “Cuba Libre” to the five-hour epic “Magellanica” premiering in January — Rodríguez signaled Portland’s oldest theater company was ready to usher in new stories for a new era.

The public responded. An analysis of Artist Rep's financial records shows that for the last years records were available ticket receipts boomed and fundraising went up dramatically, by $656,000. But that hasn't been enough to stave off a dramatic reckoning in the organization's assets.

As first reported by the Willamette Week, the IRS filed a lien against Artists Rep for lapses in its payroll tax filings going back to 2012. In total, the company owed $309,000 to the federal government. (According to former Managing Director Sarah Horton, that debt was paid off in early December.) A second lien, for the building's current mortgage, is held by a division of Menashe Properties. Tax forms show Artists Rep ran deficits of $190,000-$375,000 between the years 2013 and 2015. Production costs went up and down, but the fundamental problem remained the mortgage payments on the block-sized, 29,000 square foot building that serves as the company's performance venue and headquarters.

Board chair Mike Barr, who works in banking, told OPB last week, "This is my third arts board. Typically these [organizations] get, at best, 50% of revenues from ticket sales, the rest from donations." That can include grants, foundations, and individual giving.

"It’s not an easy business to run," Barr said.

The asset most likely to get Artists Rep out of its financial hole is the block-sized home may actually be the very building whose mortgage has proved such a problem.

In 2004, the organization moved to acquire its headquarters, located in a gritty part of southwest Portland, from the Ancient and Accepted Scottish Rite of Freemasonry.

It raised most of the $4.88 million price by 2007, and in subsequent years renovated the building's two theaters, connecting them with a central staircase and elevator.

In the 10 years since the capital campaign wrapped, the building's value grew 67 percent to $8,192,530. Artists Rep stands to be the sole beneficiary of that accumulated equity.

During 2013 and 2014, the company invited friends in. A total of 12 creative nonprofits, mostly theater-related groups, now lease space in the Artists Rep building, forming what Rodríguez named the Arts Hub. Some also paid extra to get on the schedule for the building's two stages or rehearsal halls.

But now, with the liens looming, change is coming. Artists Rep confirmed plans to sell the northern half of the building, including the Alder Theatre and the adjacent parking lot. The buyer is Wood Partners, a development firm that created the Pearl District high-rise Block 17. A pre-application permit filed in October shows a plan for a new 20-story mixed use building with 296 housing units, 4,000 square feet of retail and 206 below-grade parking spaces. Artists Rep would also do some of its own building to accommodate the changes to its remaining south side.

“We looked at offers on half the property, they weren’t that much higher, 20 percent higher," Artist Rep’s board chair Mike Barr told OPB last week.

The company also considered selling the whole building outright and moving. But the board concluded it would be harder to find a new space that meets its needs in the available price range.

If the sale goes through, Artists Rep should start receiving payments in February. Barr says the cash will be used for further renovation of the remaining southern half of the building, possibly with a few million dollars leftover to create a new endowment for the company.

"Our purpose is not to make a profit," Barr said. "It's to deliver the art we set out to deliver."

In making this move, Artists Rep joins a small circle of arts groups that have taken matters into their own hands during a breakneck real estate market. Oregon Ballet Theatre sold its headquarters in 2015 to retire its debt and make a fresh start. A year later, Imago Theatre announced plans to sell its stately brick building off Burnside Avenue. (That plan was later abandoned.) But most companies and artists can’t afford to buy a building that might turn out later to be a long-term asset. Instead, they’re tossed on the waves made when owners cash in on a high-demand market.

The tenants of the Arts Hub will be affected to varying degrees.  Office space will be protected, Barr said. But at least one company faces a highly uncertain future: Profile Theatre, the largest of the 12 tenants, relies on the two theater spaces to stage five to six shows per season. With so many of Portland’s independent theater spaces caving under development pressure, few alternatives remain for Profile.

Horton, who has managed Artists Rep’s operations since 2010, did not respond to requests for comment Tuesday night.

In his email, Rodríguez wrote: “The news of the building and Sarah Horton’s departure aren’t linked; sometimes, big changes occur simultaneously.”

But neither did he offer any clues about what brought the company to the brink, even as it has rewritten the playbook for regional theater.

Editor’s note: The headline for this article has been updated to reflect Sarah Horton’s title at Portland’s Artists Repertory Theatre.