Piven Theatre Executive Director Leslie Brown provided her assessment of the economic merits of the plan for expanding the theater’s presence at the Noyes Cultural Arts Center to Evanston Now.

Here’s what she wrote:

The Economic Return on the City’s Investment in Piven’s proposal

Return on a $2.2mm from the city to Piven:

  • When the loan comes to maturity, and not accounting for the potential increase in interest rate, the interest return to the city will be roughly $724,647 and the full loan repayment, therefore, is about $3 million.
  • The building improvements will add roughly $2.0 million to the value of the building.
  • In the current agreement, Piven will also contribute $33,125 in capital improvements for the rest of the building during the first term of the agreement.

Economic impact:

The following uses the same assumptions as the article written in Evanston Now on the Music Institute’s contributions to the city economy.

  • A 200 seat theater with shows of various levels and theater companies, at a roughly 75% capacity, 200 nights a year, will bring in 30,000 visitors to the Noyes Center.
  • Assuming 60% of those people are over the age of 21 and 80% of those having at least 1 drink, the City would earn over $9,200 annually in liquor tax.
  • Moreover, based on 30,000 visitors (which does not include Piven’s students, or parents picking up students, etc.), the number of patrons would result in a $236,000 economic benefit to the Noyes corridor, if 60% of the people spend between $9 and $14 on their visit to the theater (i.e. anything from several cups of coffee to a meal in a restaurant).

None of this estimates parking or hotel tax revenue or any other taxes the City could collect.

Total Benefit:

  • Based on liquor tax, Noyes street benefit, improved value to the building and repayment of the loan, the 25 year economic benefit to the City of Evanston is $11,163,125.
  • In other words, the City of Evanston will realize a 407.41% return on their $2.2 million loan (more if the increased variable rate condition is triggered).
  • Over 25 years, the average annual return will be 16.30%.
  • This annual economic return on investment is roughly 32.6 times greater than the return on the City’s own investment fund, and these numbers do not reflect the economic benefit derived from the increased daily traffic to the building based on expanded class capabilities and theater training opportunities. Nor do the assumptions herein reflect the potential for increased rents based on a building that is now significantly more desirable.

Bill Smith is the editor and publisher of Evanston Now.

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2 Comments

  1. A theater on every Evanston Block !

    With the assumptions and return expectations of a 25 year average annual return of 16.30% provided by the head of Piven, Leslie Brown, the City of Evanston should consider putting a theater on every block in Evanston!

    These "lofty" return assumptions are likely a mirage.

    Call it what it is…the City of Evanston is going to subsidize the Arts.

    Maybe we should, maybe we shouldn't.

    But let's debate the merits of this idea on complete and real numbers. Assumptions should be questioned.

    In depth analysis should be conducted.

    As I recall, there is a world class business school less than 1 mile away. Seems like a worthy project to get some independent, objective analysis.

    Is Piven Theater going to focus on producing comedies?

     

  2. City into the red, Piven secures cash flow on City property?

    Piven's optimistic numbers are, first, a best-case scenario (let's hope all that drinking actually happens!) and, second, do not include the loss of rental income to the City due to Piven taking away almost triple their space from paying renters – and paying no rent themselves. When you figure it all in the City does not gain $11 million, it actually goes into the red at least a few million. See http://evanstonnow.com/story/government/bill-smith/2013-05-06/56110/more-details-emerge-about-piven-deal

    I think it's worth noting that Piven itself puts on very few performances – it is primarily a teaching organization, not a producing theater – so who is actually performing in that $3 million theater those 200 nights a year? Groups other than Piven, it is said, will rent the space. And then the City is paid its lost millions back, correct, from the theater's income? No – the landlord, Piven – whose contract allows them to sublet all of their space (theater and classrooms) — keeps the rents.

    Piven becomes a landlord – of City property – and secures itself cash flow for years into the future. Is that right? And what about other worthy arts organizations in Evanston; is this equitable treatment, or favoritism?

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