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Actors Guild responds to LexArts funding cut

By Rich Copley rcopley@herald-leader.com

We just received the letter that Actors Guild of Lexington’s board directors and artistic and managing directors have sent to LexArts, in response to the LexArts allocations committte cutting AGL’s funding from its annual Campaign for the Arts. We are working on a story for later today to get LexArts response, but here is the letter:

June 23, 2009

Patrick O’Donovan, Chair, Board of Directors Barbara Edelman, Esq., Chair, Allocations Committee James M. Clark, President & CEO Cc: LexArts Board of Directors

Dear Mr. O’Donovan, Ms. Edelman and Mr. Clark:

As the leaders of LexArts and Actors Guild of Lexington (AGL), we bear considerable responsibility for allowing misunderstandings to turn a long collaborative relationship into a climate of mutual distrust.

We write to clarify facts about AGL’s financial situation and about our satisfaction of the conditions set by LexArts for AGL’s receipt of the full $70,000 allocated for fiscal year 2009. Further, we dispel LexArts board members’ misperceptions that have come to our attention in the days since we learned that LexArts chose not to fund AGL for fiscal year 2010. Finally, we request a rehearing and reconsideration of LexArts’s denial of funding in accordance with appeal procedures.

AGL’S PAST AND CURRENT DEBT We are open about AGL’s past problems, and regret that LexArts has not acknowledged the responsible and productive corrective actions that we have taken.

Your letter denying 2010 funding read in part: “Your current status of insolvency presents problems we are unable to disregard.”

By definition, this statement is correct: AGL’s financial liabilities exceed our tangible assets. Nevertheless, we are concerned that LexArts has ignored the fact that over the past year we have reduced our debt, and have a plan to eliminate it entirely.

LexArts CEO Jim Clark told the Lexington Herald‐Leader this weekend that AGL had in the relatively recent past a debt totaling more than $80,000, and he estimated a current debt of approximately $40,000. After this month, AGL will have finished three of the last four fiscal years “in the black”. We are willing to make public our financial audits from the last four years in support of this statement. We have formulated a plan to eliminate our debt by June 30, 2012, which we believe to be a realistic time frame given the current economic recession.

It bears noting the source of our debt. In 2002, AGL made what has proven to be an imprudent decision: AGL spent $79,000 on physical improvements (bathroom, electricity, fixtures, etc.) to the fourth floor of the Downtown Arts Center, a government‐owned building for which LexArts is the lessor. For that expenditure, AGL depleted its reserve funds and took a bank loan, with a present balance of approximately $17,000. We are current with this obligation. In a sad irony, however, this fourth floor office space has been essentially unusable most of the last two years. Though AGL has paid rent, LexArts has failed to provide heating or air conditioning for the last 22 months, despite repeated requests from AGL. This is contrary to the clear terms of the lease agreement which obligates LexArts to repair and keep in good order the HVAC system.

Our current debt includes approximately $12,000 owed to the Internal Revenue Service. AGL has been paying monthly installments set by the IRS. This unfortunate matter was discussed at great length during last year’s LexArts allocation hearing. Finalized in December 2008, AGL’s installment agreement with the IRS requires monthly payments toward payroll taxes owed for the quarters ended December 31, 2007, and March 31, 2008. Not being able to satisfy these taxes was a regrettable occurrence and due in part to circumstances beyond AGL’s control. AGL voluntarily contacted the IRS to make arrangements for monthly payments toward the prior taxes. The installment agreement also requires that AGL remain current with the payment of payroll taxes. Both of these conditions have been and continue to be met. A copy of the finalized installment agreement was provided to Mr. Clark, as were printouts from the IRS website showing the history of payments.