Stephanie Ingersoll

USA TODAY NETWORK – TENNESSEE

Roxy Regional Theatre building fund now stands at zero balance

Several board members have quit, both directors this week announced retirement

City of Clarksville not funding theater as nonprofit in 2017 fiscal year

CLARKSVILLE — Hundreds of thousands of dollars raised to build a new home for the Roxy Regional Theatre were used instead to pay operating expenses, wiping out the capital fund.

An audit of Roxy’s finances obtained by The Leaf-Chronicle found $299,882 in donations pledged for a new building were spent to fund operations, leaving the building fund capital campaign with a zero balance by Aug. 31, 2015, when the most recent fiscal year ended.

Those donations had been “temporarily restricted” for a specific purpose, but those restrictions expire over time if they’re not used.

“During the last several years, the Roxy has used the temporarily restricted capital campaign contributions to fund operating activities,” the audit states.

It states that as of Aug. 31, when auditors examined Roxy Productions Inc.’s finances for 2014 and 2015, it was highly unlikely the Roxy could replace money used from that fund, so management elected to convert the temporarily restricted building fund campaign to “unrestricted assets” with the belief that contributors who gave money to the building fund have also historically supported operating costs.

It states management did not believe donors who gave to the building fund would mind.

Since the audit — dated Jan. 28 but presented to the board this month — several board members have quit, some citing disagreements on how the Roxy should proceed. Co-founders John McDonald and Tom Thayer, the theater’s executive director, announced their retirement Monday.

On Wednesday, board president Stacy Turner, along with executive board members Nancy Ladd and Kay Haase, issued an exclusive statement to The Leaf-Chronicle in response to questions.

“When the board of directors for Roxy Productions Inc. were made aware through management of certain financial concerns, the board of directors took action to collect all pertinent audits, tax records and financial statements to obtain the entire picture of the financial state of the organization,” the joint statement says. “As a result of the presentation to the board, we put in place outside controls to oversee the finances moving forward.”

While the audit showed $299,882 was taken from the building fund capital campaign in the year that ended Aug. 31, Turner said that is the year the funds were reclassified, but the money had been actually spent over several years.

“We are also in the process of collecting a complete list of building fund donors, since its inception more than 10 years ago, to publicly inform them of the audit’s findings and the use of their respective donations,” the statement says. “The auditor has explained that the building fund monies were used as operating expenses over the years to keep the doors of the Roxy open, pay the light bill, pay the actors, salaries, and to produce the quality shows that the Roxy has produced for 33 years.What was also explained in the audit was that the sum total figure of $300,000.00 was not spent in the year ending August 2015, but was an accumulation of expenditures over a significant period of time.”

Ryan Bowie, who will take over in July, has been working for Roxy Productions for six years as the director of fundraising and management.

He also issued a statement Wednesday.

“After working hand in hand with Roxy management and donors and sponsors for the last six years, I am confident that the Roxy Regional Theatre can move forward in a positive light and continue for the next 33 years and beyond,” he said, and thanked the donors for “believing in “the mission of the Roxy.”

“These are exciting times to breathe a renewed life into the cornerstone of downtown Clarksville by partnering with outside organizations and users. This is not a crossroads, this can be a clear path of continued success.”

Executive director’s salary doubled in four years

As the building fund was being depleted, founder and executive director Tom Thayer’s salary nearly doubled over four years. According to tax forms filed by Roxy Productions — required for nonprofits — Thayer’s salary was $46,754 in 2011, $76,108 in 2012 and jumped to $92,883 in the 2014 tax year.

Thayer did not return phone calls Wednesday, and Turner said that decisions regarding his salary increases were addressed by a prior board, before any of the executive board of directors' terms began.

Former treasurer Barry Kitterman said he has not served on the board for about three years but while he was on the board, it approved measures to increase Thayer's salary as co-founder McDonald's salary decreased.

"I don't want to cause problems, but I want to speak up for John and Tom," he said Wednesday night. "We viewed them as a team."

Both Thayer and McDonald drew a salary, and at some point they asked and the board agreed to have McDonald's salary be higher and Thayer's to be low. But as McDonald got closer to retirement, his salary would decrease and Thayer's would increase, Kitterman said. The amount the two received together balanced out over time, he said.

"This was done in a good faith effort to help John and Tom," he said. "All those years they were both working full-time. They have given so much of themselves to that theater."

The audit also states, and tax records show, that in the fiscal year that ended Aug. 31, the Roxy borrowed $41,842 from Thayer and still owes him $32,842. Turner said the loan shown on tax forms was reimbursement for expenses Thayer incurred personally because the theater did not have a business credit card.

“With regard to the loan inquiry, the board has been presented invoices, receipts and charges made by Tom Thayer on his personal account for Roxy business expenses as the Roxy did not have a business credit card and these transactions would be reimbursable expenses to Tom Thayer," Turner said. "These expenses were also verified by the audit (prepared by) Stone, Rudolph and Henry as reimbursable expenses.”

According to the audit, “there are no repayment terms, but the Roxy expects to repay the balance during fiscal year ending Aug. 31, 2016, therefore the balance is classified as a current liability.”

Roxy deficit hits $169,383

Meanwhile, the Roxy appears to have been losing money, with its net assets or fund balances falling from $102,317 in 2011 to a deficit of $169,383 in the most recent tax year, according to tax records.

Turner said that figure is “an accumulation deficit over time as explained by the auditor.”

But contributions to the Roxy have been declining significantly each year over the past five years, according to tax records.

In tax year 2010, gifts, grants and contributions totaled $390,775. In the 2014 tax year, that had fallen to $192,669.

City likely not renewing funding

For the first time in those five years, the City of Clarksville will probably not include the Roxy in its upcoming budget. The mayor’s proposed budget includes $103,500 to be split among a number of nonprofits who apply and are approved.

The Roxy submitted an application this year, but the city chose instead to provide funds to the Gateway Chamber Orchestra in the proposed budget, which provides a similar service instead because the Roxy received money last year, said Jennifer Rawls, spokesperson for the city.

City funding to the Roxy has ranged from $30,000 in fiscal year 2011 to $15,000 in the current fiscal year.

The budget had not been approved yet and can be changed by the Clarksville City Council.

Over the past couple of years, the city has been studying the feasibility of building a new performing arts center downtown. Several locations were studied but the current site of the Roxy was deemed most suitable. Those efforts are separate from the Roxy’s building campaign.