TOPIC: So you want to be a non-profit eh?
So you want to be a non-profit eh? 30 May 2008 07:15 #18668
Burns Court sister theater busted for blockbusters
By Anthony Cormier and PATRINA BOSTIC
Published Thursday, May 29, 2008 at 5:35 a.m.
Last updated Thursday, May 29, 2008 at 11:41 a.m.
LAKEWOOD RANCH â€” Lakewood Ranch Cinemas is the independent movie house that went mainstream. And when it did, film buffs were not the ones to complain â€” but the county property appraisers sure did.
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Business owners and residents are on edge about possibly losing what they say is the last anchor in the new Main Street plaza -- its movie theater.
Lakewood Ranch Cinemas, owned by the Sarasota Film Society and recognized as a nonprofit, is in dispute with the Manatee County Property Appraiser's Office over its tax-exempt status.
Appraisers say it owes $75,000 in property taxes.
The film society says it cannot afford to pay that and might have to close if forced to do so.
When the Main Street strip lost its most prominent business -- Morton's Gourmet Market -- on March 1, the commercial center endured a heavy blow.
If the theater closed, the effect would be enormous, said Heidi Allwood, who owns a children's book and clothing store there. "It would probably be one of the worst things to happen to Main Street," Allwood said.
The area might not be able to bounce back from another hit like that, said Julianne Randolph, co-owner of Endless Summer, a clothing boutique in Lakewood Ranch's downtown center. "I don't think the area can handle more of that," she said. "It's a hard time, and the economy has slowed for everybody."
The movie theater brings traffic into shops and restaurants, those businesses say.
MacAllisters Grill and Tavern, which is adjacent to the theater, offers a dinner and movie card special.
Residents can pay $10 to join the MacAllisters Movie Club and get 10 percent off meals when they present a Film Society movie ticket stub or the restaurant's movie membership card. The movie club has 170 members.
People who come to enjoy a movie are a steady stream of business for the restaurant, said Karen Ronney, a co-owner of MacAllisters.
If the theater closes, "the extra business we have would disappear," Ronney said.
A well-planned commercial strip is a lineup of diverse businesses that complement one another, experts say.
"When you have the right mix of tenants, they help each other to succeed," said Brian Kennelly, Lakewood Ranch Commercial Realty president.
Kennelly said he is confident that the county and the society will find a solution that is acceptable to both parties.
"I'm hopeful," he said. "If there was another outcome that forced them to change their business model, it would be disappointing to people on the ranch and off the ranch."
Kennelly said the success of the cinema demonstrates the need for entertainment east of Interstate 75. And, he said, anchor businesses are not easy to come by because of a competitive market.
Lakewood Ranch resident Rick Loop is also looking to the county's Value Adjustment Board as it prepares to review the society's case on June 6, he said.
"They need to do something," said Loop, 38. "They are going to dry this area up. They are going to tax the area to death."
He pointed to a sign in a nearby window as he and his wife, Kristi, 37, sat outdoors Wednesday and had lunch at MacAllisters.
"You are going to see a lot more of these 'space available' signs," he said.
The society has sent a cry for help. At the Lakewood Ranch theater, ticket attendants give a bright pink flier with a plea for help to everyone who purchases a movie ticket. The fliers also are posted at the concession counters inside.
Theater officials are asking the community to e-mail the county's six Value Adjustment Board members in support of a tax-exempt status for the society.
"Without this exemption the Lakewood Ranch and Burns Court Cinemas may be forced to close," the flier states, also referring to a theater the society operates in downtown Sarasota.
Melissa O'Buch, 31, received an e-mail through a Lakewood Ranch mothers group about the society's plight. She immediately sent an e-mail to the Value Adjustment Board in support of the theater.
The biggest challenge to the strip's survival is finding another anchor should the theater be forced to close, said University of Florida economist Dave Denslow. "That probably will be difficult now because of the downturn in the Sarasota-Bradenton area," he said.
If the society is regarded as a for-profit business, it must deal with other factors that have made it difficult for businesses to thrive in today's economy, said Denslow, who is part of the university's Bureau of Economic and Business Research.
The Save Our Homes property tax exemption for homeowners shifts the tax burden to others, he said.
"If you have lived in your house for a long time, you are paying relatively low taxes," Denslow said. "Somebody has to make up for that, to pay for what you are not. And the ones who are doing that are businesses and snowbirds. That's forcing some businesses to shut down."
Other factors likely have affected the society's bottom line, regardless of whether it is for-profit or nonprofit, said Denslow, such as "an increase in gas prices, the recession and flat-screen TVs."
County Commissioner Donna Hayes heads the county's Value Adjustment Board and found herself struggling to respond as she wore those two hats Wednesday. The Lakewood Ranch theater is in her commission district.
"I can't discuss this because this is a quasi-judicial issue," said Hayes.
"I can say that I'm very disappointed when I hear any business that can't survive in Manatee County."
Indiana Jones and Iron Man are not exactly the high-brow cinematic fare that organizers had promised at the theater. But with those and other first-run blockbusters on the marquee, Manatee County officials are planning to take away the nonprofit cinema's tax-exempt status and are seeking nearly $75,000 in property taxes.
It is a move that one of the founders says could sink both the Lakewood Ranch location and the long-running Burns Court in Sarasota. Dick Morris, founder of the nonprofit Sarasota Film Society, which oversees both theaters, is fighting the assessment with pamphlets -- which practically scream that the "cinemas' future is in jeopardy!"
Morris wants to know when the county became art critics. The county wants to know when independent filmmaking became so mainstream.
The squabble has evolved into a murky debate that touches on First Amendment issues but really boils down to a single point: What is the difference between art and entertainment?
Lakewood Ranch Cinemas was not supposed to be just another movie theater.
When it opened in December 2006, the theater was seen as both the anchor to the new Main Street shopping district and a place where independent films, not big-budget blockbusters, would line the marquee.
There were to be student films. Classes about movie making. Discussion groups about obscure foreign titles -- for example, the Hungarian film "Csoda Krakkoban," which is about a magic dreidel and probably would not play well at a local megaplex.
This was to be the theater for people who loved film, a hub for the arts in a place where art was sorely lacking.
Best of all, it was backed by the nonprofit Sarasota Film Society, which already had success with Burns Court, a similar theater in Sarasota. The society expected a property tax exemption from Manatee County so long as it used the Lakewood Ranch theater as a way to educate people about the magic of the movies.
But more than a year in, Lakewood Ranch Cinemas is fighting just to stay alive -- largely because it has become just another movie theater.
Playing this week: "Iron Man," "The Chronicles of Narnia," "Indiana Jones and the Kingdom of the Crystal Skull" and other movies high on the box office charts.
But the Film Society argues that every film is a piece of art, and that independent movies hold no more educational value than a Hollywood blockbuster.
"Art is art," Morris said. "When you go to a film, you are seeing a piece of art. Now, is it a good piece of art? That's in the eye of the beholder."
In the eyes of the county's property appraisers, the situation has more to do with commerce than art.
They say the theater is no different from tax-paying megaplexes such as the Hollywood 20 in Sarasota, and that the Film Society knows the difference between first-run hits and independent films.
After all, the society has operated the Burns Court cinema for more than 15 years, drawing steady crowds for showings of Oscar-nominated films such as "The Queen" and "Little Miss Sunshine," as well as more obscure, hard-to-find films. Burns Court has been tax-exempt since it opened in 1993.
"Right now, they are no different than any other commercial theater," Scott Tussing, who is in charge of tax exemptions for the Property Appraiser's Office, said of the Lakewood Ranch theater.
Figuring out who is right can be tricky, and this is not the first time that a government has come looking for money from a nonprofit.
In Massachusetts, for instance, officials are looking to tighten tax breaks around Boston Harbor, which could net the government as much as $1 billion, said Daniel Borochoff, director of the American Institute of Philanthropy.
"Governments more and more are looking for tax revenues wherever they can find them," he said.
The law says a nonprofit has to be used "predominantly" for its mission, which, in the case of the theater, is to "educate" the public about film.
But that description is broad and can include any number of things. This year, for instance, the Lakewood Ranch theater is offering independent films on Saturday and Sunday mornings, and the society is working with Manatee Community College and local elementary schools on filmmaking classes.
Morris admits that first-run Hollywood movies are not what the society envisioned, but that the theater had to show popular movies to spread the word about Lakewood Ranch Cinemas.
"If we showed some Romanian film, eight people would show up," he said. "Now that they know we are here, we can start showing those obscure films and become a viable part of the arts community."
So far, though, the county is winning.
When the society protested its tax bill, about $74,000 for 2007, a special magistrate agreed with Tussing and others, and said that Lakewood Ranch Cinemas should not be exempt. The society has an appeal in front of the Value Adjustment Board scheduled for June.
If it loses, Morris said that the cinema could be in jeopardy. In fact, the society handed out pamphlets recently that suggest both the Lakewood Ranch and Burns Court cinemas could be forced to close if the property appraisers have their way.
The society's current financial documents were not available, and Morris declined to discuss how much money the cinema made last year.
If the theater closes, it would have a big impact on Main Street, Lakewood Ranch's shopping district. Already hit hard when Morton's Gourmet Market shut down this year, most of the small businesses on Main Street depend on the 5,000 or so moviegoers who visit the theater each week.
On most weekend nights, the street is packed with shoppers, diners and moviegoers. Dale Katz, a sales attendant at Create Your Own, a candy store in the Main Street strip, said the theater is a magnet to the shopping center.
"We benefit from the theater because people come in before and after movies," she said.
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Re: So you want to be a non-profit eh? 30 May 2008 09:11 #18669
This is really not a debate about art vs. entertainment, but rather the potential competitive advantage that may inure to a non-profit when said non-profit engages in activities that are for-profit in nature and sometimes compete directly with for profit enterprises in the same neighborhood. This debate has on-going in various arenas for the past several decades.
For Example: The health club facilities at your local for-profit Gold's Gym franchise are fully taxable. Should those same identical health club facilities located within your local YMCA be tax exempt?
Most tax assessment authorities look at the nature and extent of the activities conducted to determine if a real estate tax exemption is warranted for all (or a portion) of the property.
I would have to agree that if the primary faire is nothing more than 'Iron Man' and 'Indiana Jones 4' then it is just another commercial movie theater.
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Re: So you want to be a non-profit eh? 30 May 2008 09:44 #18670
Absolutely correct assessment here. They should the property tax bill and all the others taxes that they have been 'exempt' on if they are going to compete with the rest of us. No Non-Profit entity should have access to first run product period. It is an unfair competitive advantage.
My local non-profit stage theater dabbles in film during the summer, playing art house stuff and hosting a festival every year. I'm not thrilled about it but at least they stay away from first run product.
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