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Red ink at Fairfax County’s arts center in Lorton forces change

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When Fairfax County acquired the District’s former Lorton prison a decade ago, leaders of a private foundation and county officials unveiled a dazzling plan to transform the historic reformatory into a vibrant artists’ colony.

Mikhail Baryshnikov danced at a black-tie gala in the prison’s old gym. Studios for painting, glass-making, ceramics and dance opened in brick dormitories that once housed prisoners including Chuck Brown, the godfather of go-go. Theater companies took the stage in a new theater, and a spacious gallery showcased regional artists and brought a splash of color to the southeastern part of the county.

But today, the most distinctive hue at the Workhouse Arts Center is red ink. Awash in $53.7 million of county-endorsed debt, the foundation responsible for renovating the complex and running the arts center is now fighting for survival. County taxpayers are paying more of its bills, to the tune of nearly $3 million a year.

Some foundation and county officials say the nonprofit Lorton Arts Foundation ran into trouble when the economy crashed, but still think that the venue has great promise. The arts center might not have been savvy at marketing itself and sometimes sponsored events that were fun but unprofitable, but its prospects have already begun to change with new leadership, they say.

Others worry that the arts center was always a shaky bet in a remote part of the county and that years of rosy projections, naive management of a complex renovation and lax county oversight have created a money pit. Even those who have faith in the venue’s future say troubles occurred because the foundation’s early leadership had a grandiose plan that relied too heavily on borrowing.

“They had these lofty goals of creating a self-sustaining arts colony,” said Scott Habes, director of the visual arts program. “A foundation is usually built on money. This was built on debt.”

The county’s Board of Supervisors this year acknowledged that the foundation was on the brink of failure. But John Mason, president of the Lorton Arts Foundation, said he is confident that the arts center can succeed with a new business model and restructured debt.

“We need to think of entrepreneurial options,” Mason said.

In the 1990s, former congressman Thomas M. Davis III, who was then Board of Supervisors chairman, helped transfer the federal property’s approximately 2,300 acres to the county for about $4.2 million. The Fairfax County Park Authority took over most of the land, and there is now a golf course, a high school and private homes. The Lorton Arts Foundation leased the 55-acre workhouse site on Ox Road and set to work preserving and reinventing the complex. County officials joined the foundation in celebrating the Workhouse Arts Center’s opening in 2008.

“How many places in the country do you have a prison that’s been turned into exactly the opposite, an arts center?” said Roger A. Lancaster, a Falls Church resident snapping pictures on a recent visit. “Yes, it’s expensive, but it adds to the quality of life.”

By June 2011, the foundation completed the first phase of construction and started the second, which was originally planned to include artists’ residences, restaurants, a museum, a music barn and a performing arts center.

Now the center offers arts classes and lessons in cooking and even pilates. There are films and plays for children — “The Goonies” and “Rapunzel” are playing this month. There is live comedy and a singalong to the movie “Grease.”

But despite the diverse offerings, the project always posed unusual challenges. Founders had envisioned something like Alexandria’s Torpedo Factory, where visitors can walk in from the street to see working artists in their studios. Unlike Old Town, however, the Workhouse Arts Center is devoid of shops, cafes, restaurants or hotels. Workers also found that the historic complex held costly surprises, such as a network of underground steam tunnels that had to be filled and stabilized before anything could be built.

To finance its vision, the young foundation had partnered with the Fairfax County Economic Development Authority. The authority, which is an independent entity established by state law and funded by the county and a lodging tax, can issue bonds on behalf of businesses or nonprofit groups. Yet neither the economic development authority, Virginia nor Fairfax County is legally obligated to repay the bonds. The foundation’s bonds were to be repaid by anticipated revenues from studio leases, fundraising and its programs.

When the first $26.2 million bond was floated in 2006, former Board of Supervisors chairman Gerald Connolly boasted that the trade newspaper the Bond Buyer ranked it as a deal of the year finalist. With much less fanfare, a second bond worth $27.5 million was issued in 2010. That same year, however, the foundation reported a $558,000 drop in program revenues and a $3.32 million deficit as the economic recovery dragged on and donations lagged.

“I think if I had been involved as CEO at the point where the decision was made to go for a second bond, I might have wanted to pause and think about whether we could absorb the costs of the first bond,” Mason said.

As the foundation’s problems got worse, Fairfax increased its support. The county had already been matching donations to the foundation on a dollar-for-dollar basis up to $1 million since 2005. But the supervisors agreed to give an extra $2.2 million for debt service in fiscal 2012 and an additional $2.6 million in fiscal 2013, which begins July 1. And that was in addition to $750,000 a year in operating subsidies that, since March 2010, the county agreed to give whenever necessary for up to 15 years.

“I was concerned several years ago when we gave our blessing to the loan, that while we weren’t making any sort of legal obligation, we were sending a message to the banks,” said Supervisor John C. Cook (R-Braddock). “So now we’re being put in this position where we’re being told we’re kind of expected to help out. We’re potentially on the hook for the life of the loan.”

Board of Supervisors Chairman Sharon Bulova (D) said that county officials “could just wash our hands of the whole thing and let things fall apart. But is that really in our best interest?”

Bulova sees the county’s extra funding as a bridge until the arts center’s fortunes change. Meanwhile, County Executive Edward L. Long Jr. has been given more oversight over the foundation’s spending, while Mason said he and the nonprofit’s newly reconfigured board are looking for solutions.

That could mean renting the arts workhouse for trade shows, weddings or other private events, selling naming rights, or working with corporations to build restaurants, shops and lodging for multi-day events. The foundation is looking into forming partnerships with George Mason University and Northern Virginia Community College. And it’s scouring the region for arts-loving donors with deep pockets.

“I don’t think it’s doomed to fail,” Mason said.

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