Debt-Ridden Source Theatre Closes, Plans to Sell Building

By Jacqueline Trescott and Jane Horwitz
Washington Post Staff Writers
Thursday, February 9, 2006

The Source Theatre Company, which provided a home for experimental plays and fledging artists for more than 28 years, has ceased operations and agreed to sell its building. Source had been struggling financially for several years and has received almost $1 million in public funds.

The city, which will not try to block the sale, is conducting a "serious review" of where the money went, said city official John McGaw.

In 1977, Source was one of the first arts groups to move back to the 14th Street corridor, an area scarred by the 1968 riots but now reborn as a bustling theater, restaurant and gallery zone. In an announcement this week, the theater's management said the property at 1835 14th St. NW was sold to Bedrock Management Co., which will replace the theater with the Standard Bar & Grill.

Peggy O'Brien, chairman of the company's board since 2000, said the group's dire financial situation forced the sale.

"The building had to be sold. The debts continued to mount and we could not find a way out," she said. "We have been actively trying for a number of years to reverse this downward spiral. We just had to admit we just couldn't do it. There is a real considerable level of debt."

She said she didn't know the total liabilities, but creditors include the IRS and the city. In 2004, Joe Banno, the theater's artistic director, told The Washington Post that Source's debt to the IRS and Actors Equity was $50,000.

Though Source has had several co-productions in recent years, O'Brien said she considered the theater's final production to be the Amiri Baraka play "Dutchmen," presented in 2002.

City officials, who had worked with Source to help stabilize it, were puzzled by the decision. "The District is looking at what investments it has made in the property over the years and what obligations Source Theatre has to the District and the community," said McGaw, special assistant to Deputy Mayor Stanley Jackson. McGaw said the city lent Source $365,000 in 1987 and holds a mortgage on the property, which has been "in arrears" for 10 years. O'Brien said conversations over the years had led Source to believe that the city was going to forgive the mortgage.

The city gave the group an additional $500,000 for renovations in the late 1990s.

The D.C. Commission on the Arts and Humanities gave the theater a $25,000 grant for roof repairs in 2004. Tony Gittens, the commission's executive director, said that to his knowledge the roof work had not been done. (O'Brien confirmed that the work was not done.) "We have asked them to return the grant, but we haven't gotten a response," Gittens said. The commission has also given Source $112,550 for various projects since 1999.

In 2004, alarmed by the problems at Source, the Meyer Foundation met with theater officials and gave them a $10,000 grant for management assistance. "We wanted to help them determine the extent of their financial obligations and develop a plan to meet those obligations, " said Katherine Freshley, senior program officer at Meyer. She said the theater has not given the foundation a report on its financial plan.

The city would like the 140-seat space to remain a performing arts venue.

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