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.

"It's certainly a vibrant real estate market, and while we definitely want to encourage private investments, we nevertheless want to make certain that we're not losing a small, affordable performance space," McGaw said. "It's in the public interest to determine if there's a viable future for the Source building and the organization as we've known them. Like affordable housing units, once lost it may be lost forever."

Anne Corbett, executive director of Cultural Development Corp., a nonprofit group that aids arts organizations, said the arts community wanted "the historical use of that property to continue, regardless of who the owner-operator was."

Those who have watched Source's travails were not surprised by the decision but lamented the loss of Source in particular and theater space in general.

In its active years, Source produced five plays a season. It created the annual Washington Theatre Festival, which has developed more than 700 plays since 1981. For 20 years, a 10-Minute Play Competition was part of the event. That creativity earned Source a Mayor's Arts Award.

Over the years, Source was nominated for 30 Helen Hayes Awards.

Recently, it lent its space to other arts organizations, including several theater companies.

"It was a place where a lot of young people could have their first professional experience, from actors to playwrights to designers," said Morey Epstein, executive director of institutional development at Studio Theatre, an arts anchor along the 14th Street corridor.

Victor Shargai, chairman of the Helen Hayes Awards board, said Source was an important theater space and an important part of the community.

"Fourteenth Street is the 14th Street we know now because of the theaters," he said. "It's the 14th Street that has art galleries, stores and restaurants that you can't get in without a reservation."

Curt Large, an executive with Bedrock, which operates Buffalo Billiards on Dupont Circle and at 11 other locations, declined to discuss the selling price. The sale will close shortly, he said.

The two-story building has 8,000 square feet. It is assessed at $1.7 million.

The company would respect the history of the neighborhood, as well as fit into its contemporary flavor, according to Large. The Standard name is taken from an old business at the location and the decor will celebrate the street's past life as an auto row.

O'Brien said she didn't have a problem with the theater space becoming a restaurant. "Those can be warm, neighborhood places," she said.

O'Brien said that proceeds from the sale would pay off the debts and finance a special arts fund. She said the purpose of the fund would be to "truly impact theater in Washington and embody the values of the people who founded and supported Source for this last quarter-century."

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