Novogradac Journal of Tax Credits
July 2018 | Volume IX - Issue VII
By: Brad Stanhope, Senior Editor, Novogradac & Company LLP
The Milwaukee Symphony Orchestra (MSO) wants luxury, history and to be a place for the common citizen.
That’s why it purchased the Warner Grand Theatre in downtown Milwaukee to serve as its new concert home beginning in 2020 and that’s why it is overseeing the building’s rehabilitation through equity from state and federal historic tax credits (HTCs).
“The biggest win is for the arts and culture sector in Milwaukee,” said Mark Niehaus, president and executive director of MSO. “There has been a tremendous investment in sports [in Milwaukee]–with the new basketball arena–and an investment in skyscrapers. To see all that happen, it would be a huge miss if there weren’t an investment in arts and culture. This is one of the most meaningful projects for arts and culture [in Milwaukee].” Niehaus expects the renovation will open the arts–whether a symphony, concert, comedians or something else–to the public.
“This makes the symphony available for anyone,” Niehaus said. “The theater was built in the 1930s for the common man, to allow them to escape from the Depression for a nickel to see a movie. There’s no reason we can’t do that in the 21st century. You’re going to have a patron experience of the 21st century, but in a way, it’s like going back to 1930. That will take people back.”
Wisconsin granted more than $8 million in state HTCs and the MSO received conditional approval for federal HTCs. It has raised a significant portion of the $120 million needed to convert the theater into a 1,750-seat venue and construction is underway.
MSO began in 1959 and its full-time professional musicians perform more than 135 concerts each year and reach more than 40,000 children and their families through the Arts in Community Education program.
MSO’s home venue is the Marcus Center’s Uihlein Hall, which is also used by other major arts organizations in town.
“The symphony had been thinking about moving into the theater since the 1980s,” Niehaus said. “The theater closed in 1995 and prior to that, the theater operators– who are also donors to our symphony–split [the theater] in half and made it a duplex with two smaller theaters. In 2001, they removed the divider and the symphony [for which Niehaus was a trumpeter for 15 years] did an acoustic test. It was amazing, but needed a stage extension with a false stage. The thought [of adapting it] is decades old, but there was a matter of timing.”
Meanwhile, Uihlein Hall got busier and busier.
“Since 2001, the home stage began producing Broadway musicals, which pushed us out for more and more dates,” Niehaus said. “That made [a new home] more necessary.”
The MSO announced plans to renovate the theater in December 2016.
“This is a truly unique project and a great story of how the historic tax credit program is able to breathe new life and purpose into an old idle building,” said Nathan Pekul, manager at Baker Tilly Virchow Krause LLP, which is providing financial modeling and structuring consulting services as well as helping find historic tax credit investors. “The Milwaukee Symphony Orchestra is vital to our community, providing significant economic, cultural and educational benefits. We are humbled to be a part of its journey to create a permanent home in the community it so graciously serves.”
History of Theater
The Warner Grand Theatre was designed by the Chicago architectural firm of Rapp and Rapp, a leading designer of movie theaters for Warner Brothers in the early 20th century. The 2,400-seat theater cost $2.5 million and opened May 1, 1931, for movies and vaudeville performances. It remained open until 1995–although it was named the Centre Cinemas in 1973 and the Grand Cinemas in 1982.
“The old movie theater palaces failed in the 1970s and 1980s when everybody fled downtown and went to the suburbs, then wanted to go to the movieplex,” Niehaus said. “That left the downtown theaters empty.”
MSO leaders knew that many old theaters have been rebuilt into homes for symphony orchestras and that orchestras in St. Louis, Pittsburgh, Erie, Pa., and Portland all perform in refurbished Rapp and Rapp theaters. This is one more.
“Historic movie places like the Warner Grand Theatre pose some of the greatest challenges for historic renovation,” said John Cramer, a senior associate in the Midwest office of HTC consultant MacRostie Historic Advisors, who is a project manager on the development. “There are issues with access, acoustics, egress and codes. What was OK in 1930, we know now, is not safe and we need a better design for modern audiences.
“What we find is old theaters, even if they are big and grand and beautiful, don’t account for accessibility,” Cramer said. “The sloping at the Warner Grand Theatre auditorium [floor] couldn’t account for anyone in a wheelchair. We are working to retrofit the floor to allow for code compliance. That can be done, but we have to micromanage it so it doesn’t affect the historic walls and ceilings.”
The solution to the need for access and egress for the Warner Grand Theatre comes through adjacent new construction on the southeast corner–where there will be several amenity spaces, but also new code-compliant stairs and elevators–as well as another addition on the north side with elevators and stairs.
“That’s fairly unusual,” Cramer said. “On other projects, there isn’t room for new construction and we’ve had to find closets or secondary office space and turn it into elevators and stairs. We’re very lucky we have more sensitive options at the Warner Grand Theatre.”
The renovation will include moving the theater’s terracotta rear wall about 30 feet for a larger stage. The wall is being moved, not replaced, in order to preserve the HTCs.
“The stage needed to be extended and we needed to bump the wall out,” Niehaus said. “We had to negotiate with the National Park Service (NPS) and had to do it in a very specific way. In 2001, the traffic patterns were different and we couldn’t bump out into the street. But there were major changes in traffic patterns and now we can.”
Cramer said the Wisconsin state historic preservation office (SHPO) and NPS also worked to ensure that the façade of the new construction works.
“Inside, the biggest issue is peeling back layers of changes to see the original construction and intent,” Cramer said. “Most of it isn’t that altered and we’re finding a lot of historic terrazzo floors under carpeting.”
While HTC investors haven’t been identified, the tax credits play a huge role in getting the project to the finish line.
“The state and federal [HTCs] combine for a 40 percent discount,” Niehaus said. “Of course you have to spend money to get the credits–you have to do some things you might not do normally. Having both together made it a slam-dunk to spend the extra money.”
He said following NPS and SHPO rules isn’t an issue.
“We’re fortunate to have state and federal tax credits for this project,” Niehaus said. “We’re not frustrated by it at all.”
Pekul said he expects to have HTC investors lined up soon.
“We have received positive responses and letters of intent from multiple parties on the federal and state tax credits, as well as the tax credit bridge loan components,” Pekul said of the search for investors. “All proposals are currently being evaluated.”
Beyond the HTCs, the investment of the community is important. Niehaus said waiting from 2001 until after the Great Recession was crucial.
“The philanthropic support is important,” Niehaus said. “The community built an art museum and to embark on a symphony hall project at the same time wasn’t a good idea. But ours is one of the first large capital campaigns in the arts and culture community after the recession.”
With the property being renovated and an opening in fall 2020 moving closer, Niehaus said the community is onboard.
“The community reaction has gone from ‘How can you do this?’ to ‘How can you not do this?’” Niehaus said. “It has become a civic project, not just about the symphony.”
Cramer said he’s looking forward to the reaction. “I understand this is a building the public hasn’t been inside for two decades,” Cramer said. “For some people, it’s going to be great to return to a theater that they knew. For others, it will be really exciting to be somewhere they haven’t been before. We expect that they will be amazed.”
This article first appeared in the July 2018 issue of the Novogradac Journal of Tax Credits.
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