North Carolina City Struggles with Failed Music Theater TIF District

North Carolina City Struggles with Failed Music Theater TIF District
December 7, 2011

Country singer Dolly Parton joined her lesser-known brother Randy Parton on Nov. 11, 2005, in Roanoke Rapids at a groundbreaking ceremony for a city-owned music theater that would bear his name.

Thousands of citizens and several government officials attended the event. Project supporters said the Randy Parton Theatre would make Roanoke Rapids a significant tourist destination. It didn’t—and six years later the project provides a lesson to cities that pay for economic development projects using untested financial vehicles.

City officials voted in an emergency meeting in November to sell the theater to a Chicago investor because the city cannot make payments on the debt.

The $21.5 million project was the first major economic development underwritten by a North Carolina municipality using tax increment financing (TIF).

Under TIF, a public economic development investment is supposed to improve the values of surrounding property; the incremental increase in property tax collections is then used to repay the borrowed money.

The city borrowed $21.5 million to build the 35,000-square-foot, 1,500-seat theater. But when the project failed, Roanoke Rapids was left with a debt to retire, and little revenue with which to do so.

‘City Gave False Information’

“In the beginning, city officials gave us a bunch of false information. They didn’t tell us what the feasibility study said. They didn’t give us any of the negatives,” said Jim Garrett, a local businessman who initially supported the project. He maintains the current value of the theater is $5 million to $7 million, and he said if the city receives an offer it should take it.

The Randy Parton Theatre was to be the anchor tenant of Carolina Crossroads, a 1,000-acre entertainment and retail development, with Randy Parton as the manager. Randy Parton’s band played regularly, but he didn’t book other acts to perform. Attendance plummeted. As revenues fell, the city fired Parton and the facility declined.

Randy Parton’s contract with the city called for Roanoke Rapids to pay him up to $1.5 million per year as an “artist fee” to manage the theater, over and above all other expenses. In addition, the city was required to provide him an “acceptable” fully furnished home and an “acceptable” vehicle.

The theater was completed in March 2007 and turned over to Parton to manage. Parton’s first show with his newly formed band, the Moonlight Bandits, was on July 26, 2007 to a sold-out crowd. Parton’s band usually performed Wednesday through Saturday, but attendance eventually declined. Crowds of less than 100 became frequent.

The city scrapped the original contract with Parton on Nov. 20, 2007 and removed him as the theater’s manager.

New Name, Same Problems

The situation quickly deteriorated. On Dec. 6, 2011 then-Mayor Drewry Beale asked Parton, who appeared to be intoxicated, to leave the theater just before his show was to begin. Parton exited the back of the building and encountered a few reporters. He never performed there again, and city officials quickly renamed the facility The Roanoke Rapids Theatre.

Roanoke Rapids officials had planned for the expected increase in property tax revenue to be used only as a reserve. They expected Parton to make the debt payments with theater revenues over a 20-year period. Once Parton retired the debt, he could buy the theater for $1.

City Finance Director MeLinda Hite said the city currently owes $19.9 million in principal. The annual debt service payments of $1.7 million are scheduled to continue until 2027. The city’s current annual operating budget is $14.3 million, and Hite has developed a recommended budget of $13.5 million for the next fiscal year beginning July 2012. Debt service on the theater would soak up 12.6 percent of the city’s operating budget.

Failed Sales Tax Increase

In 2011 the City Council approved an initiative for a 1 cent sales tax increase that would be dedicated to the annual debt payment. The city estimated the increase would bring in $1.7 million to $2 million per year.

Such a vote would have to be authorized by the North Carolina General Assembly. State Sen. Ed Jones, a Democrat, sponsored a bill to allow such a vote. But Jones withdrew his bill from consideration after Republican leaders in the Senate told him they would not support it.

Official Profited from Project

Former Northeast Partnership CEO Rick Watson originally developed the concept for the theater and recruited Randy Parton to participate. The partnership was a state-funded economic development agency that seeks to recruit businesses to a 16-county region stretching from Halifax County to Dare County. Watson convinced Roanoke Rapids officials that they were competing with other North Carolina communities to land the project.

Watson had a one-third ownership interest in Parton’s company, Moonlight Bandit Productions. Watson’s board of directors terminated him in 2006 for working for Parton while Watson was still being paid for his state-funded economic development job.

City officials had bet on Parton’s ability to manage the theater competently and attract enough customers to cover expenses. Before coming to Roanoke Rapids, Parton had played at the Dollywood Amusement Park in Pigeon Forge, Tennessee but had no experience managing a theater. He never invested any of his own money in the Roanoke Rapids project.

Don Carrington (dcarrington@carolinajournal.com) is a reporter for Carolina Journal, where an earlier version of this article appeared. Used with permission.