JOLIET – The Rialto Square Theatre board is slated to decide this week whether it needs a property management company to stem a decline in office rental revenue.
The Rialto’s operating budget shows a $636,000 deficit due largely to a loss in office rental revenue and an increase in management fees.
The budget ultimately is balanced by an anticipated subsidy from the City of Joliet and expected fundraising revenue from the Rialto Square Theatre Foundation.
But board members may decide at a meeting Wednesday whether to move ahead with an agreement with Olivieri Brothers aimed at keeping office tenants happy and bringing in new ones.
“I think we need to do it,” board Vice President Jeff Pierson said. “It’s more of an investment than an expense.”
Pierson said hiring Olivieri has the potential of generating $1.2 million if the company delivers on its goal of increasing office occupancy to 75 percent by 2020.
The Rialto Square Theatre, once a private enterprise, was turned into a public institution under a structure designed to subsidize theater operations with rentals from adjoining office space that along with the theater is under the control of the Will County Metropolitan Exposition and Auditorium Authority.
The office space, however, does not generate enough revenue to cover theater losses, and now the Rialto board is looking at the extra cost of hiring Olivieri to keep what tenants it has.
The Olivieri contract for the 2017-18 fiscal year that begins in July would be $80,000.
“I want to see the final budget revisions before I think we can afford it,” board member Joe Carlasare said. The preliminary budget reviewed last week, Carlasare said, “was eye-opening in terms of the costs we are going to incur.”
Board members gave tentative approval to the agreement last month but can still back out.
Olivieri, meanwhile, has been willing to renegotiate parts of the agreement to lower costs, board member Jane Condon said.
“John Olivieri was made aware of our financial challenges,” Condon said. “We know that what he proposed was fair, but he is aware of the situation. He knows that we are a nonprofit that is trying to make its way.”
Meanwhile, Condon said, VenuWorks, the company hired last year to manage the theater and office space, has also been asked to develop a property management plan.
VenuWorks is being paid $114,000 a year for its services.
The board gave its tentative approval to the Olivieri agreement without asking for proposals from anyone else.
Chairman Robert Filotto, a self-employed accountant who has done work for Olivieri, urged board members to approve the agreement, pointing to the potential loss in tenants.
“Some of them felt it was pushed down their throats, and I apologize for that,” Filotto said last week. But Filotto said he still believes the Rialto needs to hire Olivieri.
“I don’t think VenuWorks is the answer because they don’t have the expertise,” he said.