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After Las Cruces city probe, what now for city’s historic theater?

LAS CRUCES – Among the revelations of a lengthy investigative report probing the city’s convention and visitors bureau and released by New Mexico State Auditor Brian Colón in December, was that the historic Rio Grande Theatre downtown lost money while the city manager claimed it was profitable.

Early in 2019, then-city manager Stuart Ed told Mayor Ken Miyagishima and the city council that the theater generated $130,000 in gross receipts in 2018, after an investment of $125,000 in city funds, according to investigators from the McHard Firm.

Accounting records told a different story.

While Ed said the theater had delivered nearly $5,000 in profit to the city general fund, city expenses omitted from Ed’s presentation, including salaries and benefits for employees running the theater, meant the Rio Grande actually lost more than $111,000 that year.

The total loss for the theater from 2017 to 2019 was $353,082, investigators said.

Since 2017, the convention and visitors bureau, Visit Las Cruces, has been responsible for managing the theater. Because the bureau derived nearly all of its budget from lodger’s taxes, the financial investigation identified another problem: Funds used for general events, such as the Las Cruces Country Music Festival, events at the downtown Plaza de Las Cruces and the theater, may have violated the law.

“In authorizing the occupancy tax for revenue on lodging with municipalities, the (state) Legislature decided that the proceeds could only be used primarily for advertising, publicizing and promoting tourist-related attractions, facilities and events. … Paying for general event costs is not included among the authorized uses for occupancy taxes.”

Although the nonprofit Friends of Visit Las Cruces was involved with events at the theater, investigators determined that it was largely a “shell company” with no funds of its own: Every dime that went through the organization was city money, the report said.

Ed resigned from the city in 2019 and San Filippo was fired later that year in the midst of a sweeping investigation into the misuse of city funds under his supervision.

Among its recommendations, the McHard report suggested that Visit Las Cruces had become a “de-facto cultural affairs department” and should “get out of the ‘event planning’ business.”

Financial auditors wrote, “the City should evaluate the Rio Grande Theatre as a continued City-owned and City-operated venture, and consider the options of selecting a third-party contractor to operate the Theatre, having a truly independent nonprofit run the Theatre, or selling the Theatre.”

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