The Charles Theater: Almost killed by city taxes

Alan Shecter

October 18, 1991|By Alan Shecter

THE LEASE expired last February but wasn't renewed until this fall, after a year-long ordeal in which various taxing authorities tortured and very nearly closed the Charles Theater, Baltimore's midtown showcase of film art.

Since 1979, the annual property tax on the theater has risen by 136 percent from $3,470 to this year's $8,177. During the same period, the "minor privilege tax" for the front entrance canopy rose by 153 percent from $1,175 to $2,973. Worst of all, the amusement tax, which was quintupled in 1988 from 1 percent to 5 percent, was doubled again last year to 10 percent of the ticket price, nearly crushing the theater's economic viability.

The Charles shows films from six continents, often erratically. Unless you're watching closely, it's easy to miss some of the favorites you've been waiting to catch there. For example, for two nights last January the theater played a Henry Miller double feature, "Henry and June" and "Tropic of Cancer." It was a near sell-out.

Film fare of this sort is virtually limited to the Charles because of its unusually low admission prices and its willingness to work on very close margins, a policy that often results in run-of-the-film losses. The Charles benefits from being close to six colleges and universities. Free parking, rarely offered by an urban movie house, is available across the street. Similar attempts, without parking, failed miserably after a successful era at the once-wonderful 25th Street Playhouse -- now a church -- and at 5 West -- vacant for the past 15 years. Two art film houses apparently are one too many for Baltimore. (Perhaps the current effort at the Orpheum in Fells Point will disprove this theory.)

Back in 1978, Baltimore's largest movie theater chain, JF Theaters, filed for bankruptcy, enabling it to legally terminate an earlier lease on the Charles. Frustrating efforts to lure another tenant/operator finally led to an exhibitor from Georgetown taking a sweetheart trial lease deal and reopening the Charles.

Might anyone have predicted back then that out-of-town proprietorship of what was to become Baltimore's only art theater would portend a similar fate for its baseball team; its daily newspapers; its second, third and fourth largest banks and some of its best-known business institutions (Noxell, Joseph Bank, Londontown, Maryland Cup)?

One nice surprise was that the new tenant knew how to pick films. While other exhibitors choose commercially safe titles, the Charles consistently scoops up Academy Award winners for foreign film performances. "Cinema Paradiso," "Babette's Feast" and "Pelle, the Conqueror" are three; dozens of other foreign films, documentaries and animations that have played the Charles would never have been exhibited in Baltimore if this Penn Station-area movie house had remained closed or become something else. Only the Charles found the courage to play "The Last Temptation of Christ."

Nevertheless, the Charles very nearly closed when the lease expired. It was victimized mercilously by the tax policies of state and city governments -- despite official claims of welcome to business operations that provide recreational and cultural enhancements to life in Baltimore.

The doubling of the admissions tax was sloughed off by the mayor, the City Council and your paper as a "nuisance tax." By definition, a nuisance is not supposed to be deadly. Here's a legitimate analogy: Imagine Maryland's sales tax doubling overnight from 5 percent to 10 percent with legislators describing it as a mere nuisance. It wouldn't be tolerated, and the pols would lose their jobs in the next election.

The Charles raised admissions prices as much as it dared during those 12 years (from $3 to $4.50), but total annual sales volume has remained relatively constant. Fewer people were coming in 1990 than in 1980, perhaps reflecting the city's middle-class population loss and the VCR craze.

This spring, trying to negotiate a lease renewal, the tenant/operator fought for a rent reduction from the level set 12 years earlier. He argued that his film rentals run about 60 percent of his ticket sales and that the amusement tax was now another 10 percent, leaving him an inadequate 30 percent to pay for payroll, heat, air conditioning, lighting, insurance, rent, patron parking, janitor, cleaning supplies, maintenance, minor privilege tax, advertising, telephone, travel to and from Georgetown.

The landlord, a company of which this writer is a part-owner, argued that the rent had been set 12 years earlier under distress, with no protection from an ensuing period of double-digit inflation, from accelerating landlord maintenance expenses or from the soaring property tax expense.

Analysis of the lease negotiations renders it obvious that the Charles has nearly been taxed out of existence. The 5 percent additional admissions tax eliminated the margin of profit for last year.

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