Faced with near-financial collapse, Copia intends to dramatically reshape itself, turning exhibit galleries into conference rooms and selling off five acres to a hotel developer.

The new Copia will be a leaner, more entrepreneurial operation, focusing more on wine, with food taking a reduced role and art shrinking drastically.

A third of Copia’s 85 employees were scheduled to get pink slips Monday as the center tries to pare operating costs by about 25 percent, nearly $3 million.

Copia had put off this day of reckoning for as long as possible while it tinkered with programs, cut ticket prices and pressed major supporters for new donations, said Arthur Jacobus, Copia’s president.

“For all the wonderful things we’ve accomplished in the past year, we’ve been economically unsustainable,” Jacobus said. “There was eternal optimism that the money will be raised through philanthropy or an angel will show up.”

With the backing of his board of directors, including the Robert Mondavi family, Jacobus said Copia was now taking the steps needed to secure the institution’s future. The focus will be on fee-based wine and food education.

This refined emphasis should bring new customers and revenue to Copia, he said. Many programs popular with locals, including concerts and Friday night movies, will remain.

Conference space?

Copia’s centerpiece exhibit, the interactive Forks in the Road, that looks at American culture through food and drink, may be turned into conference space, Jacobus said.

The 13,000 square feet Copia devotes to art and cultural exhibits do not generate the revenues that Copia needs to survive, whereas the market for conferences can be lucrative, he said.

“We strongly believe we are not selling out,” Jacobus said. “It’s building us an audience … it has to do with the whole gestalt of what’s going on here.”

Copia began expanding fee-based wine and food programs a year ago with great success, said Larry Tsai, Copia’s chief marketing officer. “They’re hugely successful. They’re coming for wine and food. They’re paying the bills.”

The Copia that opened in November 2001 as the American Center for Wine, Food and the Arts was a first-of-its-kind institution that intended to play off Napa Valley’s wine and food celebrity with exhibits, tours and classes celebrating aspects of the good life.

The expected crowds haven’t materialized. The sleek 80,000-square-foot building often looks empty.

When attendance stagnated, Copia’s leadership brainstormed on how to get tourists off Highway 29 and into downtown Napa.

Within the past two years, Copia has tried a more populist approach, with less avant-garde art and more wine and food festivals. While individual events were successful, annual revenues fell far short of covering expenses, Jacobus said.

$10 million in the red

Copia, which ran $10 million in the red last year, continually had to dip into reserves from an initial $55 million fundraising effort. This month those reserves ran out.

This left Copia in a dire financial situation. Copia had $68 million in remaining debt, but no way to make payments, Jacobus said.

Without a bold plan for financial self-sufficiency, Copia risked being shut down by its lenders, Jacobus said. That plan is now in hand, he said. Expenses are being pared drastically, while revenue-producing programs will be expanded.

In 2007, for the first time since Copia opened, operational revenues should match operational expenses, Jacobus said. Next year’s operating budget will be $10.3 million, $2.7 million less than this year.

Laying off 28 employees

Twenty-eight employees were scheduled to get termination notices Monday as Copia pares its staff from 85 to 57. These workers will be gone by the end of December, Jacobus said. “We hope to do it in as humane a manner as possible,” he said.

Copia’s most visible move is to sell the five acres containing gardens and a parking lot south of First Street to a developer who will propose a riverfront hotel, Jacobus said.

Negotiations are in the final stages to sell the southern acreage to a developer with a national reputation for hotels with shopping “villages,” Jacobus said.

The developer, whose name Jacobus would not reveal, would have to go through the city’s permit process to get approval for a tourist development. More parking will be required, Jacobus said.

This land sale will help pare Copia’s debt to about $50 million, while helping turn the Napa River Oxbow into a major tourist destination, he said.

Selling half of campus

Selling off nearly half of Copia’s 12-acre campus is a drastic move, but one that an institution that is land rich but cash poor needs to do, Jacobus said.

When he told a group of volunteers of this plan, the reactions were emotional, Jacobus said. “There was some bewilderment, some anger. It was really tough,” he said.

Copia intends to reconfigure the gardens north of First, relocating the wedding venue. The children’s garden also moves north.

Having put together a realistic plan for achieving financial health, Copia should be able to refinance its bond debt, Jacobus said. If Copia can get a lower interest rate and delay repayment of principal, the institution will have breathing room to operate while the Oxbow District develops into a powerful tourist attraction, Jacobus said.

With so many tourist-related projects in the works, the Oxbow District should realize its promise in three to five years, Jacobus said. “It will take what Copia has to offer and multiply it 10-fold,” he said.

Copia always intended to be part of a larger tourist draw on the river, but proposed hotels were slow to be built in the tourist slump after 9/11.

A 180-room hotel is planned on McKinstry Street. Construction has started on the Oxbow Market, a collection of restaurants, food and winetasting booths at Copia’s western border.

A stalled hotel resort east of Copia is now being revived, possibly as a Ritz-Carlton property, creating even brighter prospects for the Oxbow area, Jacobus said.

Art will still be part of Copia’s title, said Jacobus, because it isn’t going away. There will continue to be art on display in the first-floor atrium and the second-floor mezzanine, and live musical performances and movies, he said.

Art still a part

Copia will celebrate “art in all its manifestations,” he said. “It doesn’t have to be hanging on the walls.”

Jacobus said he is indebted to the people who gave the money and vision to make Copia possible. “It was a grand vision. It was a success in so many ways,” he said.

By cutting its admission price earlier this year from $12.50 to $5, Copia has seen attendance increase 25 percent, with revenue, paradoxically, up a similar amount, Jacobus said. People are spending more once they get inside Copia’s doors, he said.

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