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"We hope this will be New Jersey's Tanglewood," Percival H.E. Leach said last winter, when he announced his ambition to build a $50 million theater at Waterloo Village in Stanhope, N.J., with the hope that it would become the summer home of the Metropolitan Opera, the New York Philharmonic and the American Ballet Theater.

In June, Leach, who is president and founder of the Waterloo Festival, brought up the analogy again: "There's no reason we can't become the Tanglewood of this area."Whether or not ground is ever broken for a new theater, Tanglewood is an admirable model for the festival, which ended its season last weekend. In fact, the comparison raises just the right questions about Waterloo's artistic future.

For 19 years, Waterloo's performances have taken place in a tent near a restored colonial village, with chamber music concerts presented in other locations.

The activities have been closely connected with the Waterloo Festival School of Music in which about 90 students, all on full scholarship, study with orchestral professionals and play in the festival orchestra.

Under the direction of Gerard Schwarz, who helped found the festival and school in 1976, and then under the artistic direction of Samuel Lipman, Waterloo achieved a reputation for exploring neglected American repertory by such composers as David Diamond and Howard Hanson.

In recent years, however, there has been a serious problem in attracting audiences. Leach slashed the promotion budget while applying pressure to popularize the concerts. After last summer, Lipman was fired and Schwarz resigned.

This season, the number of concerts was cut from six to four. There was much scrambling to find a new location for the school (which had been using facilities at Princeton University and this season was housed in a New Jersey resort without appropriate rehearsal space).

In the midst of these crises, the plans for the new theater were floated, supported by a letter of interest from the Metropolitan Opera.

These facts suggest that the difficulties in making Waterloo a Tanglewood may be daunting partly because priorities are skewed. Tanglewood, of course, has had the advantage of being the summer home of the Boston Symphony Orchestra, in one of the most beautiful areas in New England, while Waterloo has no hotels, no attractive climate, no existing bus service from Manhattan and no traditional seats of wealth and culture. But there are more fundamental artistic problems.

As wonderful as the Berkshires are, and as fine as the Boston Symphony is, there is more to Tanglewood's success than the big weekend concerts in the main shed. At the heart of Tanglewood is an involvement with education. The students who come to the Tanglewood Music Center help give the festival its artistic conscience.

Generations of performers have been nurtured at Tanglewood and major artists have been drawn to the critical mass of talent.

The recent inauguration of Seiji Ozawa Hall, along with the design of the Leonard Bernstein Campus in Tanglewood's adjoining Highwood estate, have now given the school an even more visible presence.

At Waterloo, Leach has only one aspect of the Tanglewood model in mind: creating affiliations with major performing arts institutions. His approach to the new theater seems to be: if you build it, they will come.

But even if the New York organizations do come (which they say is an open question), they will only be visitors. Waterloo's main attraction to the Met or the Philharmonic will simply be that they have no place else to go. There will be little to tie them organically to Stanhope or the audiences there.

The key to making a Tan-gle-wood in New Jersey may lie in precisely the aspect of Waterloo that now has such low priority: the school and the festival. The school requires dormitory and rehearsal space; the orchestra requires better performing conditions; both would benefit from more coherent promotion.