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Home My WebLink About11- Development Department DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY REQUEST FOR COMMISSION/COUNCIL ACTION FROM: KENNETH J. HENDERSON SUBJECT: SAN BERNARDINO CIVIC Executive Director LIGHT OPERA DATE: March 30, 1994 --------------------------------------------------------------------------------------------------------------------------------------------- Synonsis of Previous Commission/Council/Committee Action( )• The Community Development Commission has previously discussed in Closed Session litigation and acquisition issues related to the San Bernardino Civic Light Opera Association (SBCLOA) and the California Theater. --------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) (San Bernardino Civic Light Opera Association Ad Hoc Committee Recommendation) MOTION: That the Community Development Commission consider alternatives numbered one, two and three, as more fully described in the attached staff report, and take whatever action deemed appropriate. /IL� M Administrator KENNET J. HE DERSON Executive Director --------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Kenneth J. Henderson Phone: 5081 Project Area(s): All Ward(s): Seven (7) Supporting Data Attached: Staff Report: FUNDING REQUIREMENTS: Amount: $300,000 Source: Bond Proceeds Budget Authority: N/A --------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: -------------------------------------------------------------------------------------------------------------------------- KJH:lmp:sbclo.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/07/1994 Agenda Item Number: / DEVELOPMENT DEPARTMENT STAFF REPORT --------------------------------------------------------------------------------------------------------------------- SAN BERNARDINO CIVIC LIGHT OPERA In December of 1993, the San Bernardino Civic Light Opera Association (SBCLOA) submitted a proposal to Chairman Minor which, if consummated, would provide for the purchase by the Agency of the SBCLOA-owned California Theater in the approximate amount of $600,000. Over a period of several meetings, spanning at least two months, the Commission discussed and considered various alternatives relating to the Agency assisting the SBCLOA during the difficult times it has recently experienced. These discussions eventually culminated in the Commission establishing an Ad Hoc Committee, charging it with the responsibility of identifying and developing solutions to resolve the state of financial distress under which the SBCLOA is operating. The Committee is comprised of Councilman Oberhelman (Chairman), Councilman Negrete; Pat Norvall, Bank of San Bernardino; Susan Feller, Inland Symphony Association; Keith Stava, General Manager, SBCLOA; Evlyn Wilcox, Board Member, SBCLOA; Barry Silver, Board Member, SBCLOA; Mark Edwards, Board Member, SBCLOA; and Warner Hodgdon, private citizen. In taking up its charge, the Committee has conducted numerous meetings, reviewed detailed financial data, surveyed other cities and fine arts organizations, inspected the California Theater and commissioned special studies to assist it in evaluating various options available to it and the Commission. The Committee concluded its deliberations on Tuesday, March 29, 1994, by agreeing by consensus to submit to the Commission for its consideration three alternatives which, essentially, include the broadest possible range of potential solutions. These alternatives are discussed below in greater detail. ALTERNATIVE #1 Do nothing: This alternative as previously discussed by the Commission, would require the Commission to take no action, save the possibility, as discussed earlier, of the Commission taking action to foreclose upon its deeds of trust securing its $200,000 loan to the SBCLOA. Advantages: - Requires no further outlay of cash, except possible legal fees which would be recoverable in a successful foreclosure; - Allows the Agency to recover three properties, anchored by the California Theater, with a total estimated fair market value of $800,000+ for approximately $103,000; and -------------------------------------------------------------------------------------------------------------------------- KJH:1mp:sbc1o.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/07/1994 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT RE: SAN BERNARDINO CIVIC LIGHT OPERA ASSOCIATION March 30, 1994 PAGE 2 -------------------------------------------------------------------------------------------------------------------------- - Enables the City and Agency to comprehensively address outstanding issues affecting most, if not all, San Bernardino-based fine arts groups utilizing the California Theater. Disadvantages: - Most likely dooms the SBCLOA as a long-standing financially viable charter member of the San Bernardino fine arts community; - Harms significantly, and in the opinion of some irreparably, the SBCLOA's membership and patron base, making subsequent reconstruction efforts, at least in the near term, questionable at best; - Eliminates any possibility of a 1994 season, with a 1995 season also being somewhat dubious; and - Places the administration of the San Bernardino fine arts community most significant venue, the California Theater, in the unfamiliar hands of the Agency, most likely without key assistance and support from SBCLOA. ALTERNATIVE #2 Accept December 1993 SBCLOA proposal as submitted. This proposal essentially provided for the Agency acquiring the California Theater from the SBCLOA in the approximate amount of $600,000 and entering into a management services agreement with the SBCLOA. Advantages: - Keeps SBCLOA involved in managing and promoting the California Theater; - Makes the Agency the final arbiter in disputes between SBCLOA and other fine arts groups; - Allows for SBCLOA to conduct a shortened 1994 season; - Allows SBCLOA to commence planning for a full 1995 season; -------------------------------------------------------------------------------------------------------------------------- KJH:1mp:sbc1o.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/07/19/9`4 Agenda Item Number: / / DEVELOPMENT DEPARTMENT STAFF REPORT RE: SAN BERNARDINO CIVIC LIGHT OPERA ASSOCIATION March 30, 1994 PAGE 3 -------------------------------------------------------------------------------------------------------------------------- - Retains the SBCLOA membership and patron base; and - Allows SBCLOA to make significant inroads on its short and long-term debt. Disadvantages: - This alternative would require the Agency to appropriate immediately at least $600,000 to acquire the California Theater; - Additional funds would be necessary to complete necessary rehabilitation; and, - There remains an uncomfortably high degree of uncertainty that the proposal as submitted would place SBCLOA on more solid financial footing if approved by the Commission. ALTERNATIVE #3 Acquisition of the California Theater by Agency based upon the following deal points: - Price: $300,000 - Terms: All Cash - The $103,000 outstanding loan balance owed to Agency by SBCLOA to be deferred for two years, with the interest rate reduced from ten (10) percent to six (6) percent. SBCLOA will make twenty-four interest only payments to the Agency over the two-year deferral period. - After the expiration of the two-year deferral period, SBCLOA will make principal and interest payments to Agency commencing with month twenty-five (25) and ending with month sixty (60). - SBCLOA to receive free rent up to a maximum of $100,000 per year for two years, with the understanding that any unused portion of the rent subsidy in year one will not be carried over into year two. -------------------------------------------------------------------------------------------------------------------------- KJH:1mp:sbc1o.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/07/1994 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT RE: SAN BERNARDINO CIVIC LIGHT OPERA ASSOCIATION March 30, 1994 PAGE 4 ------------------------------------------------------------------------------------------------------------------------- - No SBCLOA Board of Director loans or management fees to be paid prior to the Agency loan to the SBCLOA being fully and completely extinguished. - The SBCLOA will attempt to sell its "E" Street and Cajon Boulevard properties with the understanding that the proceeds of such sales will be applied to the outstanding balance of the Agency loan to SBCLOA. Additionally, the Agency will not invoke a "due on sale" clause for the portion of the Agency loan to SBCLOA, if any, not paid off by the sale of the "E" Street and Cajon Boulevard properties. Advantages: - Would reduce by 50% (from $600,000 to $300,000) the Agency's anticipated cash outlay to acquire the California Theater; - Provides for the repayment in full of the outstanding Agency loan to SBCLOA; - Provides two years of "breathing room" for SBCLOA to make the necessary organizational and financial management decisions to place itself on solid financial footing; - Allows an abbreviated 1994 season to go forward and planning for a full 1995 season to commence immediately; - Preserves SBCLOA's membership and patron base; - By reducing the purchase price, more money is potentially available for rehabilitation activities; - Allows the Agency to retain a professional Fine Arts Management Group, the SBCLOA or a consortium comprising the SBCLOA and other San Bernardino-based fine arts groups, as appropriate, to manage the California Theater; - Enables the Agency, as "Final Arbiter" to equitably and expeditiously resolve disputes arising from the use of the California Theater by SBCLOA and other fine arts groups. -------------------------------------------------------------------------------------------------------------------------- KJH:lmp:sbclo.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/0711994 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT RE: SAN BERNARDINO CIVIC LIGHT OPERA ASSOCIATION March 30, 1994 PAGE 5 -------------------------------------------------------------------------------------------------------------------------- Disadvantages: - Requires the use of funds which could be used for other downtown development activities; - Additional monies necessary to finance rehabilitation activities; - Reduces significantly Agency rental revenue for first two years; - Reduces earnings on Agency loan by reducing interest rate from ten to six percent; - Extends time for repayment of outstanding Agency loan to SBCLOA. Although uncertainty is not as high as alternative #2, valid questions remain about SBCLOA's ability to right itself and reacquire financial viability. Based upon initial discussions conducted by the Ad Hoc Committee, it was determined the above alternatives would be presented to the Commission without an Ad Hoc Committee recommendation, allowing for the greatest possible flow and exchange of ideas. It is for this reason that the SBCLOA Ad Hoc Committee recommends to the Community Development Commission adoption of the form motion as stated herein. ( &f KENNETH J. iIENDERSON, Executive Director Development Department -------------------------------------------------------------------------------------------------------------------------- KJH:lmp:sbclo.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/07/1994 Agenda Item Number: -