08/14/2001 RA RPT 03 - Laserfiche WebLink

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4\ CITY OF RIVERSIDE REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor & Agency Members Date: Item No.: August 14, 200 I 3 Subject: Proposed Restoration and Rehabilitation of the Fox Theater - Supplemental Appropriation Background For the past several years, Agency staff has undertaken discussions with various public and private entities in an attempt to restore and rehabilitate the historic Fox Theater Building. The major obstacle to this effort has been the economics associated with the redevelopment effort. As you may recall, funds were set aside out ofthe Mission Village Economic Development Initiative Program in 1996 to develop a multi-plex theater on the "Fox Block." However, those funds were reallocated to the lifestyle/entertainment project shortly after the Keyser Marston Downtown Retail Strategy and Action Plan determined that a multi-plex theater would not be feasible at the Fox Theater site. Most recently, Agency staff and City officials have been working with the new owner of the Fox Theater, Mr. Joe Zivnak, regarding his plans to restore and rehabilitate the entire building, which consists of approximately 15,000 square feet of office space, 7,500 square feet of retail space and the approximate 1,400 seat theater. Current Issue Mr. Zivnak has displayed his commitment to the Fox Theater through the acquisition ofthe building as well as the retention of architects and engineers expert in the field oftheater restoration. However, Mr. Zivnak faces complex and costly challenges in regard to the Theater's preservation, including unreinforced masonry, the need for a new roof, HV AC, plumbing and significant architectural features that must be carefully preserved and restored. The improvements, which have yet to be determined, will take several years to complete. However, due to the limited cash flow currently generated at the site, it is extremely difficult for Mr. Zivnak to obtain financing for the rehabilitation. However, the Agency's assistance will enable Mr. Zivnak to secure the funds necessary to improve the office space, which, when occupied, will generate additional cash flow and hence allow for additional financing. As proposed, the Agency's funds will be allocated for seismic, roof replacement and fa~ade improvements and would be provided as a grant. However, should there be any funds remaining, it is proposed that Mr. Zivnak utilize the funds for other restoration purposes, provided that he be required to reimburse the Agency for said funds. Therefore, it is staff s recommendation that the Agency pursue an Owner Participation Agreement with Mr. Zivnak, which will authorize assistance in an amount not to exceed $937,000. Staff is proposing to use the $900,000 loan paid back earlier this year by the Historic Mission Inn Corporation for the rehabilitation of the Fox Theater for the majority of this assistance package. It should be noted that these funds may have the normal redevelopment restrictions pertaining to required prevailing wages and labor reporting. Analysis The Fox Theater has been mostly vacant and neglected for many years due to the cost required to rehabilitate and seismically retrofit the building. The Agency funds will enable Mr. Zivnak to move forward by allowing him to leverage the Agency's $917,000 toward a much higher level of total improvements. The additional $20,000 requested will cover the cost of acquiring pre-planning documents, plans, specifications and studies from Dr. 3-1