FOTS has learned that the Board of Estimates meeting tomorrow (August 25, 2010) at 9AM will include a vote on the proposed lease for The Senator Theatre. What follows is an excerpt from the meeting agenda (pages 94 & 95):
BOARD OF ESTIMATES 8/25/10
Baltimore Development Corporation – Triple-Net Lease Agreement
for the Senator Theatre
ACTION REQUESTED OF B/E:
The Board is requested to approve a triple-net lease, with the Senator Theatre, LLC for the City-owned Senator Theatre, located at 5904-06 York Road. The period of the lease agreement is effective upon the date of the lease and will terminate on the lesser of 43 years from the lease date or 40 years from the date of the granting of a Certificate of Completion.
The Board is further requested to authorize the Commissioner of the Department of Housing and Community Development to execute any ancillary documents, letters or certificates that do not change the substance of the terms of the documents, subject to review and approval by the Law Department.
AMOUNT OF MONEY AND SOURCE:
$1.00 – Annual Rent
(The first five years are payable at the execution of the agreement).
In May 2002, the Board approved a $600,000.00 loan guarantee for the Senator Theatre. With the threat of foreclosure imminent and facing the loss of its $600,000.00 guarantee, the City purchased the Promissory Note and Mortgage on the Senator Theatre from the First Mariner Bank in May 2009. The City’s acquisition and settlement costs were $965,757.00.
Through a Request for Proposals (RFP) issued September 21, 2009, the City of Baltimore Development Corporation (BDC), on behalf of the City of Baltimore, offered for sale or rent the Senator Theatre for use as a movie theatre and/or performing arts venue. The BDC received four proposals in response to the RFP. After a review and analysis process, which included a public meeting and several meetings of an Advisory Panel (comprised of business, residential and theatre advocacy groups, and City staff), the panel recommended that the City enter into an Exclusive Negotiating Privilege agreement with the Senator Theatre, LLC.
BOARD OF ESTIMATES 8/25/10
BDC – cont’d
The Senator Theatre, LLC is comprised of Mr. James Cusack and his daughter Ms. Kathleen Cusack, the owners of the Charles Theatre. Their proposal is to use the building for a single screen theatre and two food-service establishments, with the possible addition of a second screen.
The proposed capital improvements include replacement of seats, carpet, wall coverings, and curtains, and painting of ceilings and walls in the auditorium; repairs to the exterior; new or upgraded building systems including electrical service, sprinklers, boiler and roof; and construction of a restaurant on the north side of the building.
The total cost of the project is estimated to be approximately $1,650,000.00. The Senator Theatre, LLC is contributing $400,000.00 in equity; applying for $450,000.00 in Federal and State Historic Tax Credits; applying for a $100,000.00 in State Community Legacy Grant funds; and has requested a $700,000.00 loan from the Mayor and City Council. The deadline to apply for Historic Tax Credits is August 31, 2010 and in order for the Senator Theatre, LLC to qualify for these tax credits, the term of the lease must be extendable for a total of 40 years, and the lease must be executed by August 31, 2010.
The BDC conducted a City Return Analysis on the project using the total City investment of $1,665,757.00, which includes $965,757.00 in acquisition and settlement costs and the requested loan. The Net Present Value (NPV) is calculated for a 20-year period using a 6% discount rate. Based on this analysis, the projected returns to the City are revenues of $473,403.00 NPV over 20 years. The City’s 20-year Internal Rate of Return is projected to be 9%.
The developer has signed the Commitment to Comply with the Minority and Women’s Business Enterprise Program of the City of Baltimore.
(The triple-net lease agreement has been approved by the Law Department as to form and legal sufficiency.)