The Rochester Broadway Theatre League has gotten the government funding it needs to buy the Auditorium Theatre, but how's it going to pay for $2.5 million in renovations?
The RBTL thinks it has found a solution. But that solution may be less certain than RBTL hopes.
Because of low interest rates, RBTL President Don Jeffries decided to seek a loan from HSBC, which would ultimately be paid off by ticket sales.
The plan, as it was announced on July 8, was simple: To secure the loan, RBTL would have to identify a guarantor. Since it's illegal for municipalities to guarantee loans, RBTL would ask the Cultural Center Commission, which was formed by the city and county under state law, to be its guarantor. The Cultural Commission has $2.6 million set aside in proceeds from the East End garage --- enough money to guarantee the loan.
The Auditorium Theatre is located outside the Cultural Commission's jurisdiction. But "the RBTL's office [at East and Gibbs] is within the Cultural Commission's geographic boundaries," said Jeffries shortly after the RBTL made its announcement. "If you look at their mission and what they do, this is very much in line with what the commission should be doing."
But this deal isn't quite so clear-cut.
First, the Cultural Commission was originally formed as a mechanism to fund improvements to blighted properties and spur development in the East End. And second, since the renovations are not actually taking place in the East Avenue offices, Jeffries' solution doesn't apply.
The Cultural Commission would have to expand its boundaries in order to guarantee the loan. And according to a legal opinion written years ago by county attorney Chuck Turner, who also serves as legal counsel to the Cultural Commission, any change in the commission's boundaries would have to be approved by both City Council and the County Legislature.
But the larger question is whether the Cultural Commission is a viable source of a loan guarantee.
The Commission met to discuss this issue on July 22, but did so in executive session, so City Newspaper was denied access to that portion of the meeting. But just after the executive session ended, the Cultural Commission agreed to form a sub-committee that would study the loan RBTL is seeking from HSBC, and the potential role of the commission as guarantor. The sub-committee was asked to report its findings to the commission at its next meeting, on August 12. At that point, a vote on the loan guarantee could be taken.
If the commission decides to guarantee the loan, $2.5 million of its $2.6 million pot could be tied up for the loan's duration, severely hampering the commission's ability to assist other projects within its boundaries.
Reached prior to the Cultural Commission's meeting, Mayor Bill Johnson expressed concern over that possibility.
"It is fair to say that this would be an entirely novel approach, something that would set a precedent. As I understand, there's probably a little over $2 million in that garage account," Johnson said. "It's just about the same amount of money they would be asked to guarantee. The guarantee would be for 20 years. If this money would be tied up, it appears to me that there ought to be a much better way, a more practical way, of doing this than the idea they're floating now."
Johnson is a voting member of the commission, but he's frequently represented in commission business by Deputy Mayor Jeff Carlson.
"I was rather surprised when that was announced," Johnson said of the RBTL's proposal for the loan guarantee. "And my question to both Jeff Carlson and [city Economic Development Commissioner] Fashun Ku was: Is the Cultural Commission in the habit of guaranteeing loans? The answer to that question was: No, we've never done that before. So then I asked: Was the Cultural Commission in the habit of guaranteeing loans for a project that sits outside of its boundaries? They said it could be done, but it was highly unusual."
Another wrinkle: Proceeds coming in to the East End garage have diminished by $121,000 over the past year. The garage now has 196 fewer monthly parkers than it did a year ago because of restructuring at Xerox and RG&E, and the loss of the downtown DMV office.