Symphony Has a Hall of Its Own : ‘Fabulous Deal’ Made for the Former Fox on Eve of Gala

Finally, San Diego has a new cultural center, and the San Diego Symphony has its own Symphony Hall--all of it.

In a Byzantine real estate deal involving 12 law firms and a personal, $5.8-million loan to two symphony board members, the symphony has purchased the former Fox Theatre for $500,000. The action, which symphony officials termed “a fabulous deal,” occurred Friday, one day before the symphony’s gala fund-raising concert to christen the renovated theater, renamed Symphony Hall.

Described as a bargain sale by the San Diego Symphony Orchestra Assn. president, M.B. (Det) Merryman, the transaction capped a two-year campaign in which the once-ailing symphony:

- Purchased an entire downtown block including the theater, which is bordered by 7th and 8th avenues and A and B streets.

- Sold the block to Charlton Raynd Development Co., retaining long-term free use and management rights to the Fox Theatre.

- Received 40% ownership of the building from Charlton Raynd.

- Renovated and converted the 56-year-old theater into its orchestra hall for $4.75 million.

The $500,000 purchase price, plus the $4.75 million in renovation, gives the symphony an orchestra hall for a total outlay of $5.25 million, which Raynd partner John Whitney estimates would cost the symphony $30 million to replace.

Technically, the symphony paid for only 60% of the hall, since Charlton Raynd had given the orchestra 40% ownership of the building last December. That percentage of ownership was equivalent to the 22 weeks of the year the symphony will play in the hall this season.

The complex maneuver culminated Friday after more than half a year of negotiations and cleared away existing trust deeds on the block. In the deal, Merryman and Blaine Quick, another symphony board member who had masterminded the initial purchase and resale of the block, personally took out a seven-year, $5.8-million loan between them, then loaned the money, on identical terms, to Charlton Raynd. The move replaced a $4.5-million first trust deed held by Teachers Insurance Co. and part of a $1.7-million second trust deed held by Charles Kendall, the former owner of the block.

The loan by Mission Federal Credit Union to Merryman and Quick was the largest ever made by the company, according to Hal Stephens, Mission Federal’s chief operating officer. One of the nation’s 50 federal credit unions holding more than $200 million in assets, Mission Federal serves the education community, Stephens said.

Merryman praised Mission Federal, which has supported the symphony for six years, as “the key entity” in making the deal go through.

Stephens has been a symphony backer and board member. He is on the San Diego Pops board of directors and resigned from the symphony board of directors six months ago, prior to helping arrange the loan. He said his board of directors approved of the loan as an excellent way to serve the community.

Mission Federal provided the most favorable terms available, thus resulting in the personal loan. “Federally chartered credit union restrictions varied substantially” from those of other lending institutions, Merryman said. They require that only individuals can borrow money, he said.

“We want to stress that the loan to Charlton Raynd was on the identical terms we received,” Merryman said. “We are acting as facilitators in the loan and have agreed with the symphony that if any profit should be generated, it will flow to the symphony.”

The entire block, minus Symphony Hall, will serve as security for the loan to Merryman and Quick, Merryman said. Although the block is owned now by Charlton Raynd, they provided it as collateral for a new all-inclusive trust deed.

“It was a fabulous deal,” Merryman said. “On a personal basis I would take every block I could get in downtown San Diego for $500,000, with or without a building on it.”

In a related matter, the symphony received a $4.5-million construction loan for the renovation of the hall from a consortium made up of Home Federal Savings and Loan, San Diego National Bank, Great American Federal Savings Bank and Bank of America, the consortium’s “lead” bank. That loan provided the $500,000 cash payment made to Charlton Raynd.

The symphony has mounted a $6.5-million capital fund-raising campaign to finance the purchase and renovation of the hall. Merryman said Friday that $4.5 million in cash and pledges had been received to date.

The purchase of the entire theater will not affect an earlier deal with Charlton Raynd in which the symphony will receive 1 cent per square foot per month as an “override” on space leased in Symphony Towers, to be built by Charlton Raynd. That figure, which is tied to cost-of-living increases, will double after five years, resulting in a revenue flow that Merryman says is equivalent to a $10-million endowment to the symphony.

Symphony Towers is a $150-million development, composed of a 33-story office tower and an 18-story Westin Hotel, both of which will rise around and over Symphony Hall.

Work on that project, which will involve demolition of the Fox Office Building on B Street and a parking garage on A Street, will begin after the symphony’s season ends. Financing for the project, Doug Wilson of Charlton Raynd said, is close to completion.

Thirty percent of the office building already is rented, according to Wilson, and completion of both structures is scheduled for the second quarter of 1988.

Charlton Raynd, partners Whitney and Wilson say, will take advantage of the bargain sale nature of the transaction to realize tax credits accruing from the difference between the $500,000 sale price and the fair market value of the hall, appraised before renovation at $3.6 million.