Officials are putting off millions of dollars worth of improvements at the Alex Theatre because under a state mandate to dissolve local redevelopment agencies, Glendale may be forced to sell off the historic venue.
In their most recent quarterly report, Glendale Arts, which operates the theater, said they’re holding off on the major upgrades until they know whether earlier moves to try and transfer ownership of the venue from the now-defunct Redevelopment Agency to the city are deemed legal. If not, the venerable theater would be considered a redevelopment asset, and so could fall victim to the state-imposed dissolution process — or what city officials have called a “hostile takeover.”
In February, a state law shut down redevelopment activity throughout California, redirecting the higher property taxes they earned to the state to bridge a yawning budget gap. While Glendale’s redevelopment money was behind start-up projects, such as the Americana at Brand, Disney’s Creative Campus and affordable housing units, it also took over and revamped the city’s crown historic venue, the Alex Theatre.
In a defensive move, officials shifted ownership of the historic landmark from the Redevelopment Agency to the city. But now that can be undone, and in a report to the City Council on Tuesday, city officials warned, “there are more questions and uncertainties than clear answers.”
Glendale’s Redevelopment Agency used to provide $415,000 a year for operation of the venue. In August, the City Council, acting in its dual role as the Redevelopment Agency, agreed to give the nonprofit $3.9 million — $2.8 million of it earmarked since 2007 — for new dressing and meeting rooms, a loading dock and a subterranean floor.
However, the planned backstage expansion and capital improvements are on hold until there’s more clarity about the possible sale. Officials expect that decision to come in June, when an oversight board consisting of school, county and city officials begins to supervise the redevelopment wind-down.
The state Department of Finance must approve the oversight board’s decisions.
Glendale Arts is also looking into funding options to buy the theater if it goes up for sale, said Interim Chief Executive Elissa Glickman. A property assessment would likely be needed to ascertain the theater’s value however, Glickman said. Glendale Arts would hope to subtract the added value of forecourt renovations that were completed this summer from the price, she added.
“We are so committed to managing the theater that if the option came up, we want first dibs,” she said.
The redevelopment shutdown has also impacted the nonprofit’s ability to get grant funding, and could cause issues when securing rental reservations because the theater’s future is up in the air.
More rentals are part of the nonprofit’s strategy to increase revenue and wean itself from its reliance on the annual redevelopment subsidy. As of Dec. 31, the theater had $336,834 in net rental revenue, placing revenue through the end of the second quarter, which began in October, $32,837 behind the same period a year ago, Glendale Arts reported.
Although the theater had what Glickman called “its strongest fall season ever,” its cash and reserve accounts have still taken a hit. She said that was partially driven by the costs of increasing programming, she said.
As of Dec. 31, total cash accounts were at $349,523, about 35% behind the previous year. The theater’s total reserve accounts, at $266, 831, were down roughly 30%. The theater had to rely heavily on the Glendale subsidy in the first quarter to meet cash flow needs, as it was closed over the summer for renovations to the forecourt.