Council Announces They Will Not Accept Playhouse Offer
It is with regret that the Visalia City Council has informed the Enchanted Playhouse Theater Company that the City will not be able to accept the theater company’s formal offer to purchase the Main Street Theater because the offer did not meet any of the City’s minimum terms.
“Unfortunately, the Enchanted Playhouse Board did not come close to making a viable offer,” explained City of Visalia Vice Mayor Bob Link. “The Enchanted Board’s very vague August 23rd proposal indicated an indeterminate purchase price of not more than $300,000, from which they wanted unspecified discounts on.”
The Enchanted Playhouse proposed that the City of Visalia finance nearly 100 percent of the group’s purchase of the building, and provided only a “nominal down payment.” The proposed loan was to be interest-only for five years and included vague references to grant funding for improvements. The proposed purchase price, even before the unspecified reductions, is below the requested minimum purchase price and below the appraised value.
“The Council gave Enchanted Playhouse a special opportunity to make a good faith proposal. The Council felt this was not a good faith proposal,” said Link.
In a recent letter to the City from the Enchanted Playhouse’s Fresno-based attorney, it appears that the Enchanted Playhouse is seriously considering legal action. As a result, the City Council has no viable choice but to make an immediate demand for the missed rent payments that are owed to the City of Visalia. Legal counsel for the City will take the necessary steps to attempt to recoup the $13,000 owed.
“The Council is heartsick that we have gotten to this point. The hope was that the Enchanted Playhouse Theatre Company would purchase the Main Street Theatre, but they have not been able to make a realistic offer in the last fourteen years,” added Link. “Once they knew - a year ago - that there was other interest in buying the building, we hoped they would spend the past year aggressively fund raising so that they would be in a position to purchase the building. At the very least, the Council thought they would focus on the future and continuing their good work in one of the other six theatres available in our city,” said the Vice Mayor.
Added Link, “The City Council has taken the high road and has not publically outlined the Enchanted Playhouse’s repeated financial woes and lack of follow through. But given their recent actions, we felt it was time to publically provide more information on what has led the Council to its most recent actions.”
- 1997 – The Enchanted Playhouse Theater Company (EPTC) Board signed a lease with Visalia Theatre (Martin family) to lease the property for $2,300/month in the first year, $2,835 in the second year, $2,976 in the third year, $3,125 in the fourth year and $3,281 in the fifth year of the lease. The EPTC was responsible for most of the non-structural maintenance.
- 2003 – The EPTC Board signed a performance agreement with the City of Visalia to look at options for acquiring the Main Street Theatre, which was up for sale at the time, including a commitment to raise $100,000 or 20% of the negotiated price, whichever was greater, within a 12 month period, and to pay off the remainder through monthly loan payments, including reimbursement to the City for the costs to acquire the Theatre. The EPTC continued to be responsible for most of the non-structural maintenance.
- 2004 –The City acquired possession of the property from the Martin family. The EPTC Board signed a month-to-month lease agreement with the City for $3,000/month.
- 2008 - The City acquired title to the property through a lengthy court process, which ultimately established the amount of $600,000 as the purchase price the City was obligated to pay. Despite this higher than expected purchase price, the City continued to lease the property to EPTC for the same $3,000 per month as before.
- 2008-2016 – The City invested over $162,000 in maintenance and repairs, including major electrical upgrades and restoration of the marquee.
- 2013 – The EPTC Board was behind in rent by $25,000 and requested a lease modification. The City Council retroactively lowered their rent to $1,500/month, which reduced the debt to $12,000, a repayment plan of $500/month over two years, and the rent returning to $3,000 in 2016.
- 2016-2017 – The EPTC Board continued to pay up to $2,000, but does not make all payments.
- November, 2017 – The EPTC Board Treasurer sends email to the City of Visalia Finance Director confirming that he has reviewed the accounts and agrees with the City’s accounting that shows the EPTC owes the City $13,000.
- December 7, 2017 – Article in the Visalia Times-Delta discussing that the City of Visalia is considering selling the Main Street Theatre.
- February 16, 2018 – Article in the Visalia Times-Delta discussing the Request for Proposal for the Theatre with quotes from EPTC Board Members.
- February 27, 2018 – Two EPTC Board Members attend the Request for Proposal bidder’s conference at the Theatre.
- April 20, 2018 – Letter of support from EPTC Board President, included in another group’s proposal to purchase the building, says, “We cannot afford to buy the building.”
- July 16, 2018 – The EPTC requests that, despite not having made an offer to purchase the property through the original Request for Proposal process, they be given a new opportunity to make such a proposal. The City Council agrees and provides EPTC with 60 days to submit an offer to purchase the building.
- July 25, 2018 – The City of Visalia sends letter to the EPTC Board with the specifics that are requested in a proposal from the Board by September 17, 2018 including a minimum price of $450,000, present a financial plan for the purchase and repair of the building, and clear indication that the Council was not interesting in carrying the financing on the building.
- August 23, 2018 – The EPTC Attorney submits a proposal for up to $300,000 that includes request for a reduced price below the $300,000, for the City to carry an interest-only loan for five years, and with no plan for funding the building restoration.
It is expected that the City Council will consider the ordinance to sell the building to Legacy Investments, a local entity that made a $515,000 purchase proposal through the public request for proposal process, at the October 1, 2018 City Council meeting.