LACONIA — The City Council will be asked to approve two resolutions at its Feb. 25 meeting to advance the Colonial Theatre restoration project.
During a special meeting Monday, Mayor Ed Engler briefed the council on what it will be asked to do, explaining in effect the resolutions will reaffirm the city’s commitment to the project.
One resolution will serve as a commitment letter for investors detailing that the $9.6 million construction cost does not include staging, sound and lighting equipment and offers an assurance that the city will pay for the estimated $900,000 purchase cost.
Engler said the council would retain the final say on the equipment selection and the cost.
The second resolution acknowledges that the annual lease fee the city will pay the developer may exceed the $144,000 initially agreed to.
The council has previously approved lending $4.2 million to the developer who will pay interest and charge the municipality rent. Every half-point the city demands in interest the mayor said, will hike the rental agreement by about $20,000.
One unknown variable is the rental income the property will produce. Plans for 14 apartments to be rented at market-rate on the upper floors of the building were jettisoned after construction costs exceeded revenue. Four storefronts remain available for lease.
The developer is now hoping to attract an independent party to buy or lease the second and third floors of the building, generating additional income. Engler said he wanted to put the council on notice that the amount of the lease is not a firm number.
In response to a question posed by Councilor Andrew Hosmer, Engler said, the city’s total liability for rent could be about $170,000 per year, some $25,000 more than originally anticipated. The city will also be responsible for paying the utilities, estimated at $50,000 a year.
Justin Slattery, executive director of the Belknap County EDC told the council that announcement of whether $4.8 million in federal new market tax credits will be awarded to the project is still expected to come later this month or in early February.
He represented that the Business Finance Authority that has committed to loan $215,000 to the EDC for the project has extended a letter of credit for a maximum of $872,000. The added money could serve as a bridge loan ensuring all needed funding is in place in time for the closing.
On Tuesday, the mayor said, the prior federal government shutdown and the one still looming may delay the distribution of NMTCs. If the project receives them, Engler said, a closing date will be set and the city will have about three months to commit all the financial details into a lease agreement.
The finance sub-committee will work with City Manager Scott Myers to determine the interest rate the city will charge and then make its recommendation to the full council.
The city is still looking for a management company to shoulder the liability for booking acts and ticket sales.
The mayor said the city is “categorically unwilling to take any risk for management of the theater” and will likely have to offer a two- or three-year no-cost or low-cost agreement with a management entity for them to assume the financial risk of paying to bring an act to Laconia.
During his remarks to the council, Engler observed that construction of a 750-seat, auditorium would cost more than the $9.1 million investment in the Colonial and would lack the architectural details that would be preserved in the 104-year-old theater.
Last year, voters in York, Maine, a municipality with a population of 13,000 — similar in size to Laconia — approved construction of a 750-seat community auditorium linked to their high school that was recently completed at a cost of $10.4 million.
“We’re still talking a heck of a bargain here if the city puts in $5 million and gets a $10 million auditorium for half the cost,” Engler commented.
The council previously committed the city to purchasing the 609 Main St. property at the end of seven years by forgiving the construction loan.