Sacramento County supervisors and the Sacramento City Council approved an agreement with two arts groups Tuesday to pay for $11.4 million in bonds planned for major improvements at the H Street theater complex.
The cost has increased from $8.2 million conceptually approved a year ago for the project, which includes a permanent Music Circus tent for the California Musical Theatre and improvements at the Sacramento Theatre Company. CMT and SCT are responsible for paying off the bonds, which ultimately are backed by the city and county treasuries, over 20 years.
"This process has really been aided by the city and county," CMT managing director Richard Lewis said. "They both recognize that the structure that will ultimately be built is a genuine signature structure that will be a magnet for downtown Sacramento."
An environmental study is under way for the theater complex at 15th and H streets. The Board of Supervisors and the City Council are expected to give final approval to the bond issue in January.
Groundbreaking is set for March 1 on a new entry plaza and courtyard, Lewis said. Work is scheduled to begin in April on STC's smaller theater, including new dressing rooms, restrooms and lobby. In September, the theater's main stage will begin undergoing a major overhaul, including a new stage, seats and upgraded electrical and sound systems, he said.
Also next fall, crews are expected to begin erecting the 2,250-seat, air-conditioned Wells Fargo Pavilion for the Music Circus, Lewis said. The bank has agreed to pay $127,500 annually for 10 years for naming rights to the facility, which is set for completion in April 2002.
The bond increase resulted from efforts to help the arts groups succeed while reducing the risk of default to the city and county, according to a staff report.
An initial proposal called for CMT and STC to rely on fund raising to pay for the first two years of construction and use bond proceeds for the rest of the project. But the plan posed a risk for investors, who would be likely to require a higher interest rate, county Chief Financial Officer Geoff Davey said.
Selling bonds to cover the entire project reduces the risk and interest cost, he said. In addition, private funds raised by CMT and STC will be placed in a reserve account to ensure future bond payments, according to the agreement approved Tuesday.
Construction costs also have increased since October 1999, a staff report said, because of inflation and design changes resulting from meetings with neighborhood residents and the city's Design Review Board.
Besides guaranteeing the bonds, the city and county each will continue paying $66,000 into an improvement fund for the H Street arts groups begun in 1997. The payments will last until 2020 or until the bonds are paid off, whichever occurs first, according to the agreement.
In addition to tapping the improvement fund, the arts groups have pledged new revenues to pay off the bonds, including ticket surcharges. Most of the debt is expected to be repaid by CMT, which has launched a name-a-seat campaign for its new pavilion . The group also plans to add Music Circus matinees in 2002 and expand its season by two weeks in 2003.
In 2004, CMT also will launch a series of early-summer concerts in its new pavilion . Plans call for 15 shows over three weeks, similar to concerts that the group - formerly known as the Sacramento Light Opera Association - produced from 1979 to the early 1980s, Lewis said.
"It's something old that's new again," Lewis said. "We could have entertainers like Bill Cosby and offer a comedy series and maybe a country-western series and a gospel series."
To minimize risks to the city and county coffers, the agreement includes a "lock box" that will receive all revenues from CMT performances at the theater complex. If fund raising does not generate enough for bond payments, other sources - including ticket and concession sales - will be tapped to pay the bond debt, officials said.
