Tax credit issue has been to blame for the stall in work
March 21, 2011
The stalled renovation of the Saenger Theatre on Canal Street is scheduled to resume next month, thanks to a decision Monday by City Hall to front more than $1 million for the project until developers smooth out a wrinkle in their financing strategy.
The restoration of the venerable theater has hit snags, but should resume in April. Contrary to the sign, the opening now is expected in the fall of 2012.
City officials said they hope the cash advance will get construction crews back in the building by mid-April and continue work without further interruption in anticipation of a grand opening in the fall of 2012, several months later than originally planned.
Developers halted work on the $45.8 million project earlier this month after investors expressed concerns that a state tax credit program that expires Dec. 31 will not be renewed by the Legislature.
The Saenger development team is counting on about $6 million in historic credits to pull off its plan to resurrect the iconic theater, which has been shuttered since Hurricane Katrina's floodwaters swamped it more than five years ago.
Private lenders, who remain committed to the project, have asked that closings on all transactions be put on hold until the tax credit issue is resolved.
With an estimated $600 million worth of pending projects statewide dependent on the credits, Gov. Bobby Jindal's administration and lawmakers from across the state have come out in support of a four-year extension.
City agrees to allocate the money
Confident that the Legislature will act quickly after its regular session begins April 25, the city agency overseeing the Saenger renovation agreed Monday to allocate $1.1 million of its $6 million in cash on hand to ensure that work resumes.
With the blessing of Mayor Mitch Landrieu's administration, the board of the Canal Street Development Corp. voted unanimously to advance the money now. The development corporation is a public benefit agency that serves as landlord for the city-owned Chateau Sonesta Hotel on Canal Street.
A representative of the Saenger Theatre Partnership, the theater's longtime private owner-managers, told board members that if the Legislature acts in a timely fashion, developers can close on financing by mid-summer and reimburse the agency shortly thereafter.
Gary Elkins, an attorney for the Saenger Partnership, told the board that despite the uncertainty about the status of the tax credits, investors in the project remain on board.
While Elkins said he believes that legally, financing could have gone forward without legislative action, the lenders were concerned. He said having the Legislature extend the program represents the "easier, cleaner and faster'' solution.
Elkins said Mississippi faced a similar issue with a sunset provision on the tax credit program when its Legislature convened in January. After lawmakers approved an extension, he said Gov. Haley Barbour quickly signed the bill.
The Saenger developers would like to see the same scenario play out in Baton Rouge and have the matter resolved by mid-May.
State, federal tax credits included
Along with private dollars, developers are relying on a mix of five different types of state and federal tax credits to pay for the massive renovation, including the historic tax credits that require builders to adhere to strict preservation rules.
The Saenger project cleared a major hurdle in October when the City Council approved a 52-year lease deal with the Saenger Theatre Partnership and a document formalizing the partnership's donation of the theater building to Canal Street Development Corp.
While developers have worked on financing, the past few months have been spent on preliminary work, including asbestos removal and storage of historic lighting fixtures that would be reinstalled later.
Major renovation at the site has not started.
Developers planned to stage the theater's first holiday-themed shows in December, adding that the initial Broadway production, set for spring 2012, was going to be "The Lion King.'' That show has now been booked for a March 14-17 run at the Mahalia Jackson Theater for the Performing Arts.
The money the development corporation is advancing for the Saenger project will be used for exterior restoration, interior electrical, foundation and demolition work and elevator installation, according to Cindy Connick, the agency's executive director.
Back to the future
Developers want the reborn theater to resemble the way it looked when it opened in 1927 as a vaudeville playhouse before it became the city's pre-eminent movie palace.
The restoration plan calls for years of veneer to be stripped away to expose the original color scheme, and for modern fixtures to be replaced with period hardware. With the help of historic photos, builders want to install new windows, doors and poster boxes that strive to recreate the original look.
Overseeing the work is the Martinez + Johnson architecture firm based in Washington, which has won numerous awards over the past two decades for restoring landmark theaters such as the Boston Opera House.
Broadmoor of Metairie is the project's general contractor.