Councilman Bill Henry email re: Senator Theatre 7/09/09

Thank you for writing to me in the last few days with your concerns about the fate of the Senator Theater. Please excuse the non-individualized response and allow me to take a few moments and make sure that we all have the same background, not just as to where we are now with the Theater, but also as to at least some of how we got here and why.

I believe that most of us who care about the fate of the Theater were relieved earlier this spring when Mayor Dixon agreed to purchase the outstanding note for the Theater, aborting a then-scheduled foreclosure auction by First Mariner Bank, the previous note holder. If that auction had proceeded, the bank would probably have been happy with any bid at or above $350,000, because they would have also been able to force the City to pay up to $600,000 (the City’s guarantee) to make up the difference. Since the bank also had liens on one of the nearby houses owned by Tom Kiefaber, as well as on one of his homes out in Sparks, in theory, they could have auctioned off all three of his properties to get their money; as long as they got a total of $350,000 at auction from the three properties combined, they would have been satisfied.

That put all of us concerned about the fate of the Theater in a very disturbing position. Our biggest fear was that any speculator could have plopped down the price of a medium-sized house to get control and then let the Senator sit vacant and dark for years until they decided what to do with it. By purchasing the note, the City enabled us to dodge that bullet. Now the City will hold its own foreclosure auction, but unlike with the bank’s auction, any bidder now will have to be willing to bid more than the City’s opening bid of the $1,000,000+ that the City has spent on the note and associated costs.
Does this absolutely preclude anyone else from coming forward to bid against the city? No. Anyone who can bring a cashier’s check for $50,000 to the auction as their initial deposit and – within two business days from then – produce the rest of the 10% down required (a minimum of an additional $50,000) could legally bid higher than the City’s bottom line offer and take ownership. Realistically speaking though, there are several reasons why it is unlikely – not impossible, I admit, but unlikely – that someone we’ve never heard of, with no prior connection to the area, will swoop in out of the blue and risk more than a million dollars by outbidding the City.

1) Parking limitations – The Senator Theater holds about 900 people. In its current use as a movie theater, it is grandfathered-in as far as off-street parking requirements under the City’s Zoning code. However, if it were bought by someone who planned to use it for any non-entertainment-related use (a church, retail space, etc.) then the new owner would need to get a new use & occupancy permit for it and satisfy the zoning requirements by identifying hundreds of off-street parking spaces in close proximity that they either owned or had under long term (20 years or longer) lease for their sole use.

So, not only would they need to pay for the Theater itself…they would also have to go to the owner of the parking lot behind the nearby Staples and purchase or lease practically that entire lot also…and the owner of that lot could charge them as much as he wanted because the new owner of the Senator would have no other nearby source of sufficient parking. (Technically, a new owner would have to get a new use & occupancy permit even to keep using it as a movie theater, but parking would probably not then be as much of a hold up – the deed for the lot behind Staples includes an easement for parking as long as the Senator remains “a movie theater or a cinema draft house, entertainment facility, or other similar facility”. That easement goes away if the Senator is not used as such for more than six months, but we expect it will continue for an entertainment-based use.)

2) Live entertainment restrictions – The Senator Theater is zoned B-2-2, as is most of the York Road commercial corridor. While this zoning permits a wide range of business uses, live entertainment is not one of them. Yes, there have been live concerts at the Senator many times over the years; regardless, they are technically not permitted by the current zoning. I suspect that the City has turned a blind eye towards enforcement over the years because the primary use was within the law – the live concerts were only occasional and never caused any problems. If, however, the new permanent use was to involve live entertainment, the new owner would have to secure either a rezoning of the building itself (difficult as the Planning Department would probably consider it to be spot zoning), add a conditional use of “auditorium” or “concert hall”, or create a planned unit development with live entertainment as a permitted use…all of which would require legislation through the City Council involving extensive opportunities for community input during the process.

To put that in perspective, the management of Belvedere Square spent over a year working with the surrounding communities to get the support needed to allow an amendment to their planned unit development legitimizing live entertainment in Crush Restaurant as well as the Friday night outdoor concerts that are almost-universally beloved. A previous amendment granting live entertainment use to Ryan’s Daughter had required similarly arduous effort…and these were already existing operations who just wanted live entertainment as an accessory use to their real business. Given that track record, it would take either a very brash developer to be willing to spend over a million dollars on a property where he or she might spend years trying – or failing – to get the approvals needed for its intended purpose…or one so accustomed to working with communities to meet their needs and secure their approvals, that they would probably make a good neighbor and we needn’t be worrying about them.

3) Deferred maintenance and renovation costs – Over the last twenty years, by Tom Kiefaber’s own admission, the operating deficit which the Theater continually ran often prevented him from providing proper upkeep for the Theater…and, frankly, it shows. Some of it is basically cosmetic – peeling paint and such – but a fair chunk of it is more substantial. I have had more than one person familiar with the building quote me costs for “properly” renovating it – they range from $500,000 for the basics of passing all the inspections that a new owner would have to face to get occupancy permits and insurance, to as high as $2 million for the level of renovation required to use it as a first-class performing arts venue.

So, in short, I do not believe that proceeding with the scheduled auction is “playing Russian roulette”, as some have said. Remember – any potential buyer must not only spend more than a million dollars to out-bid the City; they must also be prepared to spend, potentially, millions additional in parking acquisition and/or renovations.
Also remember – the reason that some kind of foreclosure auction must happen is that there are hundreds of thousands of dollars of debt to other entities besides the City that are currently tied to the property. The State of Maryland is owed more than half-a-million dollars. A local law firm has a judgment for over $100,000. These debts must either be paid with even more additional cash…or wiped out by foreclosure – until those debts are addressed, no one – private or non-profit – will be able to operate the Theater profitably.

As for assertions that I have not been willing to meet with “the community” to discuss all of these issues, let me just say this:
I was unable to attend Sen. Conway’s town hall meeting due to a prior commitment; perhaps if I’d received more than a few days notice, I could have adjusted my schedule, but that is water under the bridge.
I have, however, attended several prior town hall meetings at the Senator, last year and earlier this year. I hosted one myself, one was hosted by Tom’s former development consultants, and one a few months ago was hosted by the Senator Community Trust – I was there at all of them, took questions, gave answers, and made suggestions as to what people could do if they wanted to help.

Also, I attended last month’s York Road Partnership general meeting – as did Tom – where this issue was discussed at length among many members of the community, who themselves represent thousands more; for those who don’t know, the York Road Partnership is the umbrella community association for most of the neighborhoods along both sides of the entire York Road corridor.

Furthermore, I have returned all phone calls and emails by members of the community who have had questions or concerns about the situation or my position on it, not to mention discussing the situation at various community association meetings and with numerous individuals at various and sundry times of the day and night, week and weekend.
I am only bothering to make this clarification because saying that I “won’t meet with the community” is an insult…not to me, but to all of the people that I have met with – just because they aren’t able to put whatever they want up on a marquee, doesn’t mean they aren’t members of the community. I’m a public figure; Tom can say whatever he wants to say about me – that’s part of the job. Insulting all of the other good neighbors of my district, however, who gave up time out of their various evenings and weekends, to come discuss the Senator Theater’s plight at other community meetings besides his is inappropriate…

Anyway, after the auction is concluded, it will be time to discuss next steps. If you have any more questions or require any clarification before then, please do not hesitate to email me at bill.henry@baltimorecity.gov or call my office at 410-396-4830.
Thank you for your time and attention and I look forward to seeing you soon at the historic Senator Theater!

– Bill