Novato Council Presentation – October 9th
Good evening Mayor Fryday and Council members, thank you for this opportunity tonight.
My task tonight is to communicate our “no cost, leveraged finance plan”. This plan will ensure the completion of the theater, and its first 3 years of operations.
Firstly, I would like to express our deep gratitude to our thousands of donors and our many volunteers for their thousands of hours.
Secondly I want to thank the Council for their past support. Our existence is largely attributable to Counsellor Ekland, who in June of 2008 led the initiative to break off an attempt to privately commercialize the theater. She argued successfully that Novato needed a different strategy.
That eventual strategy was to emulate the Lark Theater’s success and so began Novato Theater.
So far we have raised and spent approximately $2M. We were fortunate to have had a board skilled in engineering and theater that designed a very efficient and flexible theater.
We have dealt with all the soft costs of going from architectural drawing to fully approved, permitted and detailed plans. We have completed phase 1 of construction, installing the new compliant foundation.
The original theater, built in 1946, was massively deficient to today’s codes. The key external design elements were removed and stored for future construction. Once finished, people will see what they have always hoped to see on Grant.
As confidence waned, donations became pledges contingent on raising all necessary funds. Today we have over $1.5M in pledges, enough for Phase 2, the full structure and external appearance.
Our reality forced us to consider alternatives. At the same time the City Administration offered help in that assessment.
Their first request was to get a sense of our business plan. If built would we be viable? I believe they would agree that the answer is yes.
We then explored how we could resolve the funding gap. The gap to construction funding is $2.5M with a further $0.5M deemed necessary for an operating contingency. Thus to release the pledges we need to fill a $3M funding gap.
In our situation today conventional loans will not work.
Thus our concept arose. Novato Theater would secure a line of credit that could be drawn upon as and when needed. The existence of the line of credit would ensure project completion.
The first part of the concept is contingent on us employing the use of Novato’s excellent credit rating.
The second part of the concept is recognizing that once completed the theater will represent a $5 million asset versus an assessed $700k today. Once complete and generating revenue we can replace any outstanding line of credit with a conventional loan and would no longer need the support of the City’s credit rating.
Outside of some administration time this plan will not cost the City.
In developing the viability of this plan we worked successfully with the highest levels of Bank of Marin. They support this plan.
I have been on the theater board for 7 years assuming the president’s role in April. I was recruited to the board to bring a business perspective from my time involved with start-ups, growing organizations, and running larger enterprises like Anchor Steam.
Let me state here clearly, outside of this plan, I personally do not know how else to get this theater built and opened.
Novato Theater is a 501(c)(3) in good order and standing and has no debt. Over the last year we have eliminated all employees and paid services with the exception of our CPA. We are run entirely by volunteers. But with no ability to move forward our state of construction will remain as it is today. That would be unfortunate for downtown.
I urge the council to recognize that now really is the time to act.
I have not found any community group or individual that doesn’t support the Theater in principle. The majority don’t care how its done, they just want it done, and now.
Risk appears to be extremely minimal.
Firstly can we actually build the theater? If we can’t, we won’t have an asset with which to refinance. We and our builder Arntz are very confident that we can.
Next can we generate enough revenue to support operations down the road?
Or in layman terms will people show up? We say yes.
If the council now doesn’t agree with us and believes there is an unacceptable risk of insufficient interest in the theater from Novato’s residents it can say so now and we can all go home.
While we have budgeted conservatively, our aim is to spend less and hope our contingencies won’t be needed. The lower our operating costs are, the more we can do as a non-profit to provide lower prices and free concessions for those in disadvantaged positions. We truly want to be a community theater.
While our board has been decimated through deaths and disabilities we are in the process of re-building that board based on functional expertise.
For example, those left standing didn’t know much about film and procurement nor music, so we sought professionals. Now we have Michael Kohn from Lucasfilms, who has also taken the lead in our relationship with MSA. And we have Greg Loiacono, a professional musician, with a rolodex of contacts inconceivable to the rest of us.
I joined the board of Novato Theater to give back to my community drawing on my experience. If there was a solution available that didn’t involve the City we would have taken it.
I urge you to give us the opportunity to move forward with the City Administration and Bank of Marin to allow us to bring our “no cost leveraged plan” to reality for final approval.
On behalf of Novato Theater I thank you for your time and attention.
Keith Greggor
