The Pittsfield City Council has approved a plan to forgive more than $2.5 million in debt for a downtown movie theater.
Tuesday night’s four-hour meeting probed the city’s plan to say goodbye to millions of dollars it’s invested in the Beacon Cinema. The move is part of a deal with prospective buyers of both the cinema and the historic building it sits in. By way of disclosure, the building hosts WAMC’s Berkshire Bureau. The meeting opened with representatives of the downtown business community vouching for the theater.
“Being at the center of downtown Pittsfield, it has become an anchor destination for all types of activity," said Jonathan Butler, president and CEO of 1Berkshire – a regional economic development organization. “It has been a catalyst for the first wave of positive downtown impact throughout the last decade, including coffee shops, pubs, art installations, niche retail shops, a very diverse dining scene, and much more heavily occupied office space.”
“The only question is, which of the two not great options in front of the city should the city elect," said Jesse Cook-Dubin, the president of Downtown Pittsfield Inc. “Option one is to restructure the debt so that a new owner can come in – and I’m looking forward to all of you hearing from Phoenix Theatre Group, because of what they have done in Michigan and Iowa they can replicate in Pittsfield, we will all be much better off for it – and that will involve recognizing an economic reality that the city’s debt can never be repaid.”
The second option Cook-Dubin presented was to refuse to forgive the debt and allow the North Street property to go into foreclosure.
“And the result of that will be rather than the city having the opportunity to vet the proposed operator and get a commitment to use this building as a theater for at least 10 years, the city will have no control over who goes in there, what goes in there, or how long it’s there," said Cook-Dubin. "And I submit that that would be the worst possible use of the $1.5 million that the city lent to this project, which is being forgiven over 10 years, not forgiven all at once, with conditions in exchange.”
The group of banks that financed the $22.1 million renovation of the building in 2008 formally began its foreclosure process in September. A lawyer representing Richard Stanley, the building’s owner and developer of the Triplex Cinema in downtown Great Barrington, said it become clear years ago that the Beacon would never recoup that investment.
“The city – in sort of your mortgage talk – the city is totally underwater," continued Cook-Dubin. "There are $4 million or more of bank debt on this property. The proposed purchase price is in the $600,000 range for the assets, the building, and the theater assets. So even if the purchase price was three times as much as is being proposed, there would be not enough money to pay a single dollar of the city’s debt.”
During the council meeting, Councilor Melissa Mazzeo led the argument against the restructuring, excoriating the city for its initial involvement with Stanley and the Beacon. She also blamed the banks for forcing the city’s hand with their desire to get the property off the books before 2019.
“You’re setting a precedence [sic]," said Mazzeo. "The next company that comes in here and says, comes up here, ‘I’ve got a great business model and I’d like a TIF,’ we look at everything, things are great, we give it to them, and they’re a year or couple in and they’re having problems and all of a sudden they’re like ‘We’re going to walk or you’ve got to forgive our debt’ or whatever – when we do these things, there are consequences down the road.”
Mazzeo said she wanted more concessions for the city in the deal being offered to the prospective buyers – the aforementioned Phoenix Theatre Group. The group first became involved with the Beacon as consultants several years ago.
With an 8-2 vote – with councilors Mazzeo and Kevin Morandi in opposition and Council President Peter Marchetti recusing himself due to his employment at the Pittsfield Cooperative Bank, one of the Beacon’s lenders – the debt restructuring passed.
