Mayor says city is likely to have to put more money into project
By RICK GREEN, LACONIA DAILY SUN
LACONIA — The city has already made a major financial commitment to refurbishing the historic Colonial Theater, but it will likely be asked to devote even more money to the project, Mayor Ed Engler told the City Council Monday night.
“There's something I want to put on the table since it's sort of the elephant in the room,” Engler said during a budget discussion. “What I can say tonight is that in order for that project to succeed, it is very, very likely the city is going to have to increase its financial contribution.”
He explained Tuesday that construction bids on the project came in more than $3 million higher than the original projected cost of $8.9 million.
The Belknap Economic Development Council, which owns the Colonial and is using a mix of state, federal, city and donor funds to bring the 103-year-old theater back to life, has been examining how much can be cut from the project to bring down costs.
The city has already loaned $1.4 million to the Economic Development Council to buy the theater. When construction financing is finalized, that loan is to be repaid and the city is to grant a new one in the amount of $3 million, which can be rolled over into ownership of the theater. After it opens, the city has agreed to pay $120,000 yearly to rent the theater.
It is looking like the size of the new loan will increase significantly, Engler said. Operating expenses could rise as well.
“The city will have to put more money into it,” Engler said. “How much more and how the city can afford it are the questions.”
City Manager Scott Myers said the city uses undesignated reserve money to contribute to the project. The city has more than $4 million in such reserves. But depending how much more money is required, the city could be put in the position of not having enough reserve funds on hand to pay for unanticipated expenses.
Meanwhile, it has taken longer than expected to assemble the complicated funding package for the project. The date for finalizing construction financing, which includes federal historic tax credits, has slipped from Jan. 1 to April 30 to Aug. 30.
The economic development council is working with funding groups, including the city, to find a way to close the gap between the original construction estimate and the higher construction bid.
Justin Slattery, executive director of the economic development council, said that through cutbacks, they’ve winnowed the contractor’s bid to $10.2 million, essentially cutting $2 million off of the overage. The overall project cost, including design fees and real estate purchase, is $16 million.
There will likely be public discussion of whether the ornate theater would be properly restored given all these cuts.
The goal is not only to cut costs but to ensure the restoration is done to a high standard.
“There's a balance to it,” Slattery said. “We want to have a quality, finished product in the end.”
Engler said the discrepancy between the original estimate for the construction and the construction bid arises from the complicated nature of the work to be done.
“It's hard to estimate things like restoring fresco paintings, but the fact that they were off by a third was shocking,” he said.
Despite the complications, Engler said a revitalized Colonial Theatre will be worthwhile for downtown, especially since federal participation will cover significant costs. Two federal tax credit programs will provide $7.6 million.
The project, part of an effort to revitalize the downtown core, is also to include 14 market-rate apartments and retail space.
“I'm still confident we'll be able to pull all this together even if it costs more than originally thought,” Engler said. “We can't lose sight of the fact that we'll end up with a $16 million theater project and the federal government will pay half.”
People took a tour of the theater last August, after workers had finished the demolition of walls that divided the space into several different screening rooms. Restoration of the frescoes is proving to be more expensive than anticipated. (Adam Drapcho/Laconia Daily Sun)
- Written by Rick Green
- Category: Local News
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