LACONIA — Rusty McLear, whose businesses jump-started Meredith’s economy, wants to build eight to 10 spacious market-rate apartments as part of a new plan to renovate the Colonial Theatre with additional financial investment from the city of Laconia.
The City Council, which has already promised $5.1 million for revitalizing the 105-year-old theater, was to consider late Monday aspects of putting another $3 million into the project, which is intended to stimulate downtown business growth.
City Manager Scott Myers was drawing up a debt-servicing plan that councilors were expected to approve, Mayor Ed Engler said before the meeting.
Subsequent City Council votes and a public hearing would take place over the next month and financing for the long-delayed, $15 million refurbishment could close by the end of September, followed soon after by the start of construction, Engler said.
Near the start of the council meeting, McLear spoke of his plan for developing second- and third-floor apartments at the theater. The units could eventually be sold as condominiums.
McLear said the theater has always been “near and dear” to his heart.
“It has the potential to sow the seeds of making this a better, more profitable city.”
He said the project could be as successful as others he has been involved with, including in Hooksett and Meredith.
“It has the chance to further the economic development of the community and hopefully what goes on here and at the State School property will bring a lot more to this community.”
He said he is working with a local architect and the units will be 1,100 to 1,200 square feet.
“They will be first rate and add to what the city is trying to do.”
McLear’s involvement sends a “tremendous, almost immeasurable” positive signal about the overall project, the mayor said.
“This is a really big deal to Laconia, to have Rusty McLear invest in Laconia, in downtown Laconia,” Engler said.
McLear had the Midas touch in Meredith, where he spent 36 years building, owning and operating hotels, restaurants and shops, turning a sleepy town into a successful resort community. In April he sold his company to a national firm. The properties had an assessed value of $25 million, and he described the sales price as “well north of that.”
He and Alex Ray also developed the Hooksett Welcome Centers.
Additional city financial participation in the theater refurbishment was required because $4.8 million in federal New Market Tax Credits failed to materialize in April. There are significant fees associated with the tax credits, so funding required to make up the shortfall was substantially less.
The city loaned the Belknap Economic Development Council $1.4 million to buy the theater, which once hosted Vaudeville acts and was a multi-screen cinema before being shuttered.
The city has been receiving interest payments on its loan to the development council.
City leaders then promised to ultimately loan $4.2 million for the project and provide an additional $900,000 to buy theater equipment. With the additional $3 million now being discussed, city financial involvement in the theater project would be $8.1 million.
Servicing the debt
Tools for servicing the debt include the downtown Tax Increment Financing District.
Tax increment financing is a mechanism that allows municipalities to fund infrastructure improvements in a given district by borrowing money and paying off the debt with increased property tax revenue fostered by those improvements.
Also, plans approved by the state Legislature call for the city to receive $800,000 in revenue sharing money in the new state budget. Also, the city has some funds left over associated with the sale of property in the Lakeport Square area.
Debt servicing would be done in compliance with the city’s tax cap.
The Colonial project has been beset by delays.
In 2017, the project was unable to get New Market Tax Credits as organizers worked through increasing cost estimates for the intricate construction work required. Mascoma Bank ultimately awarded the credits elsewhere.
Mascoma was not included in the next two yearly rounds of allocations.
The New Markets program attracts private capital into low-income areas. Investors receive a credit against their federal income tax in exchange for making investments through community development entities.
Because of the terms of federal historic preservation tax credits for the project, the Belknap Economic Development Council would remain as project owner for five years before turning it over to the city of Laconia.
Similarly, McLear would rent the apartment space from BEDC for five years before he is given ownership.
Comments on social media and letters to the editor have sometimes been critical of the city’s focus on the project, with many saying the money could be better spent elsewhere.
Former Councilor Brenda Baer, in a recent letter to the editor, said her early support for the project was a mistake.