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Chateau renovation depends on DMC funds

The curtain has been lifted on plans for Rochester's downtown Chateau Theatre. Several key decisions are still needed, though, before work can begin on an aspirational renovation of the historic space.

The most immediate decision lies in the hands of the Rochester City Council. The council on Monday will be asked for its consensus to move ahead on one of five renovation plans, called options A through E in design concepts presented by the city's lead project contractor Miller Dunwiddie Architects.

City of Rochester administration will support Option E, said City Administrator Stevan Kvenvold. That option includes building into the alley on the east side of the theater, expanding out the back (or north) wall of the theater and excavating below the site.

That plan has been estimated at a $21.3 million cost , according to city documents.

Who pays?

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The Chateau project has been a highlight for the city's and Mayo Clinic's ongoing Destination Medical Center plans, and DMC would play a critical role in funding the renovation of the project, as it did in the city's original $6 million purchase of the building.

The city began in January of this year collecting a DMC sales tax that was expected to produce about $5.6 million in revenue this year. Another provision of DMC legislation is for state revenues to begin returning to Rochester after private investment here crosses a $200 million threshold .

Those revenues would likely be used to pay the $21.3 million renovation cost for the Chateau, Kvenvold said. That was part of the negotiations for the city to purchase the building.

"It was negotiated with the council under the assumption that the cost to purchase it and the cost to renovate it would be paid by the DMC sales tax proceeds plus state revenues. … I don't believe the council would have purchased it under any other assumption," Kvenvold said.

The city council will need to take up the funding plan in later conversations. Council member Michael Wojcik said he has some concerns for the size of the investment.

"I am committed to preserving the Chateau Theatre for future generations. I am concerned about the size of a capital investment this large. Our public streets have a $1.4 billion dollar unfunded liability and the council has take no action to address this. Public safety, infrastructure, and maintaining existing assets must come first," Wojcik said in a written statement to the Post-Bulletin.

Who operates the theater?

Sales tax and state revenues, according to DMC legislation, could not be used to cover operations at the theater. Another Chateau consultant, Webb Management Services, has recommended the city operate the theater, possibly with the assistance of a new foundation.

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Webb also recommended a staff of seven full-time employees, two part-time employees and three event staff members to operate the theater.

Rochester Mayor Ardell Brede and others on the Chateau Theatre Re-use Task Force have called for the theatre to be in use almost constantly with a variety of activities . That approach is reflected in a pro-forma operating budget prepared by Web..

The budget anticipates 279 use days in the theater's first year of operation with revenues collected from rentals, ticket sales, user fees, food service and other miscellaneous income.

Operating expenses in the first year are projected at about $1.7 million, according to the Webb report. Earned income is about 70 percent of that expense, at $1.2 million. The budget anticipates about $485,000 in contributed income from grants, corporate contributions and local government support.

Kvenvold said he expected "some community obligation, possibly through local (tax) levy," to supplement operations at the Chateau.

Next steps

The first decision from the council, expected Monday, could set the pace of the project moving forward. If the council opts for Option E, city administration would need to move into negotiations with neighboring property owners.

The council is scheduled to take up the issue at its committee of the whole meeting, 3:30 p.m., Monday in Room 104 of the city-county Government Center.

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Related Topics: FINANCETHEATER
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