Phil Tagami, California Commercial Investments partner and developer (or redeveloper) of The Rotunda, scored a victory with a 57.2 million deal to renovate the long dormant Fox Theater. When I served as Economic Advisor to Mayor Elihu Harris, Phil came to me with a plan to restore The Rotunda. After almost ten years of meetings, drawings, and calls not returned by the City's Economic Development Agency, Phil won a $32 million loan to develop The Rotunda. It was his first development project.
But even then Phil had a dream and plan for the entire area boardered by Telegraph, San Pablo, and Grand Avenue that we started calling "Uptown" after that term was created by developer David Martin of The Martin Group in 1995. Phil's plan was on a much smaller scale that David's, where the latter wanted to make a large shopping complex, Phil wanted to recreate the Fox. We had that conversation in 1996. As is common with him, he kept his focus.
He maintained it, even in the face of some Oakland officials who wondered if he could take on the Fox, most notably, former Councilmember Dick Spees. But he did.
The Fox is a special place. It has the largest stage west of the Missisippi. It's structure is still intact, and though the interior had been worn with age and water damage, one visit was all it took for one to be transported to a New York / Times Square theater. It's that beautiful, even in it's state today.
In two years, it will look better.
Fox to become glamorous again under city's plan
Oakland gives nod to $57.2 million restoration
By Heather MacDonald, STAFF WRITER - OAKLAND TRIBUNE
OAKLAND — The Fox Theater will have a starring role in downtown Oakland's nascent renaissance under a $57.2 million plan to restore the long-shuttered movie palace.
The plan, approved unanimously by the Oakland City Council, would create 2,300 seats and a new home for the Oakland School for the Arts, which has been holding classes in tents outside the city-owned theater.
Revitalization of the Fox Theater — closed in 1984 — is a crucial part of the city's attempt to breathe life back into downtown Oakland and to create a thriving arts and entertainment district.
The deal is very different than the agreement approved a year ago by the council to build a cabaret-style theater with just 1,380 seats at a cost of $33.6 million, a plan that was never finalized.
"We're excited," said developer Phil Tagami, who began working on the restoration of the Fox four years ago and expects construction to take two more years. "It's been a long haul, and now the hard work really begins."
The revised plan's construction costs of $47.89 million have been guaranteed, and unless changes are made by city officials, no additional money will be needed to complete the project, according to Redevelopment Agency Director Daniel Vanderpriem. The additional $9.3 million will pay for fees, insurance and legal costs, officials said.
Although the project hinges on a $25.5 million loan from the Oakland Redevelopment Agency, most of the theater rehabilitation will be funded by a combination of tax credits and grants.
The city plans to raise the money by issuing $22.5 million worth of bonds.
Although city regulations require just 20 percent of a project's contracts to go to Oakland firms, 43 percent of the Fox rehabilitation will be completed by local firms, Vanderpriem said, adding that he hoped additional negotiations would raise that amount to 50 percent. City rules also call for 10 percent of contracts to be set aside for small local firms; 12 percent of the Fox project will go to those companies, officials said.
Councilmember Desley Brooks (Eastmont-Seminary) praised Tagami for keeping his promise to involve as many local firms as possible. Brooks said the success of the Fox project should set an example for other firms interested in Oakland projects, and proves there are local firms capable of doing the work.
"This raises the bar for everyone else," Brooks said. "It should change the tide."
To take advantage of $14.5 million in tax credits, ownership of the Fox will be transferred to a for-profit entity set up by the city. Once the tax credits expire, the city will be able to buy back the theater for its fair market value.
However, because that value is expected to be significantly less than the redevelopment agency's loan, no additional money will be needed, Vanderpriem said.
The theater will be operated by Another Planet Entertainment, which also runs the Greek Theatre in Berkeley and the Independent in San Francisco. Under the terms of the 10-year deal, which has an option for an additional five years, Another Planet will not receive a city subsidy, and its rent will be based on ticket sales, officials said.
In addition, $2 from every ticket will go to supplement operating revenues and fund a reserve for capital improvements, officials said. The original plan had called for the Fox to be operated by the Paramount Theatre board with a city subsidy.
Configuration of the theater — which includes its balconies — can be changed for a variety of different events. The stage will be raised to improve sight lines, and seating in the orchestra can be removed for cabaret shows. The lease of a bar and restaurant to be built along Telegraph Avenue is still under negotiation, Vanderpriem said.
There will be enough space at the Fox for the Oakland School for the Arts to expand to 500 students with classrooms on the second and third floor of the building that wraps around the theater. Two new extensions of the theater's "wings" along 18th and 19th streets will house music and dance studios, according to the plans.
The Oakland School for the Arts will be allowed to use the theater 10 times a year free of charge, and an additional 30 times a year if it reimburses Another Planet for out-of-pocket costs.
The school will prepay seven years' worth of rent, or $6.5 million, to help finance the construction, through a loan secured by both the redevelopment agency and the revenue generated by a billboard on the Bay Bridge Toll Plaza as part of an agreement with the Port of Oakland, CBS Outdoor and the school.
Although the school won't be able to move into its new home until the summer of 2008, the city has already approved the construction of 80 units of affordable housing on part of the land now occupied by the school's tents, which is scheduled to start in September 2007.
If construction does not start on time, millions of dollars in financing would be jeopardized, said James Coles, the senior project manager for Berkeley-based Resources for Community Development.
Vanderpriem said the city was working with the developer and school officials to craft an agreement, which would need the approval of the council. If one is not reached, the school may have to move some of its operations off-site temporarily, he added.
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