APOLLO THEATER by wuy61796

VIEWS: 4 PAGES: 18

									APOLLO THEATER
Lessons Learned
Historic American
Entertainment Venue

 • On the National Register of Historic Places

 • New York City Landmark – Exterior and Interior

 • 99-year Lease with ESDC (NYS) – all renovation
   work requires review by NY SHPO
Phased Renovation Project
• Timing Based on Funding Availability

 ▫ Phase I: exterior envelope, life safety, code
   compliance, deferred maintenance (2002-2006)

 ▫ Phase II: interior restoration
Tax Credit Closing Issue
• EDA and Other Government Subsidies
 ▫ Use restrictions recorded against the real estate
 ▫ Limitations on the use of grant funds
 ▫ Grantors may have approval rights over the
   transaction
 ▫ Educating parties unfamiliar with a tax credit
   structure can be time consuming
Tax Credit Closing Issues, cont.
• Prior use by the subtenant
 ▫ Prior to commencement of rehab, theater was
   closed for a season
 ▫ Theater re-opened with the newly rehabilitated
   property which was “owned” by new for-profit
   entities
• Tax-exempt occupancy of the property
 ▫ Had to structure around tax-exempt use property
   and the loss of credits
 ▫ Used 19-year master lease instead of traditional
   32+ year master lease
HTC/NMTC Structure Diagram

•
Basis
• Property transferred to 501(c)3 Apollo Theater
  Foundation, Inc. in 1992

• Transfer acknowledged settlement of $15.9mm
  of outstanding debt
Timing of Phases
• $63.4mm Project Plan

 ▫ Phase I: $22.5mm/Phase II: $40.9mm

 ▫ Depreciated Basis ($10.5mm) plus $22.5mm
   Phase I capital costs results in $33.0mm new basis

 ▫ Cost of Phase II anticipated to exceed new basis
Actual Phasing
• Had to add $5.9mm “FY’06 Project” to Phase I,
  increasing the new basis to $38.5mm

 ▫ Cost of “Phase II” would then have decreased to
   $35.0mm

 ▫ Phase II would no longer exceed new basis

 ▫ Had to increase scope, cost of Phase II

 ▫ At least $3.5mm of additional fundraising required
Phase II Application
• After receiving Part 3 for Phase I (& $6mm of tax
  credit funding from BofA), submitted Phase II
  application to NPS

• There was not a 60-month break between the
  two phases - application was denied, potentially
  leaving $6-8mm of additional credits unrealized
Amended Phase I
• Original deal documents amended to allow two
  additional fundings

 ▫ Work done in 2007,2008 resulted in $1.7mm

 ▫ Work anticipated to be completed in 2009 can result
   in up to an additional $1.9mm of credits to the project

 ▫ Additional credits allow remediation of deteriorated
   roof condition

								
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