With little more than a week remaining before the auction of the historic Senator Theatre, Baltimore officials have agreed to purchase the mortgage on the property and either sell or lease it in the future.
The city would use $600,000 in cash already guaranteeing a loan to the theater toward approximately $950,000 for the mortgage, held by 1st Mariner Bank, and legal fees. In addition, Mayor Sheila Dixon will seek Board of Estimates approval within the next month to make up the difference with economic development bond funds approved for capital projects, said Deputy Mayor Andrew Frank.
"By purchasing the note, we can increase the odds that the theater will end up in the hands of someone who wants to run it as a theater or performing arts venue," he said.
A strategy group of city and state leaders had recommended earlier this month that the city foreclose on the property.
"It puts the city in the position of guaranteeing it stays some sort of entertainment venue," said Councilman Bill Henry, who represents the area surrounding the North Baltimore theater. He said he was "very, very happy" that the administration saw the value of taking control of the theater and is choosing to invest in this commercial corridor, which anchors Belvedere Square.
Under the terms of the agreement, the city would release proprietor Tom Kiefaber's home in Sparks, which is currently held as collateral. The city would also auction off another collateral property on Orkney Road, to the east of the theater, to offset the cost of the purchase.
In exchange, the Senator Limited Partnership would lift the stay on auctioning the Senator property in case it files for bankruptcy.
The city would then foreclose on the property and auction the theater. It would have to sell to anyone who bid the amount of the note, Frank said. "We can't say for sure no one will bid up to the amount of the mortgage," he said.
However, if no one does, the city would take control of the property and would develop a request for proposals for a new operator.
"We know there's a substantial amount of interest out there," Frank said. "With control of the property, we're confident we can find an end user who will add value down the road."
Noting the city's investments in Belvedere Square and the theater itself, Dixon stressed Saturday that the move was meant to safeguard money the city has spent.
"We're not writing a check," Dixon said. "We'll lose $600,000 if we don't do something. ... It's taking what we have, not losing that, and refocusing the mortgage."
Kiefaber supports the move, said spokesman Sean Brescia, who has been working with the owner and others to save the theater.
"We think that the best outcome is likely to come out of this process that the city can control and manage, versus the unknown of a bank auction," Brescia said.
He said he hopes the state Department of Housing and Community Development will also work with the Senator owner. Kiefaber owes the department about $680,000 for past loans, and it holds liens on his home and other properties.
"He is appreciative for the city's willingness to work with him on this and hopes the state will, too," Brescia said.
It's unclear how long the purchase and foreclosure process could take, Frank said.
"We would move as quickly as possible because we don't want the Senator to remain dark for longer than it has to," he said.
No longer screening first-run films, the theater is showing classic movies and selling memorabilia to defray expenses and pay volunteers staffing the site.
It's not clear which city agency would issue the request for proposals, but neighbors will have a chance to participate in the planning, Henry said.