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LETTER TO THE EDITOR: Amberg offers thoughts on Cerrito Theater

Below is a document summarizing my findings regarding the
Redevelopment Agency's involvement in the Cerrito theater project. Please
be advised that I received the information referred to as a member of the
Financial Advisory Board of which I am the chair. However, the
information is available to any citizen wishing to check on the accuracy
of what I have said.

At our last meeting of the FAB, I tried to start a discussion of the
findings but was denied the liberty to do so because the project was a
fait accompli. Be advised that, although our board is supposed to act in
an advisory capacity on expenditures such as this ($520,000), we were
never asked to do so.

The FAB was asked to supply one of our members to be a part of the group
that will examine any and all responses to the Request for Proposal. We
did so, but it seems to me that this is in essence a request to examine
the proposed project as well as the proposals.

The Cerrito Theater

What follows are thoughts that I have regarding the theater project after reading the documents that were provided to the FAB about the things that led to the project adoption.

The purchase was recommended because:

A. ...concurs with Redevelopment project criteria
The California law establishing redevelopment calls for it to remove blight. Not only does this property not seem to me to be blighted, but the property owner was going to proceed to alter it to improve its economic viability.

The RDA Implementation Plan requires that the Agency’s total investment be established. Only estimates are shown, not some actual proposed construction costs.

The Plan also calls for knowing the cost of “predevelopment activity” and who will pay. I assume that refers to the costs of staff time and pay to consultants. I see no data regarding these costs.

The Plan requires that all NET revenues be determined. Since the ultimate use of the theater and who is to operate it and for what have not been addressed, it is not surprising that only guesstimates are available. The “conservative case” reported shows a loss.

The Plan calls for “community support”. The open house drew only an estimated 2500 persons, of which just 2/3 were from El Cerrito. That means that only some 6.6% of our population was present. A poorly conducted survey got only about 1000 responses of which about 2/3 were from El Cerritans. That means that less than 3% of our population felt it important to respond to the survey. It does not seem to me that this meets the “community support” criterion. In addition, there was no reported attempt by staff to get a broader view from the El Cerrito citizens who have not been those pushing for this project.

B. Financial Feasibility

The price to the property owner was settled at $520,000. Records show that he paid $1.1 million for the entire property with the theater less than half the footage, and not a corner location like the former Kiefer store. The lease cost of $10,000 per month provided him an annualized rate of return of 10.9%. It was surely a good deal for him to get over half his money back in such short order.

Only the purchase of the old building is addressed. How, then, can its financial feasibility be ascertained?

It is claimed that the Agency gains an asset which could be sold in the future. For what purpose? For what amount? If it has been empty since 1950 (except for storage) where is the evidence that there is a market demand for it? (See above as to the lack of certainty for NET revenues.)

C. Ability to raise funds

Without defining any actual source of outside funds, there is a description of “Fundraising Ability”. The aforementioned survey asked that of the respondents. The total response adds up to about $67,000 - unlikely enough to defray even the predevelopment costs.

D. Preserves historic facility

Webster’s Dictionary defines “historic” as “historical; especially, famous in history”. How can that refer to a failed theater begun in 1937 and closed since 1950? “Historic” could well have described the Castro adobe, but that did not prevent its razing for a dog track replacement. No history of El Cerrito that I have read refers to the theater.

E. Community benefits

These are not defined.

F. Financial Implications

This sheet states that “Agency has the resources to complete project”. What is meant by “complete”? If it means just acquiring the property as-is, that’s one thing. If it means to include the restoration, that’s quite another matter.

This sheet states that if the Agency “does nothing, and does not take on projects, tax increment above debt level will begin going to pass-through agencies”.

While it is true that adequate debt is required for the Agency to receive tax increment, the current project does not incur more Agency debt. With regard to the current project, whether the Agency does anything or nothing the pass-throughs will be unaffected because debt will not change. Pass-throughs became required by AB 1290 and the Agency already complies with this to a substantial degree, estimated to be some $400,00 a few years hence.


Staff’s presentation looks more like a sales pitch than an attempt to inform with sound data so as to allow the Agency to make a good decision. What follows is an excerpt from the CotW report on the Agency that has to do with staff actions:

“The RDA needs to set guidelines as to what the role of staff is. Is staff there to provide analysis, advocate certain actions and/or is it there to recommend policy? Frequently, staff (as recently as the Honda proposal) recommends a particular action. If RDA feels this is appropriate, then its staff needs to realize that they will be held accountable if things go awry. Also it seems that staff's analysis is, at least occasionally, quite inadequate.”

George Amberg

Run dates: 2002-08-01 - 2002-08-15

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