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City may consider buying State Theater building

Sharon Hayes • Sep 18, 2009 at 12:00 AM

KINGSPORT - After working to restore the old State Theater on Broad Street for several years, owner and developer Doug Beatty now says the property will best benefit under a nonprofit umbrella — and he’s willing to sell the theater to the city to accomplish that goal.

The Kingsport Economic Development Board recently voted to spend nearly $10,000 to fund a study to determine the economic impact of a restored theater in downtown Kingsport. The Cinema Preservation Group is now conducting the work, and including specific data to Kingsport, such as demographics, retail sales, and potential theater users.

“We have a pile of studies from Washington state, Florida, Atlanta — there’s plenty to back up the economic impact of a restored historic theater. What they’re looking for now is a study that is specific to Kingsport, and whether renovating this theater will have the desired effect in downtown or not,” Beatty said.

KEDB Chairman Bob Feathers said he contacted Beatty about the possibility of the city purchasing or investing in the theater after learning that Beatty was considering nonprofit status for the facility.

“It’s obvious the developer had changed course and is looking at this as a nonprofit entity. I wanted the city and KEDB to look at this as an opportunity for economic development — to really have an anchor downtown that works in conjunction with all the critical assets that Doug Beatty and others have created downtown,” Feathers said.

Beatty came to Kingsport from Asheville, where he operated that town’s successful Barley’s Taproom and created Asheville’s “Brewgrass” festival. He acquired the State Theater property in 2005 and began renovations in 2006.

Since then, Beatty has opened Bone Fire, formerly called 12 Bones restaurant, restored the old Kingsport Grocery Co. and opened a restaurant there, and opened the Bus Pit, a renovated music venue. All three of those ventures are located on Main Street.

Beatty said that taking on so many projects was a big load on his shoulders — and then the bottom dropped out of the economy around this time last year.

“Right now the State Theater has kind of taken a back seat because I’ve got these two restaurants that are already open and needed attention to make sure they made it through that long 12 months,” Beatty said.

He said the theater is about 70 percent complete — the demolition, electrical and plumbing work is finished. The theater is ready for sheet rock and a new heating and cooling system.

“So it’s churning right along, but we’ve just been through a super, super bloody economy for the past 12 months,” Beatty said.

He said he began considering what nonprofit status could mean for the theater after meeting with a businessman who specializes in restoring vintage theater equipment. Beatty was particularly interested in the technology aspect — and how to combine the old movie projectors of yesteryear with the new digital advancements. The estimated cost “is astronomical,” Beatty said.

“The longer we talked to this guy, he kept saying ‘Well, if you were a nonprofit, we could get this, or we could get that.’ Come to find out, that’s typically how historic theaters are done and held — by cities or art councils or foundations. And they’re able to raise funds as a nonprofit, solicit grants from federal, state and local authorities — things that a for-profit can’t do,” Beatty said.

To date, Beatty has spent about $450,000 on the theater renovations. In 2006, he estimated to spend a total of $500,000 on the project. Now, he’s upped that figure to about $900,000.

Redevelopment projects are eligible for tax increment financing in the downtown area. Beatty hasn’t applied for that and doesn’t feel TIF is a good fit for the theater. But he has applied and been approved for a $10,000 facade grant from the city, which he’ll get once the front of the building is finished.

However, that grant doesn’t come close to covering the facade costs.

“The marquee was $67,000 alone,” Beatty said. The new wooden marquee pieces are being built from reclaimed mahogany. Beatty has tried to follow the theater’s original designs in the restoration, and has worked to use top-quality materials.

“We’ve spent a ton of money,” he said.

He said rumors around town suggest he’s broke or in bankruptcy. He said those rumors are untrue.

“I’m current to the day. I can sustain (the theater) in mothballs just like that for awhile. But that doesn’t do anybody any good. I really want to get it done,” Beatty said.

If the city decides to purchase the property, Beatty says he’s offered to continue serving as the general contractor and finish the job for $1.

“I’m not in it to make one nickel. My interests, especially with the restaurants that we have downtown and the music venue that we have downtown, is to have another draw for downtown. And a 575-seat venue operating on a seven-day schedule is exactly the kind of thing we need,” Beatty said.

Feathers said the KEDB is expected to receive the completed economic development analysis on the theater in 30 to 45 days. That study will determine if the city chooses to move forward with an investment in the facility.

Feathers pointed out that the Model City Coalition’s master plan, which was crafted in the mid 1990s by local leaders, identified the State Theater as a place that could serve as a community theater or performing arts center. And several organizations at the time were identified as potential users of the facility, such as the theater guild, symphony and chorus.

“I just think there are multiple groups that would have a natural fit there if it were city owned or operating as a nonprofit to allow them subsidized use of the facility,” Feathers said.

He said the theater could also be used for catered dinner shows. And the facility could feature independent films, classic or children’s films, dance productions and live music entertainment.

Beatty said his vision is to see a vibrant theater drawing hundreds of people to downtown every day.

“I want to see it open seven days a week as a venue that attracts people downtown, putting 575 butts in the seats every time it’s open. That’s what I want in a nutshell,” he said.

If the city opts to purchase the facility, Beatty said he hopes to recoup his investment — $450,000 to date.

“I need to,” he said. “I want to at least get what I’ve got in it so I can satisfy the bank note.”

The theater is now appraised at $1.6 million by private professional appraisers, and at $1 million for county tax purposes.

Beatty said work is still progressing on the theater. But he doesn’t want to invest in any more big-ticket items such as $30,000 in sheet rock or new theater seats, until he’s in a better position or the city moves forward with an acquisition.

“I’ve got two restaurants that I really have to tend to and make sure that they’re able to pay their bills and stay open. That’s really distracting me financially and time-wise from the theater,” Beatty said.

“I really want to get it done, but I’m at a point right now, because the economy has taken so long to come back, that I’m not sure how much more I can plow ahead without putting myself at risk. I want to make sure that I’m acting responsibly and cautiously as it relates to all the development we’re doing downtown,” he said.

Feathers said he believes some type of investment can occur to complete the theater project — regardless of what the economic development study shows.

“I sincerely doubt it will be dropped altogether. But you never know,” Feathers said. “Economies could drive something different from our perspective and what we’re trying to do from an economic development perspective.

“But from a priority standpoint, this is a very important component to what we see as a good fit for the community.”

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