Menlo Park real estate broker Tom Hilligoss said last week he's no longer pursing the possibility of buying the theater with private funds, after its owner, Howard Crittenden, told him that "he is not going to continue our negotiation in favor of moving forward with Andy Duncan."
That decision has revived Mr. Duncan's proposal to turn the 60-year-old movie house into the new home of the Menlo Park Academy of Dance after the city forks over $2.2 million to buy it.
Under Mr. Duncan's proposal, which has the preliminary support of three council members, the city would lease the building to Mr. Duncan's development entity for 55 years. He would then restore the building, including the exterior, the neon signs and the lobby.
Mr. Duncan would pay the city $800,000 upfront, and the city would have several opportunities, beginning in the 10th year, to buy his development entity out of the lease on several occasions over the remaining 45-year period, according to the plan.
But the building would not be a public facility under the arrangement — a component of the plan that a growing number of residents have severely criticized, arguing taxpayer dollars should not go toward a private business.
Since the council voted 3-2 on Oct. 2 to negotiate an agreement with Mr. Duncan, some residents have threatened starting a recall effort against Kelly Fergusson, Richard Cline and Heyward Robinson — the three council members who voted to move forward with Mr. Duncan's proposal.
Mr. Hilligoss' interest in buying the theater was made public through an Oct. 5 e-mail to the council from Mr. Duncan, who asked the council to put his project on hold for 30 days to allow Mr. Crittenden and Mr. Hilligoss to forge a new plan that did not require public funds.
But Mr. Hilligoss informed the council on Oct. 18 that he was no longer part of the picture.
Mr. Crittenden told the Almanac that pushing ahead with Mr. Duncan's proposal gives him the chance to sell the theater sooner.
"Mr. Duncan is so far ahead of [where] Mr. Hilligoss is, as far as the public process is concerned, that it simply doesn't make any sense to stop Mr. Duncan from moving forward," Mr. Crittenden said. "[Mr. Duncan] has already come this far toward forming a plan that I'm optimistic will succeed."
After hearing that Mr. Hilligoss' plan was off the table, Mr. Duncan said he "certainly intends to move forward" with his own plans.
Hashing out a deal
City Attorney Bill McClure said city staff, Mr. Duncan, and a subcommittee of councilmen Cline and Robinson will meet several times over the next few weeks to discuss the terms of a potential agreement between the city and Mr. Duncan's development entity.
He said city staff could present a tentative deal to the council as soon as the last week of November.
Mr. Cline said late last week that the issue of public benefit will be vital to the negotiations, and he and other council members have argued that a big benefit under the Duncan proposal is that the city could turn the building into a community performance venue or back into a theater.
He said he would like to see the city buy Mr. Duncan out of the lease "early on" in the 55-year agreement, and convert the building back into a movie theater.
But critics say promises of making the theater a public resource are theoretical, as the potential costs are unknown, and the decision would be up to a future council.
Councilman John Boyle, who voted with Andy Cohen against the Duncan proposal, said the council should look for other options to restore the theater.
"If the city's going to get involved in this, shouldn't we kind of shop this deal a little bit?" he said. "If we're going to buy the property from Howard Crittenden, maybe we should talk directly to him. If we're going to enter into a ground lease with Mr. Duncan, maybe we should conduct a [request for proposals] to see what other deal we could get. ... We just need to flush out our other options."