City Begins Writing Chicago Theater Sale Script

While most requests for proposals are published in one of the city's daily newspapers, ads will show up in Variety magazine, community development commission members were told Tuesday. However, some members were not happy to hear the request for proposals will not include a minimum bid price, as well as learning they should not expect to recoup the $17 million--$21 million with interest—owed to the city by Chicago Theater Restoration Associates.

"There ought to be a price," says commission member Clyde Martin, calling the property a "white elephant." "The taxpayers of this city write this off every year."

After paying $11.5 million for the property in 1984, Chicago Theater Restoration Associates shut it down a year later. After spending $25 million in renovations, the theater reopened with performances by Frank Sinatra.

However, the city now expects to reacquire the property next July through foreclosure, says Julie S. Burros, director of cultural planning for the city's department of cultural affairs. Determining the property's value is difficult, she adds, because of the dearth of comparable properties.

The request for proposals requires would-be owners to include an estimate of income from operations of the theater, Burros says, which would provide both the buyer and city a yardstick to determine value.

"Not having a minimum bid doesn't mean we won't be looking to get paid for the property," says department of planning and development commissioner Alicia Berg. "It's a complicated project. The bid should be based on what they think they'll make on the property."

One of the bidders is expected to be the Chicago Association for the Performing Arts, which has been operating the theater as a lessee under a deal with Chicago Theater Restoration Associates. Although that lease expires next June, it does contain a four-year option, Burros says, which provides the city with a fallback position.

"It's operating. There are shows there. It does not need the amount of capital investment the other dark theaters needed," Burros says. I do not believe it's a white elephant. It's an operating theater."

Assistant commissioner Ty Tabing says the department hopes tax increment financing will not be required by the theater's new owner. However, it may have helped the current owners, Berg says, who instead relied on a loan. "It was difficult to saddle the project with the amount of debt and have it be feasible," she says.