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published on April 22, 2022 - 11:52 AM
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After nearly three hours of public comment and two years of controversy, the City of Fresno opted to purchase the Tower Theatre, citing a need to purchase the historic building in order to preserve and maintain access to it.

And while the purchase is largely viewed as a way to settle a vitriolic dispute between Adventure Church and the Tower neighborhood, the action will most likely mark only the next step in a long series of litigation.

The City Council approved a $6.5 million purchased agreement Thursday, with Councilmembers Miguel Arias, Esmeralda Soria, Taylor Maxwell and Nelson Esparaza in support and Luis Chavez, Garry Bredefeld and Mike Karbassi opposed. The deal includes not only the 83-year-old theater but also the buildings that house Sequoia Brewing Co. and Me-n-Ed’s along with 108 parking spaces.

Under the deal, Sequoia Brewing Co. owners would be allowed to purchase their property for $950,000, down from $1.2 million after it was given credits for repairs as well as reimbursement for legal fees in the restaurant’s claim its right of first refusal to purchase its portion was violated by the theater owner.

No down payment would be required and the City of Fresno would lend the brewery the money to purchase the property at a rate of 3.5% interest.

The contract also opens up the possibility to sell some of the other restaurant spaces and buildings associated with the property.

The deal commits the City to operating and maintaining the historic building.

Officials also decided to take the burden of any future litigation by indemnifying both the owners of Sequoia Brewing Co. and the theater’s owners.

That legal liability could amount to more than $15 million, GV Wire reported, citing an interview with attorney for Adventure Church David Emerzian of McCormick Barstow.

Councilmember Mike Karbassi had a series of questions to Laurence Abbate, owner of the Tower Theatre, who was not present in the council chambers for the vote. Karbassi said if the City was going to indemnify the owner against any further lawsuits, he had questions about Abbate’s dealings with the owners of Sequoia Brewing Co. as well as Adventure Church. Courts upheld J&A Mash & Barrel, LLC’s claim that they had right-to-first refusal on purchasing the property. J&A is the operating company behind Sequoia Brewing Co.

Abbate will stay on as operator for Tower Theatre, earning a salary of $8,000 a month, reported GVWire.

Operators of Adventure Church claim that Abbate did not inform them of Sequoia Brewing’s rights. Karbassi went so far as to try to issue a subpoena to bring Abbate to the dais to answer questions — a move City Attorney Douglas Sloan said he had not seen in 16 years but that was within the power of the Council. The motion to subpoena Abbate failed three-to-three with an abstention from Councilmember Esmeralda Soria.

Sloan said Abbate was present at City Hall, but didn’t want to answer questions in public.

Reasons for the urgency of the vote could not be discussed and were limited to closed session discussion.

Karbassi also had a series of questions about the deal that took place during closed session.

Pressing City Attorney Doug Sloan, Karbassi had questions first about the indemnity clause. When asked about how much legal liability the City could face, Sloan said answering that would fall under attorney-client privilege.

The City would also cover $50,000 in legal fees J&A paid in pursuing their claim of right-to-first refusal. It came out in the meeting that J&A would use that money toward Tower District preservation.

Karbassi also proposed a counter deal that did not include an indemnification clause. That motion failed four-to-three. That would have undone the terms of the mediation.

“When we engage in mediation in good faith, we should honor that agreement even if we don’t agree with every component of it,” Arias said.

Karbassi also pressed on the appraisal of the property. While many of the details were done behind closed session, Karbassi said the public should know what it’s paying for given that this was the first time the purchase was available to the public.

Estimations on the price to maintain the property as well as cash flow were proprietary and could not be discussed in open session, said Sloan.

“How can I make a decision if I don’t know how much it’s going to cost,” Karbassi said.

City Attorney Sloan said there was not a real estate expert present during mediation representing the City. Questions arose about the value of the property and Sloan said that the sellers appraised the property at $6.5 million — the price paid by the City.

Adventure Church’s original offer that went to escrow was for $4.82 million.

It took nearly three hours of public comment for Fresno City Council to be able to dismiss for lunch, reducing public comment time to 90 seconds per speaker from the usual three minutes. Nearly all comments were about the purchase, with opponents of the purchase balanced against proponents of the deal.

There was a lot of concern that funding would come from Measure P — a measure to build and maintain parks throughout the City of Fresno.

Soria said that Measure P money was set aside for parks and art, which includes properties such as the Tower Theatre.

 


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