The Rialto Theatre has struck a new lease agreement with the Rio Nuevo Board in which the theater will pay monthly rent and about $110,000 in back rent, ending a dispute that could have led to the theater's eviction.
Although the agreement is between the Rialto and Rio Nuevo, the Tucson City Council is set to approve the deal at its meeting today because the city was part of the original agreement with the Rialto, an old downtown movie theater on East Congress Street.
In late summer, Rio Nuevo gave the nonprofit theater foundation that runs the Rialto notice that it owed $260,000 for back rent and restoration, and that it had 60 days to remedy the default or be evicted.
The theater responded at the time by saying it might file for bankruptcy to avoid eviction. Both sides, however, decided to negotiate.
The agreement is a win for the Rio Nuevo District. The Rialto will begin paying $3,690 a month immediately for rent, and it must continue doing so until 2014.
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It also must put aside 3 percent of its gross revenues to pay for restoration. After 2014, the $3,690 lease payments end, said Michael Crawford, president of the board of the Rialto Theatre Foundation. After that, the Rialto will owe the district only the 3 percent of gross revenues.
Previously, the Rialto had used the theater-restoration costs as a credit against its rent. Rialto officials said former Rio Nuevo Director Greg Shelko had given that his verbal approval. Some of the items submitted as representing costs of theater restoration - such as a new sound system - were later rejected by the new Rio Nuevo Board because the improvements weren't permanent.
Under the agreement, the theater must make $110,000 in improvements by 2014 in order to pay off back rent and restoration costs that it owes the district.
The Rialto also must give ownership of its non-permanent equipment, such as sound and lighting systems, to the board. Rio Nuevo owns the theater, but the nonprofit foundation runs it.
The Rio Nuevo Board also will appoint two new members to the Rialto Theatre Foundation Board, increasing that board's size from seven members to nine.
The city originally made the agreements with the Rialto, but the Rio Nuevo Board took control of the Rialto after the Legislature stripped the city of its control of Rio Nuevo and installed a new board. The move was done amid outrage over the city's spending of $230 million for downtown redevelopment with little or nothing to show for it.
"We're happy it's over," said Crawford, the Rialto Foundation chief. "We want to put it behind us and move forward."
The previous agreement with the city wasn't written clearly, and the new agreement allows the Rialto to move forward and become an economic engine downtown, Crawford said.
Mark Irvin, the vice chairman of the Rio Nuevo Board, said the district had taken a non-performing asset and fixed the problems. No one in the city had addressed the matter in the past because it was a "political hot potato," he said.
"The Rialto was in default and had been in default for 10 years," Irvin said.
Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com
