The Anaheim City Council Tuesday will consider a proposal to give an obscure nonprofit run by a wealthy Anaheim Hills couple exclusive rights to lease, and potentially purchase, the land under the City National Grove and build a new performing arts center in its place.
Under the agreement, the Anaheim Performing Arts Center Foundation, which is run by Howard and Linda Knohl, would get first crack at negotiations for the “acquisition and development” of the property to realize their vision of a performing arts space for concerts, plays and theater productions.
Mayor Tom Tait is already crying foul -- questioning both the foundation’s credentials and the council majority’s motivations to push through proposals before they lose power upon the swearing in of a new council on Dec. 13.
“This is a binding agreement [on] one of our largest assets…without a [request for proposals] and without any disclosure requirements on who we’re selling it to and without any public input,” said Tait. “What’s the rush?”
All three members of the current council majority – Jordan Brandman, Kris Murray, and Lucille Kring – have received campaign donations from the Knohls. Brandman, who yesterday conceded to Jose Moreno in the District 3 race, has been the Knohls’ biggest beneficiary. In addition to donating $3,400 to Brandman’s campaigns since 2011, the Knohls in September hosted a campaign fundraiser for him at their Anaheim Hills estate.
They also donated $1,200 toward Kring’s reelection campaign this year and $340 to her mayoral campaign in 2014. They gave $800 to Murray’s 2014 reelection campaign.
Kring said that, while she still has reservations with some of the details of the agreement and does not know how she will vote, the campaign contributions from the Knohls did not influence her support for the project. She said she would not support the sale of the Grove property itself.
Kring added that the project has been in the works for years, and pointed to a council resolution last year that supported a performing arts center at the Grove. She also objected to Tait’s belief that the council should defer major decisions to the next city council.
“I know the mayor wants to kick everything down the road, but this council is in place to make decisions now,” said Kring.
There is good reason for Kring’s sentiments. The election victories by Tait-backed candidates Moreno and Denise Barnes in District 1 mean that Kring (who was reelected this month) and Murray will, beginning Dec. 13, go from being part of a three-member majority on a five-member council, to being in the minority on a seven-member council.
Murray, who proposed a resolution last year to support the project, praised the foundation’s proposal in an emailed statement.
“Under the agreement being considered by the council, there is no financial risk to the city. In fact, there are fundraising milestones the organization must meet to continue the process,” Murray said. "I’m proud to support this grass-roots movement to bring a privately financed, world-class performing arts center to Anaheim to benefit our residents and enrich our community.”
However, if council members approve this agreement, they will be granting the right of first refusal to develop a major city asset to an organization with falling revenues and no concrete plans for developing the property.
The closest thing to a plan the city has received from the foundation is Nov. 18 letter from its attorney that outlines the Knohls’ vision for a facility capable of accommodating both local performers and “the biggest and best Broadway productions and operas.”
The foundation ended 2015 with $85,209 in net assets, $25,612 less than what it started the year with, according to tax forms filed with the state Attorney General’s office.
In both 2014 and 2015, the foundation spent more than it raised hosting events, including a “Great Gatsby” themed gala at the Knohls' estate that grossed $46,821 but cost $71,753 to put on.
In its letter to city officials, the foundation argued that a lease agreement is necessary in order to show potential donors the viability of the project. They are also banking on finding a major sponsor to purchase the naming rights to the performing arts center.
City spokesman Mike Lyster said so far the city has only discussed a long-term ground lease and that the agreement is non-binding, meaning the foundation’s exclusive negotiation rights only hold if they meet major fundraising milestones before the agreement expires in August 2020.
The organization would need to raise $20 million by March 2018 and $50 million the following year. By June 30, 2020, they would be required to have raised 100 percent of the estimated development costs.
While the nonprofit was not required to provide any financial statements, project plans or development proposals to receive the exclusive agreement, Lyster said it will be required to submit, within 360 days of the agreement, “a proposed development plan, including a site plan, a scope of work and estimated development costs, including construction.”
If the foundation wants to purchase the property down the road, that would need to be approved in a separate council action, Lyster said.
Tait questioned why the city has not required more documentation from the foundation up front, and said any development of a major city property should be put out to bid.
“There was no process to why they were selected over other groups,” Tait said. “I’d like to see their finances made public (…) and how much they’ve raised in the last ten years.”
Lyster said the proposal is not being put out to bid because it was the foundation that approached the city.
“The city isn’t looking to build a performing arts center but instead was approached by APACF, which would be given the opportunity to raise money and be considered for a lease should they be successful,” Lyster said.
Although the contract on the table Tuesday does not make any promise of city financial assistance to the foundation, it leaves open a number of possibilities, including eventual conveyance of the property to the foundation.
The city would retain the ability to negotiate with the current lessee of the Grove, Nederlander Concerts, which currently has a lease through December 2020. According to the contract, the city would allow Nederlander to continue to operate the Grove “until the Grove theater closes for demolition or construction.”
Tait said that Angels Baseball, which has watched new development around their stadium closely, “felt blindsided” by Tuesday’s agreement.
Angels officials declined to comment specifically on plans for the Grove property, which sits on the periphery of the stadium’s parking lot.
"It is something we are watching closely and at this point feel it is premature to comment further,” said Angels spokeswoman Marie Garvey.
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