Report: Boyd rehab not viable without subsidies

An analysis by an outside consultant hired by the Philadelphia Historical Commission to assess the viability of the historic and deteriorating Boyd Theater on Chestnut Street concludes that redevelopment "is not economically feasible without significant public subsidies."

The conclusion - that only a large infusion of public cash can save the Boyd - could be critical to forthcoming decisions from historical commission panels. Hearings on the fate of the theater, built in 1928 and placed on the Philadelphia Register of Historic Places in 2008, are scheduled for Tuesday.

The current developers of the property, Live Nation Worldwide and iPic-Gold Class Entertainment, have asked the commission to approve partial external demolition and a virtually complete demolition of the richly ornate art deco interior. They intend to retain the less-robust Chestnut Street facade for access to eight intimate dining and movie rooms within.

No other plan makes economic sense, according to the developers.

The commission hearings come at a crucial point in the flickering life of the city's last remaining movie palace.

Developers are arguing that demolition should be allowed under the "financial hardship" clause of the city's preservation ordinance. That clause allows demolition of historically protected properties if owners can show "a building, structure, site or object cannot be used for any purpose for which it is or may be reasonably adapted."

In other words, if the current owners can demonstrate that the theater cannot be profitably developed, the historical commission may allow demolition in whole or in part.

Late last year, the commission, seeking outside information, hired Real Estate Strategies of Paoli, whose clients include many of the region's largest developers and corporations, as well as city agencies and nonprofits, to conduct its own analysis of the Boyd's economic viability.

Real Estate Strategies examined reuse of the Boyd as a venue for Broadway-style stage productions, a multipurpose live performance venue, a single-house movie theater, a retail space, and a combo restaurant and single-screen movie house.

None measured up, the report summary concludes, with redevelopment and operating costs largely swamping potential income. Neither tax credits nor reduced construction funding would change the picture, the consultant determined.

Construction and development costs would run from about $40 million to $50 million in Real Estate Strategies' analysis. Even re-use with the greatest financial potential - as a venue for Broadway-style productions - ends up in the red.

"Income generated by any of the potential new uses of the Boyd," said Real Estate Strategies, "is not sufficient to cover the costs associated with the rehabilitation of the property and the ongoing expenses associated with maintenance and operations."

One past developer, 1918 Chestnut L.P., which worked on a Boyd deal in 2010, told Real Estate Strategies that it had a viable reuse plan to develop the Boyd "into a theater, hotel, commercial space, condominiums or some combination of these uses." But no details of its plan could be determined, according to Real Estate Strategies.

"Our interviews and related research of renovations of historic movie theaters has indicated that virtually all are owned by nonprofit organizations and are financed with substantial government and philanthropic subsidies," Real Estate Strategies stated. "Subsidies have been especially important when the structures required the level of rehabilitation essential for reuse of the Boyd."

Source: Philly.com