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The prospective new owners of the Beacon Cinema talk with the subcommittee at length about their plans for the cinema, work they've done elsewhere, and their take on the movie industry as a whole. In the end, the councilors liked what Phoenix brings to the table.

Pittsfield Subcommittee Supports Mayor's Beacon Plan

By Andy McKeeveriBerkshires Staff
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Michael MacDonald recapped the history of the project and the terms of the deal.
PITTSFIELD, Mass. — After meeting for 3 1/2 hours with the prospective buyers of the Beacon Cinema, at least five city councilors are on board with the mayor's proposal to forgive $1 million in loans immediately and $1.5 million over 10 years to help facilitate a sale. 
 
Pheonix Theatres is offering to purchase the Kinnell-Kresge building on North Street and the assets of the Beacon Cinema. The group is planning to continue running a cinema out of the historic building and hopes to fill currently empty office space. 
 
According to Pheonix owner Cory Jacobson, the company will purchase the building for $500,000 and the assets for $144,000. The company will then lease the seats that owner Richard Stanley recently installed, though the terms of that lease haven't been finalized.
 
The deal comes as the banks are foreclosing on the property.
 
Director of Community Development Deanna Ruffer said the a consortium of banks are owed $3.7 million on the property and in September initiated the foreclosure process. However, an agreement was reached in which the banks agreed to write off nearly all the debt — settling on a payment of $750,000 — rather than foreclosing.
 
Pheonix has agreed to pay $500,000 of that, with Stanley remaining responsible for the remaining $250,000. Pheonix is then paying Stanley $144,000 for the assets of the Beacon — leaving Stanley owing $106,000 to the banks when the deal is complete.
 
The city also had subordinate loans on the property from the complicated financial structure that brought about the $22.1 million rehabilitation of the building 10 years ago. The loans consisted of three allocations from the Economic Development Fund — a pool of money the city received in the settlement with General Electric to spur economic development — a $1 million state grant, and a $50,000 allocation from the federal Community Development Block Grant.
 
Those pieces of funding were in place as loans at the time for one particular reason: to maximize the number of federal New Market Tax Credits to be sold to investors to bring the 2008 project to fruition. Those credits expired in 2016.
 
The mayor is now looking to immediately forgive the $1,050,000 from the state and federal grants and then forgive the remaining $1.5 million from the Economic Development Fund at a rate of 10 percent per year over the next decade as long as a cinema remains open in that building. 
 
"The Beacon is not a lost cause, that's why the Phoenix Theatre group is here to buy the Beacon," Tyer said. "They have decided that Pittsfield is the next right place for their business investment and I say let's welcome them and let's do it quickly."
 
The redevelopment of the Kinnell-Kresge building dates back to Downtown Pittsfield Inc. specifically citing the need for a downtown movie theater in a 1997 master plan. The cinema's lengthy and convoluted development can be found here. 
 
It started to come to fruition in 2002 but it took seven years to get the funding in place. According to Stanley's attorney Michael MacDonald, the theater has not been making a profit and Stanley is claiming to have paid more than $300,000 in deficits over the years. In total, Stanley will leave the picture after losing about $1.2 million, with MacDonald adding that Stanley also never received the expected management fees.
 
MacDonald, who was involved with Downtown Pittsfield since the inception, said it was known the building was never going to be worth the $22.1 million put into and something was going to have to be done about the loans.
 
But, it ended up being worse than expected. When the plans for the project were crafted there was a high demand for office space but with the global recession and the departure of KB Toys, he said, that demand turned into a lull. He said not all of the offices have been filled and those that are have been so at a lower rate than envisioned.
 
"We now have years of operational experience of what this project can support. This is an effort to right-size the debt so the project goes forward in a financially viable way," MacDonald said.
 
City officials and MacDonald made the case that the Beacon Cinema is more than just a place to watch movies. The restoration of the historic building was eyed to be a catalyst to drive more business and people downtown. It was a major step in filling what had become a desolate downtown by the 1990s. 
 
"The benefits of the Beacon on North Street go beyond just their doors," Tyer said.
 
While business hasn't been good there, especially loaded with a high amount of debt, MacDonald said the Beacon did serve as that keystone in bringing the downtown back from the dead. 
 
"From a community development standpoint, this project was everything we could have asked," he said.
 
MacDonald emphasized that the money packaged as loans never came from city taxpayers, but instead General Electric and state and federal officials. Ruffer said all other times the city has used those funds for a project there had always been a forgivable provision, and some being done simply as grants. She said the Economic Development Funds were used for projects such as the Colonial Theatre, Ice River Springs, LTI Smartglass, Hancock Shaker Village and more. But the Beacon funds were done differently at the time to comply with the regulations surrounding New Market Tax Credits.
 
Ruffer also reflected on the impact the redevelopment of the building has had on the downtown, saying it created new jobs, provided annual real estate payments, aided the increase in property values up and down North Street, spurred the redevelopment of buildings into market-rate housing units, and brought 120,000 people downtown last year.
 
"We've seen the vibrancy that brings with it and the diversity of businesses and foot traffic," Ruffer said.
 
The city doesn't want to see the movie theater go dark and the downtown stuck with another empty building. The restructuring of the city's debt goes hand in hand with the banks and the Downtown Pittsfield Cultural Association debts on the project — and just about everybody who was involved with it is taking some type of a loss. Ruffer, too, emphasized that "no city taxpayer dollars have ever been used."
 
"All of our debt would be wiped out and we would have no say on what happens to this property and this cinema," Ruffer said of what happens if there is a foreclosure.
 
MacDonald said the debt on the property has been costing Stanley $10,000 a month since 2016, and even more before that.
 
The City Council's Community and Economic Development Committee agreed with a positive recommendation that the debt be forgiven after liking what they heard from Jacobson and Pheonix Theatre's Chief Financial Officer Braden Alan.
 
The pair had been brought in by Berkshire Bank just a few years ago to do an analysis of the Beacon Cinema. Jacobson said his company produced a nearly 30-page report of recommendations to improve the profit margin. But, he said Stanley hadn't implemented all of it. 
 
Jacobson said Pheonix recommended the new seating and lowering the price, two of the major recommendations Stanley had instituted. But there were things like hours, incentivizing managers, number of staff members, and where to place the concessions that weren't followed. Pheonix said the Beacon does have a good draw but needs less debt and a bit more in the box office to be truly successful. 
 
Alan suggested with changes in management the theater could up its draw by some 100,000 people. But, the pair said the margin wouldn't be easy. They said until the new seats are paid off, Pheonix will be running with a slim margin. 
 
"No one is going to become a millionaire running the Beacon. But it is going to be a nice asset to add to our business," Jacobson said.
 
Jacobson said literally the first thing he'd do is make sure every light is on and everything is clean. He said he'll hire about double the amount of staff, open at 9 every morning and close late at night, and add places for concessions. He boasted of a track record of out-competing the big name movie theaters and operating successfully in cities similar to Pittsfield.
 
"You can't sell popcorn with the doors closed," Jacobson said.
 
Particularly, he said his company is good at market analysis — seeing what people want to see and when — and making those showtime adjustments accordingly. He cited examples of making changes "on a dime" to adjust to the market because the company is nimble.
 
The plan is to model the Beacon's financials only on the income from what they think they can get with the cinema and use office space revenue to catch up on deferred maintenance. They have already made contact with local repair companies for work needed and said they'll be reaching out to find office tenants if and when they take over.
 
The subcommittee was on board and voiced support for Jacobson and his team. Ward 1 Councilor Helen Moon said since a change in management is going to be seen, she'd prefer such an operator as Phoenix than an absentee landlord. 
 
The subcommittee members, Chairman Nicholas Caccamo and Councilors Earl Persip, Moon, Peter White, and John Krol, agreed with the plan to help facilitate the sale.
 
However, Councilor Melissa Mazzeo, who does not sit on the subcommittee, spoke during an open microphone period to urge the councilors to pump the brakes. Mazzeo said she still had a lot of questions regarding the money but with the Thanksgiving holiday cutting the week short, there was little time to get them answered before next Tuesday's council meeting. 
 
"I really think if we put the brakes onto it until everybody has all of their questions and answers, that's what I am looking for," Mazzeo said.
 
She peppered city staff with a number of questions, most of which could be answered but some not.
 
MacDonald said while there is no established timeframe in the contracts, the banks would like to have the debt written off its books by the end of the year. He said in reaching these agreements a memorandum of understanding has twice been extended while working to get the lenders' support and the first draft of a purchase-and-sales agreement reached his desk Tuesday morning, which he hopes to have wrapped up by next week.
 
Residents Alexander Blumin and Craig Gaetani both urged the council to reject the mayor's plan. They said the federal and state grants still come from taxpayers and forgiving the debt sends the wrong message. 
 
"When you do business, you should not borrow the money and then later ask forgiveness. It is the incorrect approach," Blumin said.
 
But committee members also heard from residents Kate Lauzon and Nick Russo who said the Beacon means a lot to them. Lauzon reflected on the cinema's support in the community in a number of ways while Russo, who lives across the street, said he would never have chosen to live in downtown Pittsfield if it meant living across the street from a vacant building.
 
"The Beacon means more than just numbers," Lauzon said. 
 
Downtown Pittsfield and 1Berkshire Presidents Jesse Cook-Dubin and Jonathan Butler both spoke of the economic driver the restoration of that building has become and its importance to the city's downtown. 
 
"There is really no place they look before a downtown to get a feel of the health of the community," Butler said of businesses looking to move to the area.
 
The proposal still needs approval from the full council. That could be as early as Tuesday depending on when the City  Council president opts to take it up. The next meeting after that would be Dec. 11. 

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Berkshire County Kids' Place Gala Celebrates Courage

By Tammy DanielsiBerkshires Staff

Michael Supranowicz was presented with the Founders Award. He was president of the Kids' Place board for two years and retired from Hillcrest Educational Centers. 
PITTSFIELD, Mass. — The "Wizard of Oz's" the Cowardly Lion finds his courage by facing his fears with the help of his friends. 
 
"Like the Lion, many children just need someone to help them realize that the courage they need to heal from the abuse they have suffered is already inside of them," said Rosemarie  Phelps, chairman of the Berkshire County Kids' Place Board of Directors. "For 26 years, the Kids' Place has helped lead these children and their families down the path to recovery."
 
The path on Friday night was a yellow brick road to "A Night in the Emerald City," the theme for these year's fundraising gala for the nonprofit that was held at Country Club of Pittsfield. Phelps donned a purple witch's hat to welcome guests to the event that also included recognition of several individuals for their work for Kids' Place. 
 
Berkshire County Kids' Place has been providing a safe and healing place for abused children for more than a quarter century. The agency is funded through the state Department of Children and Families, grants and donations. It works closely with related agencies and the Berkshire County district attorney's office to serve the more than 400 children that pass through its doors each year. 
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