Question: If I told you that for $ 2.1 million you could get ownership of a leading plot of downtown Aspen commercial real estate, would you consider this opportunity too good to be? true? For the rest of us, yes, that would be too good to be true, but for Aspen Film, this is the reality of their opportunity to own the Isis Theater in downtown Aspen.
It was a circumstance born out of a long-standing collaboration that was more like a tenuously negotiated peace treaty between three hostile nations, all of which possessed something necessary for the others to achieve their desired goals. As the CFO of Aspen, I spent much of 2006 facilitating the initial “Save the Isis” deal. It was the height of the pre-Great Recession real estate boom, and the owners of the Isis threatened to sell the theater to the highest bidder. Like today, there was a lot of moaning and gnashing of teeth following the potential loss of Aspen’s only first-run movie theater.
I got involved when the then city manager, Steve Barwick, asked me to “offer an interest rate” to charge Aspen Film for a loan from the city to buy the Isis. His request was the result of quiet discussions with the management of Aspen Film on how to save the Isis and continue to air the films first in Aspen. Such an agreement would allow Aspen Film to own the Isis, providing a permanent home for their programming and events, as well as an extremely valuable balance sheet asset.
While I was entirely outside the loop of these talks, as the city’s de facto grant manager, I reviewed Aspen Film’s finances as part of their annual city grant application. I knew their financial situation would not support such an arrangement.
Achieving the dual purpose of saving the Isis and the films first showing in Aspen and structuring a deal that would result in Aspen Film owning the cinema would take a bit of creativity. The city could not get involved in saving Isis without the strong presence of a community goal, which was provided by the involvement of Aspen Film and the path to Isis ownership. Aspen Film could not afford the Isis without the facilitation of the city and a commercial presence on the site to absorb a significant percentage of the costs of acquisition and operation.
Enter the third party to the deal, Isis Property Group LLC and their goal of bringing the retail business to the Isis facility. Their interest was to convert one of the largest screens upstairs at the Isis Theater into two retail stores, transforming the Isis from a five-screen multiplex to a four-screen multiplex. In doing so, they would bear a significant portion of the costs of acquiring and operating the property.
To say that the negotiations were difficult would be an understatement. At one point, I had to prematurely end a meeting in my office due to the threat of punches. But in October 2006, Mayor Helen Klanderud announced the public / private / non-profit partnership between the city, Aspen Film and Isis Property Group to save the Isis Theater. The city used its outstanding credit rating to finance the purchase, the Isis Property Group found its tenants, including the Peter Lik photography store that has been in existence since day one, and Aspen Film was given the opportunity to own the Isis Theater once funding was paid in 2037. All of this was structured without the use of taxpayer money and without Aspen Film having to raise a dime in donations other than a one-time contribution generously provided by the theater. One of Aspen’s main philanthropists, Boogie Weinglass, who served as Aspen Film’s deposit on his share of the acquisition. It was a strong and creative deal based on a sound tax structure that gave everyone the opportunity to see their goals achieved.
Fast forward to 2020 and the COVID crisis is shocking the entire movie industry. Aspen Film’s sub-tenant Isis, movie theater operator Metropolitan Theaters Corporation, waives his lease and roughly $ 300,000 in rent back, leaving the city and Aspen Film to hold the sack and focus on the sequel to “Save the Isis”.
Granted, COVID was an unforeseen economic disruption, but I still have questions. After a decade and a half of theatrical operations, using other people’s money in the form of Boogie’s initial donation and rental payments from Metropolitan Theaters to cover the financing of the purchase, Aspen Film was unable to fundraising or saving your own money. as a contingency fund to protect its interest in the Isis building? The Pitkin County appraiser currently values the Isis at $ 5.1 million, 3 million more than the $ 2.1 million needed to secure its purchase. Call me crazy, but it looks like such a long-term strategy would have been in Aspen Film’s best interests. It also appears that, unlike 2006, while there is a lot of value, there is very little creativity, and so Aspen taxpayers are now paying the mortgage on the building – at least temporarily.
Meanwhile, Aspen Film is awaiting the outcome of the City’s 2A voting measure, which aims to free up Wheeler RETT funds for nonprofit arts associations. According to a July 30 staff report to city council, if the 2A passes and arts grants are transferred from the general fund to the Wheeler fund, the city plans to use taxpayer money from the released general fund to pay the annual debt service on Isis finances while they negotiate with Aspen Film over the remaining $ 2.1 million to become owners of Isis. So much for the cascading potential financial benefit for non-arts nonprofits from this voting measure.
Well, there’s an old saying about Hollywood movie sequels – they’re usually not as good as the original. This also appears to be the case with the Aspen Cinema Suites.