Revenue sharing plan could help move theater plan ahead

Will Menifee residents ever see this structure built? City manager Armando Villa tells residents not to give up hope.

Q: What’s playing at the Krikorian Theater in Menifee?

A: "Field of Dreams."

OK, that was for those who are calling the Menifee Town Center and Krikorian Theater project the joke of the city. Granted, the theater complex has been promised to arrive "soon" in signage and news articles for nearly four years. And to many residents, the delay in construction of this major entertainment venue on Newport Road is anything but funny.

The first "tentative" opening date mentioned by city officials was the summer of 2015. Every update since then has been vague. Now, city manager Armando Villa is saying he believes "it’s safe to say they’re going to begin their grading operation by the summer."

Why should we believe him this time, you ask? Perhaps because, for the first time, city officials have revealed in the last week that they are prepared to pay up to get the bulldozers moving.

Nothing is certain in this case, as we have learned in recent years. But it is a fact, as Villa told Menifee 24/7 on Friday, that city officials and executives of Krikorian Premiere Theatres have met several times to negotiate a tax revenue sharing agreement as an incentive to move the project forward.

Such revenue sharing agreements are not unusual when cities are trying to convince a large developer to finalize plans to become the anchor of a major commercial center. As far as Villa is concerned, this is evidence of the lengths to which the City of Menifee will go to make sure owner George Krikorian has the funding he needs to begin construction.

Bottom line: The City is not the hold-up here. As a private developer, Krikorian can work at his own pace. Now that the economy is improving, it appears he is closer to securing the financial backing he would need from banks. The issue at hand now is, does he really need the extra security blanket of a share of the tax revenue? And if so, how much will his share be?

Krikorian Premiere Theaters has not responded to media inquires on the subject, and Villa recognizes the need to proceed carefully when discussing the subject.

"If he can secure his pro forma to make sense for him to get the bank to lend him the money he needs, he may not need the incentive," Villa said. "But he continues to say he does. We have to believe his pro forma is still correct."

Villa is careful in choosing his words because of legal issues and Krikorian’s request for confidentiality in the negotiations. At the same time, he is aware of public frustration of the delays, as well as the sensitivity any time the word "tax" is used.

This all comes at a time when city officials are trying to convince residents the Measure DD 1 percent sales tax increase remains necessary to fund public safety and road improvements. And while recognizing the immense potential sales tax revenue that could be generated by the theater and Menifee Town Center projects that will follow, Villa knows how some might question a city proposal to give some of those funds away.

"This project is very important, so we don’t want to do anything to jeopardize it," Villa said. "Competitors are going to try to shoot holes in this thing. We’re trying to work on an agreement to share the revenue in exchange for getting the job done. Yes, there’s a lot of people who may not appreciate us doing those things because of the perceived gift of public funds. We have to make sure we complete the negotiating process and keep in mind the best interests of the citizens.

"What we’re negotiating is not the project itself. Mr. Krikorian’s going to build this thing whether we give him a subsidy or not. What we’re negotiating is the amount and the timing of the subsidy."

In other words, Villa and his staff want to do everything possible to make the theater project happen sooner rather than later. Even so, he believes it will take a little more time to make the deal right.

That’s why, after posting the legally required 10-day notice of a public hearing at the upcoming April 18 City Council meeting almost two weeks ago, Villa on Thursday pulled an item regarding the proposed tax revenue sharing agreement from the agenda.

"Often, issues become very fluid," Villa said. "There’s going to be some movement on both ends to try to get to some middle ground. Over the last week, we’ve been negotiating with Mr. Krikorian and we anticipated having a solid 100 percent agreement by yesterday (Thursday) so we could have it ratified by the council. But we’re stuck on two issues. They’re not major issues, but they are issues that are important from a liability perspective. We’re talking about the public’s money and we want to make sure it’s right."

Meanwhile, Villa said Krikorian has begun the process of having engineers prepare working drawings that elaborate on the previous approved conceptual plans. That, Villa said, will make it easier to move to the grading process once the financial details are worked out.

Right now, the only grading taking place at the Menifee Town Center site is for condominiums previously approved for developer Lennar Homes. That is only part of the overall plan for the Town Center, which includes not only the Krikorian theater and bowling alley complex, but a Fairfield Inn & Suites Hotel, central park and additional retail space. A revenue sharing plan for the hotel has already been approved.