Sacramento’s B Street Theatre moved a giant step closer to pulling off its long-awaited expansion and relocation project Friday, thanks to a state-backed loan program geared toward nonprofits.
As scores of season ticket holders and several of its actors cheered from the audience, B Street won approval for an $8.4 million loan from the California Infrastructure and Economic Development Bank’s governing board.
B Street is the first nonprofit in the state to take advantage of an overhaul of I-Bank’s loan program, which mainly focuses on loans to municipalities. The revamp, which the bank completed last fall, gives nonprofits greater access to loans and at more favorable borrowing rates than before. Other nonprofits have recently expressed interest in I-Bank lending, including the proposed Powerhouse Science Center museum north of downtown Sacramento.
The B Street loan will help the theater relocate to spacious new quarters on land donated by Sutter Health near Sutter’s main medical campus at the east end of midtown. The theater company will leave its namesake B Street home, where space has been at a premium and performances are often marred by noise from trains passing on the nearby tracks.
B Street has a few more hurdles to climb: It must get $5.5 million in so-called “new market tax credits” from the federal government in order for I-Bank to release the loan funds. The tax credits are designed to induce financial institutions to donate to the project.
Bill Blake, managing director of the theater company, said he expects to hear from the U.S. government on the tax credits in two weeks, and “we believe we are in a very good position.”
The loan is also contingent on B Street securing $2.5 million in aid for fixtures and equipment at its new home. City Councilman Steve Hansen said the council will soon consider a proposal to provide that money through a newly created city economic development fund. The grant wouldn’t materialize until the building project is well underway, Hansen said.
“This project is catalytic for midtown,” said Hansen, who represents the central city on the council. B Street’s current location is about a mile north of the midtown commercial district, while the new location is closer to restaurants and other amenities.
If all goes according to plan, B Street will “get a crane in the air and a shovel in the ground” this fall, Blake said.
B Street plans to build a 250-seat main stage and 365-seat secondary stage that will be used mainly for family and children’s productions.
The I-Bank vote culminates years of fundraising as B Street has labored to sew up financing for the $23.2 million project. “We’ve been pursuing a lot of avenues to get the project done,” Blake said. The I-Bank loan “is a huge moment for us, and it is a major piece of the puzzle.”
The scrambling for dollars doesn’t end with the state’s loan approval. “It is a debt, and it has to be paid back,” Blake said.
A ticket surcharge will be the primary source of revenue to repay the debt. B Street plans to charge patrons around $3 a ticket to start, with the fee likely growing to as much as $7, Blake said.
So many community leaders were lined up to speak on B Street’s behalf that the I-Bank board cut short the public comments. It then voted 4-0 to OK the loan, bringing cheers from a crowd that included season ticket holders and at least two of B Street’s mainstay actors, Kurt Johnson and Dave Pierini.
I-Bank is a 20-year-old state program whose main purpose is to finance infrastructure projects for municipalities. I-Bank funding was used to help convert the former McClellan Air Force Base into a thriving business park.
The state-run bank has long had a loan program for nonprofits, but last fall it amended its rules to make borrowing more attractive, said Teveia Barnes, the bank’s executive director. B Street is the first nonprofit borrower under the new system, she said.
B Street will pay 2.06 percent at the start, although the interest rate will grow to 4.15 percent in later years.
Other nonprofits have taken an interest in the program, Barnes said, including the planned Powerhouse Science Center. The center has said it plans to seek a $25 million construction loan from I-Bank.
If the loan were granted, Barnes said the Powerhouse would become one of I-Bank’s single largest borrowers. Because the bank currently has about $100 million available to lend, the bank’s board will have to weigh carefully whether to commit so much money to one loan, she said.
I-Bank funds its loans by issuing bonds and gets no money from the Legislature, Barnes said. If borrowers such as B Street can’t repay their loans, “it’s my bondholders who are at risk,” she said.
The bank’s most recent bond offering, in January, received top ratings from the three Wall Street credit rating agencies.