Cathie Anderson

Insights into the people who shape Sacramento’s business landscape

Anderson: Crest operators hit impasse on lease at historic Sacramento theater

08/26/2014 12:00 AM

08/26/2014 12:37 AM

The operators of Sacramento’s Crest Theatre, including Sid Garcia-Heberger, said Monday that they have reached a negotiations impasse with their landlord and will end their management of the landmark building at 1013 K St. on Oct. 31.

“We actually had agreed to a 25 percent increase in our lease amount, but there were some sticking points,” Garcia-Heberger said. “I think the biggest were some capital improvements requirements that we just felt that we couldn’t be 100 percent responsible for.”

Garcia-Heberger runs the Crest with three partners – her husband, Bill Heberger, Andy Field and Gary Schroeder – through their company CSLM Inc. Since 1986, their lease had obligated them to cover the cost of the capital improvements at the historic building, Garcia-Heberger said, but she and her partners didn’t think they could continue to completely bear that responsibility along with the increase in rent.

Garcia-Heberger, whose name has become synonymous with the Crest, is not booking events beyond October. That’s when her landlord, Robert Emerick, a fifth-generation Sacramentan and an accomplished wastewater treatment engineer, takes the reins. He acquired the Crest for about $2.8 million in 2011, saying he wanted to preserve a signature regional asset.

What Garcia-Heberger describes as a 25 percent increase of their $6,000-a-month lease, Emerick said, he sees as a 25 percent reduction from $10,000. Garcia-Heberger and her partners requested that he lower their rent because they had closed the movie screening rooms on the lower level and revenue had declined, Emerick said. Based on revenue figures he was quoted, he agreed to drop the rent from $10,000 to $6,000 until he could have an audit done.

When the audit showed that the revenue was higher than CSLM stated, Emerick said, he increased the rent to $7,500.

As for infrastructure costs, Emerick said: “They were paying 40 cents per square foot. Clearly, it’s well under half of market rent, and the reason it was so low was they needed to undertake certain improvements. There’s plumbing in the theaters that’s 100 years old, and if a pipe were to break, we would be washing out the theater, and that would render it unusable.”

And, there’s more, he said: The Crest’s air-conditioning system must be replaced, at a cost of $100,000, because the state is banning the refrigerant it uses by 2020. And, if the Crest is ever to show movies again in its historic theater, it will need to upgrade the projection equipment at a cost of $100,000 to $150,000.

“The industry moved from film projectors to digital server-based projectors,” he said. “As a building owner, I didn’t expect that I had to pay for digital projection. It seems to me like that’s a cost of their business, but when the people of Sacramento say, ‘Hey, I miss movies at the Crest,’ who do they call? They call me. Well, I want movies back at the Crest, too.”

Heberger, Field and Schroeder got involved in restoring the Crest at the bequest of Linda McDonagh, then owner of The Palms playhouse in Davis. Later, the three men took over the operation. Garcia-Heberger initially worked as a concessionaire, but she acquired a partnership stake in CSLM a couple of years after it opened.

“We opened the Crest just as the cyclone fencing was coming down from the then-new light-rail,” Garcia-Heberger said. “It’s been tough to be a pioneer on K Street with all the challenges this area has had over the years, and we’ve weathered a couple of bad economic downturns. We really had hoped that we were going to be able to participate in the renaissance of downtown.”

Emerick said he had thought until Aug. 4 that CSLM would renew the lease: “Sid and Bill and Andy have done wonderful work there since they opened in 1986, and we owe them a huge debt of gratitude.”

If a promoter or event organizer has a date on hold for November or beyond, Emerick said, they can contact his fiancée, Yulya Borroum, who has stepped into the breach to handle scheduling and hiring of contractors. A project manager for a local engineering firm, Borroum manages multimillion-dollar engineering contracts, Emerick said, so this is within her scope.

As word spread that Garcia-Heberger and her partners are leaving, Emerick said he has heard from several people willing to pay market rent. For the last 25 years, Emerick said, the Crest has survived on redevelopment money from the city, but that source of revenue is gone. Market-rate rents would provide for upkeep of this city institution for many years to come, he said.

Emerick also has found partners willing to renovate the Crest’s lower level: Michael Thiemann, former head chef of Ella Dining Room, and his wife, Lisa Thiemann. They plan a restaurant called Empress Tavern in that space. They have taken out a small business loan and agreed to use a portion of the funds to replace the Crest’s old air-conditioning system. The trio are also partners in K Street’s vegetarian restaurant sensation, Mother, along with Borroum and Ryan Donahue, formerly of Edible Sacramento magazine.

 

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