Outfoxed? 

The city of Oakland is banking on the Fox Theater to revive Uptown, but where will that leave the Paramount?

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The theater's possibilities were outlined in a May 2001 report that considered everything from a basic, 600- to 1,000-seat capacity theater to an expanded, 2,550-seat design. The city shopped the plan to various developers. But Chew said there wasn't a lot of interest because the developers "knew that it was going to lose money for them."

One developer was interested, however. Many years before, an ambitious young developer named Phil Tagami had pledged to buy and renovate buildings in an area bounded by 14th, 27th, and Webster streets and the freeway. "That was kind of my little mission," he recalled recently, sitting in a plush leather chair in his office in downtown Oakland's historic Rotunda building.

Tagami was involved with a dozen buildings downtown before renovating the Rotunda. Later, he helped bring in several nightlife establishments, including Cafe Van Kleef, @Seventeenth, Luka's Taproom, and the Uptown Nightclub. But all the while, he had his eye on the long-dormant Fox.

In 1997, during renovation of the Rotunda building, Tagami says he gave the city a proposal for the Fox. Officials shot him down, suggesting he finish the Rotunda first.

So after he finished the Rotunda, Tagami organized a volunteer development team of architects, engineers, and supporters to analyze the costs of renovating the theater into a 600-seat cabaret-style venue. Then, the city called upon Tagami to solve the problem of then-Mayor Jerry Brown's Oakland School for the Arts in 2003. As Tagami recalls, Brown was having trouble with complaints from neighbors who lived near the Alice Arts Center, which then housed the school. Tagami suggested moving the school into the Fox.

After getting the green light from the city, Tagami began pulling together funding. A deal with the Port of Oakland and CBS harnessed $22 million in revenue over the next twenty years from a billboard near the Bay Bridge that guaranteed the School for the Arts' rent for the next seven and a half years. Today, the Fox has sixteen funding sources, including loans, philanthropic grants, government grants, and three equity investors — the National Trust for Historic Preservation, the Charter School Development Corporation, and Bank of America Historic Ventures. Of the $58 million total project cost, the city's redevelopment agency provided $25.5 million via a 30-year loan at 8 percent interest.

When it came time to find an operator, Tagami's company considered the Paramount. But as the studies made clear, such a relationship could have been a costly mistake.

In September 2003, Tagami's company entered into a memorandum of understanding with the Paramount and the Oakland School for the Arts to work out a strategy for renovating and operating the Fox. How that relationship degenerated depends on whom you ask. According to Tagami, he spent years trying to encourage a relationship between the Paramount board and the Fox, but was "unable to bring that to closure." On the other hand, former Paramount board president Clinton Killian accused Tagami's company of intentionally stonewalling the Paramount to prevent the board from submitting a formal management proposal. Tagami says the Paramount was not only invited to bid but was also given an extension on the deadline.

What the Paramount submitted was a four-page letter expressing its interest in running the Fox as a 500- to 600-seat capacity cabaret that would require a city subsidy. The facility would have been run just like the Paramount, meaning it would have been rented to promoters without producing its own shows.

But the Paramount board was split over the decision to run the Fox. "There was never a consensus among the Paramount board that they wanted to actually operate the Fox Theater," Chew recalls. Some board members say their interest was tempered once they learned the project had changed from its original, smaller conception.

"They really did have an opportunity way back when this project was first coming together to be the ones to run the Fox," agrees Patricia Dedekian of Friends of the Oakland Fox. "And they were as a board very reluctant to take it on. ... They never really embraced it."

Throughout the course of the Fox project, the size of the theater fluctuated based on available funding. Although initially a minimal investment and smaller theater size was considered, the size gradually expanded beyond 600 seats once California Capital Group secured more funds and realized that a larger facility would bring in more dollars. Ultimately, in early 2006, it was agreed that the size of the theater would remain flexible depending on the nature of each show. The floor will have an option of seats, tables and chairs, or standing room, while the balcony will have fixed seats with the option of adding tables and chairs. The maximum capacity will exceed 3,000 seats.

"We were interested in managing but not obligating the Paramount to additional financial exposure through a lease or other contract," said current Paramount president Tom Hart. "We urged the conceivers of the Fox renovation to establish a facility that was less competitive or non-competitive to that of the Paramount."

But during the process, Tagami's company commissioned another market study that was released right before the Paramount submitted its proposal. It recommended that the only way to make the project fly would be to pair the Fox with a for-profit operator.

"A strategy with more likelihood of dramatically increasing the volume of new business would be to enter into a long-term agreement with an experienced entity combining both promoter and operator functions to take control of just the Fox Theater," the report said. "This will create a strong profit motive for this experienced promoter to fill the Fox with as many revenue-producing events as possible."

Sure enough, Another Planet Entertainment's 48-page proposal — including letters of reference from the likes of Carlos Santana, former San Francisco Mayor Willie Brown, and Grateful Dead Productions — stated that it could run the facility without a city subsidy. Eventually, the proposal claimed, the theater would even produce revenue for Oakland.

A panel of five judges — which included Chew, Dedekian, and three other city employees — eventually chose Another Planet. "I wanted to deliver for the city an operator that wouldn't be looking to the city for a subsidy," Tagami said.

But Tagami's consultants also revealed the potential dangers of his choice for the Paramount. "The downside of this strategy for the Paramount is that whichever promoter is selected to operate the Fox, the shows they formerly promoted in the Paramount will in all likelihood be moved to the Fox," the report said.

"Given that the City also owns the Paramount Theatre on the next block, the City has a strong interest in minimizing any potential destructive competition between these two facilities," the authors cautioned.

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