Novato Theater site sold to prospective developers

The site of the former Novato Theater has been sold for considerably less than city officials had hoped.

Matthew Burns, the owner of Sandbank Construction, and his wife, Julia Burns, paid about $375,000 for the 6,370-square-foot parcel on Grant Avenue. They are planning a mixed-use project that will feature a cafe on the first floor and three apartments and an office on the second floor.

“We’re aiming to entertain the new demographic of people that are moving into Novato,” said Matthew Burns, a Novato resident.

The buyers acquired the property from Novato Theater, a nonprofit formed to preserve the site’s use as an arts venue.

The city, which is struggling with a budget deficit, was hoping to recover a sizable chunk of the more than $1 million it has invested in the site over the last three decades. In 2023, the nonprofit agreed to turn over most of the proceeds from the sale in return for the city agreeing to lift a deed restriction specifying that the site could be used only as a theater.

“Per the agreement between the city and the theater group the city received the net proceeds from the sale,” Novato City Manager Amy Cunningham wrote in an email Friday. “The net proceeds are $229,691.”

Novato Councilmember Susan Wernick said, “They would have hoped to have sold it for more.”

No one with the theater could be reached for comment on the sale.

The agreement the city reached with Novato Theater in 2023 specified that the “net closing proceeds” would be whatever was left over after the theater had covered its closing costs and resolved any liens pending on the property. The agreement also guaranteed the theater an additional $100,000 to be used to pay its creditors.

The sale price was considerably lower than the $720,000 appraisal by Semple Appraisals in 2022. Novato Theater paid Semple to appraise the property in preparation for its negotiations with Novato to get the city to lift the deed restriction.

Novato sold the property to Novato Theater in 2010 for just $50,000. At the time, an appraisal of the theater site by Art Gimmy International concluded that the value of the site without land use restrictions would be $445,900, less demolition costs of $50,000, for a total market value of $395,000.

Gimmy, however, stated that given the uneconomic nature of the usage restriction, the appraised value was only $50,000.

Joe McCallum, a real estate broker with Newmark who represented the Novato Theater in the recent sale, said the property was initially listed at $750,000, but there were no buyers at that price.

“We ran the course trying to get a dollar amount near the appraised value,” McCallum said. “The appraisal said what it said, but the reality of life was telling us otherwise. The market was telling us what it was worth.”

The historic theater was essentially gutted in 2016 in preparation for a new theater, although, according to the Semple appraisal, the side walls were maintained and the front wall reinforced.

The Semple appraisal said the theater spent $1.4 million making improvements to the site. That included $985,000 for utility connections, demolition and the installation of a new foundation compliant with the Americans with Disabilities Act; and $415,000 for costs such as architectural and engineering consultants.

McCallum, however, said the improvements actually made the property harder to sell.

“That was all very specific to a theater,” McCallum said. “So anybody thinking of buying it had to take into account they might have to demolish some of that in order to make a new project work.”

When the city authorized removing the deed restriction on the property in 2023, Novato Theater board member Keith Greggor said that the nonprofit had raised close to $2 million in its effort to create a new theater. Marin County donated $300,000 to the cause. Other sizable donations came from the Margaret E. Haas Fund and the Marin Community Foundation.

Toni Shroyer, a longtime critic of the theater project, wrote in an email, “How did a hole in the ground cost over $2 million of private and taxpayer funds? Even a third grader knows you count costs before you begin construction.”

Regarding the Semple appraisal, Shroyer wrote, “My husband, Jim Shroyer and I have been in the real estate business for a long time. When we saw the appraisal we laughed and knew the Novato Theater would not get that price or close to it. It will cost a tremendous amount of money to remove all of that cement. The site is a hole in the ground and looks like a WWII bomb shelter.”

A staff report to the Novato City Council in 2010, when the council authorized selling the property to the Novato Theater, noted that the city had recently invested more than $10 million in downtown improvements “to provide the initial foundation for downtown revitalization and set the stage for private reinvestment in the area.”

“The return of the downtown Novato Theater building as an entertainment anchor,” the reported continued, “would greatly benefit businesses along the eastern section of Grant Avenue.”

Instead, Shroyer wrote, “Novato Theater left a blight on Grant Avenue for years.”

Wernick said that is why the property’s sale is good news for the city.

“It’s not doing anything for us,” Wernick said. “It’s not solving any problems. It’s not creating any revenue. To have someone buy it and develop the property is a much better scenario.”

Longtime Novato Councilmember Pat Eklund, who estimates Novato spent at least $1.37 million on the property between 1995 and 2019, said, “It would be nice to get that piece of property back into use. It will help make the downtown more vibrant.”

Matthew Burns, who emigrated from Ireland in 2000, said the cafe he is creating will be a place “where the working adults can come in and plug in their computer and work from there.”