Friday, March 7, 2014 | 6:45 p.m.
Caught up in the community glee around efforts to revive the historic Huntridge Theater, forgotten or ignored was the lingering question of whether the theater’s owner had broken a deal with the state.
Those deals, called covenants, date back to the early and late 1990s.
Last summer, during a neighborhood meeting about planned efforts to buy and renovate the 69-year-old building, information emerged that the current owners had not been living up to terms of three covenants. Owners were supposed to uphold certain provisions in return for $1.3 million in grants from the Nevada Commission for Cultural Affairs.
Now the state of Nevada has filed a lawsuit against three defendants — Eli Mizrachi, ECT Holding LLC and King George LLC — alleging the defendants didn’t uphold their end of the bargain.
The building’s owners, the state alleges, broke these five tenets of the agreement:
• Maintain the building “to preserve (its) architectural, historical, cultural and/or archeological integrity.
• Make no visual or structural alterations without prior permission.
• Allow the Commission for Cultural Affairs to inspect the building “at all reasonable times.”
• Be open to the public no less than 12 days per year.
• Publish a newspaper notice when the building closes for “CCA-assisted improvements.”
The lawsuit says the state wants repayment of the $1.3 million.
That money did not, however, go to the current owners/defendants.
In the 1990s, the theater was owned by Friends of the Huntridge Theater Inc. The state Commission for Cultural Affairs gave the group $300,000 in 1994, $300,000 in 1997, and $766,000 in 1997 to preserve and protect the building.
Mizrachi and the other defendants, the lawsuit says, did not purchase the building until 2002.
In the lawsuit, Nevada Senior Attorney General Shane Chesney wrote that covenants are passed on from one owner to the next — so from Friends of the Huntridge Theater Inc. to Mizrachi and the other defendants.
In addition, Chesney said Mizrachi indirectly benefited from the covenants because they allowed him to buy the property at a steep discount.
Mizrachi could not be reached for comment Friday.
Covenants “run with the land,” Chesney said Friday, adding that they are “binding on the first and all subsequent owners.”
It’s a key point for Mizrachi but also for Huntridge Revival LLC, which wants to renovate the building. Last summer, Huntridge Revival led a successful campaign to raise $200,000 in start-up funding from hundreds of people through an online Indiegogo campaign.
The entire project is expected to cost about $15 million: $4 million to purchase it from Mizrachi and another $11 million for renovations. Renovations might include a restaurant, bar, classrooms and more.
Questions that arose last summer about the covenants take on more importance with the filing of the lawsuit:
• Will the lawsuit stall Huntridge Revival’s desire to purchase the theater?
• If Huntridge Revival buys it, would it have to repay the grant money?
Michael Cornthwaite, one of Huntridge Revival’s two managers, said today he had not seen and did not want to speculate about the lawsuit.
Asked if new buyers would be "on the hook" for the $1.3 million, Chesney replied they would not. Any covenant breach, Chesney said, would "stay with" the property owner who committed the breach.
The theater has become a neighborhood unifier downtown. After the success of the $200,000 Indiegogo campaign, numerous businesses came forward to offer free legal, architectural and other services aimed at preserving the theater.
In late September, hundreds of people volunteered their time to whitewash the building, whose paint had been crumbling and peeling for years. Last week, a new logo — an encircle “H” — was affixed to the building’s facade.
Joe Schoenmann doesn’t just cover downtown; he lives and works there. Schoenmann is Greenspun Media Group’s embedded downtown journalist, working from an office in the Emergency Arts building.