On the market for $5.5 million since October 2010, North Park’s mint-condition, historic Birch Theater building, housing an opera house, a Starbucks and Uptown’s premier tavern, is inching closer to a sale.

Seven months ago, three undisclosed groups had expressed interest in buying the theater building, said Leon Natker, general director of the Lyric Opera (recently renamed Lyric at the Birch), which currently owns the building at 2891 University Ave.

“One of [the groups] is the same; plus there are two others that are currently prepared to make offers,” he said. “I would say we should have something on the table in the next month.” Natker’s scheduled to meet the week of May 16 with the property broker to discuss the status of the sale, which he said could be consummated as early as this fall.

“If the deal concluded by October, that would be pretty good,” he noted adding, “That’s what it takes to sell a house in this market—about a year.”

A successful $200,000 fundraising drive launched by Lyric more than six months ago temporarily stemmed a serious cash flow problem. But Lyric’s managing board, the primary as well as managing tenant of the building, has decided it’s best to seek a new outside owner-operator.

An ideal buyer would be “somebody who has connections to a promoter the size of Live Nation,” said Natker. “We’re not doing this because we’re going out of business or running for cover: What we’re trying to do is ensure the future of the North Park Theater.”

The theater building owned and managed by Lyric could be a steal for the right buyer, said Patrick Edwards,
a longtime North Park businessman and member of the theater’s board.

“It is a financial investment in a structure that is undervalued, has great potential and is a great opportunity
for someone to own a neighborhood theater,” he said.

Edwards noted that the dilemma Lyric finds itself in happened through no fault of the theatre’s management. The problem, he said, is due to a contractual agreement that fell apart.

Patrick said the agreement between Redevelopment, the developer and Lyric was that, if the theatre was not open in time for the next season, the Lyric would be reimbursed for its normal expected income from that season. That agreement required three signatures to be approved but, since staff changed at Redevelopment during the construction, the third signature was never signed, and the city attorney refused to accept the terms of the agreement. Since the opening was delayed a year, Lyric was forced to use its line of credit to continue to pay staff and expenses. Redevelopment never paid back that line of credit.

The developer also agreed to provide the Lyric with a simple lease for $1/year. “However, after the Lyric was operational, the developer transferred the ownership of the theatre to the Lyric, a non-profit corporation, which required an emergency fund-raising campaign to pay down the mortgage,” said Edwards.

Edwards believes there is one condition in particular that should make purchasing the theatre attractive.

“There is a deed restriction that the building will always be a theater,” he said. “It can’t be gutted and made into a shopping mall, or condos or a parking structure.”

Whoever buys the building from Lyric has the advantage of long-term leases with the building’s other two tenants, Starbucks and West Coast Tavern, added Edwards, noting Birch is also one of the few historically
intact theaters left in San Diego.

“It has its complete original fabric, both exterior and interior— seats, loft, everything from 1929,” he said.

The North Park Theatre has a long and varied history. Built in 1928, it is the only theater of its size in San Diego County (730 seats) featuring a fly-loft for legitimate live theater productions, a full-size movable
orchestra pit and a projection room for motion picture exhibition.

Birch stopped showing movies in 1974 and sat idle for several years. A church bought it and used it for services and Sunday school meetings through the 1980s. In the late 1980s, the city of San Diego purchased
the theater from the church with the intention of restoring it to use as a performing space. But it rejected several plans from developers, mainly because of lack of funding.

In 2000, developer Bud Fischer approached Lyric Opera San Diego with the approval of the city of San Diego to explore a restoration project. Fundraising on the part of Lyric Opera began in 2001. Renovation of the theater has transformed it from an unused, out-of- date venue to an entertainment destination with high-tech, state-of-the-art staging and lighting systems, projection equipment, and a multi-channel theater sound system. Connections to nearby fiber-optic lines provide high-speed access to the Internet and to global telecommunications systems, enabling simultaneous web casting of performances or a hookup to the Convention Center for meetings.

The theater building is not only ideally appointed but ideally situated, said Edwards.

“The reconfiguration of the theater was done spectacularly, and the building is near a parking structure for 400 cars,” he said. “If that theater was in Chicago, it would be a $28-million facility. But because it was leveraged with redevelopment and property and tax-increment monies, the structure was built for $6 million.”

What’s more, added Edwards, is that there are plans to redevelop property near the theater that will potentially increase its value.

“The idea is to add a $4-million business park right behind the theater property. To buy a $6-million structure with the city throwing in a $4-million business park in this economy—I have a lot of confidence we won’t be talking about the theater being up for sale for too much longer.”

The Lyric Opera-owned theater building is a centerpiece of North Park’s ongoing commercial renaissance,
said Elizabeth “Liz” Studebaker, executive director of North Park Main Street, the community’s Business
Improvement District, which represents 530 small businesses.

“The renovation of the theater has done wonders for the North Park community’s ability to attract other complementary businesses to the district,” said Studebaker. “With the theater, you have a creative gathering space where a diversity of different talents can be displayed. I’m optimistic that there will be an investor, or a theater management outfit, that sees North Park as a great opportunity to start a project. No one wants to see the theater close.”

Edwards said the community isn’t the only entity with a serious stake in ensuring the theater building
continues operating.

“I’ve been in discussion with the bank, the owner of the mortgage, and they’re not interested in owning
a theater,” he said. “The bank doesn’t want to foreclose. Lyric doesn’t want to default. So we’re just waiting to see who’s going to pick up the building as a bargain and continue to make it work.”