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Holly struggles to finish

Born in the grips of the Great Depression, the Holly Theatre has survived many threats to its existence and almost faced demolition after it held its last show in 1986.

Now it faces another hurdle.

Unless $3.2 million is raised over the next few months, an almost eight-year restoration project is in danger of losing $500,000 in tax credits. Without the donations, the project could delay the expected December 2020 opening.

If the project is delayed for too long, construction costs could rise further and require even more fundraising.

The restoration budget for the Holly is now estimated at $11,175,000, almost triple the initial estimate of $3 million to $4 million in 2011, when the region was struggling out of the recession.

Jefferson Public Radio, which bought the Holly to turn it into a 1,000-seat venue in Medford, had restored the 1,348-seat Cascade Theater in Redding in 2004 for almost $6 million.

Since the Cascade opened, it has operated in the black, and some of the money, $120,000 to $150,000 annually, has helped offset some of the Holly’s overhead.

Randy McKay, who took over in 2013 as executive director of Jefferson Live!, which runs both the Holly and the Cascade Theatre, said the Cascade has been financially self sufficient, and he anticipates the Holly will be self sufficient once it opens.

The Holly was largely gutted after its 1986 closing. Many of the building’s original decorative pieces were lost over the years, but community members have returned many of them to help with the restoration effort.

McKay said early cost estimates were made before bids came in and were essentially a “back-of-the-napkin” calculation. He said it’s not unusual for a project like this to face cost escalations.

“The Craterian (in Medford) was originally supposed to cost $3 million, but it became $5.5 million,” he said.

In 2018, the Holly restoration was estimated at $10 million, but over the past year that has increased to $11 million.

The Holly got off to a good start in 2011 and 2012, when a facade restoration was completed. But a dispute between JPR and the Oregon University System intensified, ultimately leading to the 2012 ouster of former JPR executive director Ron Kramer, who had been with the radio station since 1974.

During the impasse between JPR and the university system, the Holly restoration effort lost steam, even though it received help from the city of Medford and the state of Oregon.

“If this project hadn’t stopped, it would have been done,” said McKay. When McKay started, the estimate to restore the Holly was $4.3 million, an amount still listed on hollytheatre.org.

To date, more than $3 million has been spent on the Holly, roughly the original estimate of the cost to completely remodel the building back in 2011.

Even though it will be a scramble to raise $3.2 million over the next few months, McKay said that if the money isn’t raised, the Holly project won’t die. But construction costs could go up and more fundraising might be needed.

Once the current phase of construction is completed to renovate the front portion of the building, the bids for the remainder of the project will be good for another 30 days, McKay said. He expects this phase to wrap up sometime around the end of the year.

He said he has until about February to secure pledges or donations in order to lock in $2 million in federal tax credits.

Some of the big-ticket items on the Holly included $1.6 million for a new electrical system, $1.4 million to outfit the theater so it can put on theatrical events, $1.2 million for the heating and air conditioning system, $1.4 million for carpentry, demolition and other work. Doors, windows and other finishes will cost $800,000. A fire sprinkler system will cost $300,000.

McKay said initial bids put the Holly well above $11 million, so the project team had to whittle costs down. Costs for steel and other materials have gone up because of new tariffs, he said.

“I can tell you that when we first started this thing, nobody had any work,” said Mark McKechnie of Oregon Architecture, who has been involved in the Holly since the beginning of the restoration effort. “The subs and contractors were willing to do the project just to keep their guys busy.”

Fast forward seven years, and the subcontractors are busy keeping up with construction demand.

As a result, labor costs have escalated — since 2013 they have gone up 30%, according to Construction Analytics, which found Oregon has seen higher construction costs than the nation as whole.

The theater received $2 million from a state contract, but the grant came with strings attached, namely that workers would have to be paid to Oregon Bureau of Labor and Industry standards.

The increased labor costs total about $1.2 million, effectively reducing the $2 million to $800,000, according to numbers released by Jefferson Live!

McKechnie said there were some initial discussions about not accepting the grant to avoid paying the higher wages.

“They thought long and hard whether they needed the money,” he said.

Other issues have popped up as well. When the facade work was completed, the trusses that supported the roof were failing. McKechnie said the initial work on the trusses has been followed up by adding extra support for the roof.

George Kramer, a local historian who is working on the Holly restoration, blames the previous administration at Southern Oregon University, specifically former SOU president Mary Cullinan, who left in 2014, for derailing the project.

“Had it not faced the political headwinds that it did, it would be open now for $5 million or $6 million,” he said.

In the meantime, costs have gone through the roof, Kramer said.

Kramer has worked on other vintage theaters in Oregon, including the Egyptian Theatre in Coos Bay, the Liberty Theatre in North Bend and the Alger Community Theater in Lakeview, all with much smaller auditoriums than the Holly.

He said SOU created another level of bureaucracy with the Holly that has made it more problematic to get it done in a timely manner.

Jefferson Live! is a subsidiary of the JPR Foundation, which is the fundraising arm of the radio station. Jefferson Live! was created as a result of settling the dispute with the university system.

Unlike the Holly, the Cascade Theatre in Redding, also owned by JPR, was built on time and within budget, Kramer said.

Now, we’re looking at potentially completing the Holly almost 10 years after it was first discussed, he said.

“This should have been a three- or four-year program, but it wasn’t, and then the numbers got bigger,” Kramer said. “It’s a horrible thing, and it should never have happened.”

Despite the problems, Kramer said the Holly will not be torn down and turned into a parking lot, as some suggested years ago.

“It might take a long time, but it’s going to be a theater,” he said.

Reach reporter Damian Mann at 541-776-4476 or dmann@rosebudmedia.com. Follow him on Twitter @reporterDM.

The Holly Theatre marquee updates progress on renovations.{ }Jamie Lusch / Mail Tribune
Randy McKay, Executive Director for Jefferson Live!, walks through the Holly Theatre on Tuesday.{ }Jamie Lusch / Mail Tribune