Council approves Precon Industries contract for Royal Theater renovation; funding gap remains

The Guadalupe City Council voted unanimously Oct. 14 to award a construction contract to Precon Industries for the renovation of the city'owned Royal Theater, advancing a long-running revitalization project but leaving a remaining funding gap of about $2.95 million.

Project manager Tom Branderberry told the council the city received four bids after re-scoping the project from a three-story facility to a one-story design. He said the lowest base bidder, AMG Associates, later told staff it had omitted equipment pricing for several bid alternates and would withdraw if the council included alternates in the contract. "We would include all of the alternates in the contract, not just 1, but all 5 of them," Branderberry said during his presentation.

The staff-recommended approach moved forward with the next-lowest responsive bidder, Precon Industries, whose total proposal — including all five alternates — was the lowest of the remaining complete bids. Council adopted Resolution 2025-57 approving the contractor services agreement; a roll call recorded five ayes and the measure passed.

Why it matters: the contract award lets construction proceed to build the theater shell and core work, but staff and the council emphasized the project still needs additional funding to complete all planned alternates and fit-out. Branderberry told the council the current documented funding shortfall, based on the accepted Precon bid and the city'reported funds to date, is $2,954,000.

What the council heard and discussed - Funding gap and capital campaign: Staff presented options for closing the gap, including private fundraising and seeking New Markets Tax Credit (NMTC) investment. Branderberry explained NMTC financing could supply cash equity and a loan portion but would require adding commercial square footage (a storefront) to the project to attract investors. He provided an example: building a roughly 2,500-square-foot commercial space could cost roughly $1.4 million and, after NMTC mechanics, would leave the city with about $600,000 in net proceeds but also a roughly $650,000 loan obligation carried by the nonprofit partner.

- Oversight and communications: Council members and a public commenter urged caution before launching a public capital campaign, citing unresolved reconciliation of prior project expenditures. Community member Mira Ramirez recommended the council separate approval of the construction contract from any decisions on a campaign and required the creation of a communications director role for campaign messaging if a campaign proceeds.

- Bid evaluation and alternates: Branderberry explained AMG's alternate pricing error and said staff'the design team and the city attorney had reviewed how to proceed; staff concluded awarding to Precon would best protect the city while allowing alternates to be added later if funding becomes available.

Action taken - Resolution 2025-57: Approved (5-0). Motion and second were made on the record; the council's roll call recorded "aye" votes by Council member Costa Junior, Council member Fernandez, Council member Villegas, Council member Hernandez and Mayor Julian. The resolution approves an agreement for contractor services with Precon Industries for the Guadalupe Royal Theater revitalization project.

Next steps and context Staff said they will continue fundraising work, reconcile spending-to-date figures with finance staff, and return to the council with any recommended changes to the project scope or financing approach. Staff also noted the city needs to finalize a gift policy and a formal oversight structure before major public fundraising or naming-right solicitations.

Ending: With the contractor selected, construction planning can move forward; however, council and staff emphasized the need to reconcile past expenditures and identify roughly $3 million in additional funding before the theater project can be completed as currently envisioned.