Guadalupe council votes to halt Royal Theater construction, directs staff to reconcile contracts

The Guadalupe City Council voted unanimously July 28 to stop construction of the Royal Theater and direct staff to reconcile contracts, assess closeout costs and work with grantors on reimbursements.

City Administrator David told the council that continuing construction without a verified funding plan would drive the general fund negative. "I prefer stop, stop work," he said, recommending a reconciliation of contracts and a closeout plan. Finance staff and the city administrator said the city has relied on a mix of grants — $5,000,000 from the California Arts Council and a $4.8 million EDA award that is fully reimbursable — but that cash-flow timing and unaudited fund balances leave the general fund unable to carry the project. Staff presented estimates that continuing construction using general-fund money would result in roughly a $2.6 million shortfall in the current fiscal year; completing the project would cost about $13 million in total according to staff projections.

Multiple residents urged caution and asked for clearer, written estimates of closeout costs and what would be owed if the contract were terminated. "I still think it's not been super clear what the actual process is if this project were to be stopped," said Mira Ramirez, a resident who asked the council to delay a final decision until the financial details were laid out in writing. George Alvarez asked bluntly, "Who dropped the ball?"; staff clarified that some reimbursements are pending and that the EDA funds are reimbursable rather than cash on hand.

After discussion, Councilmember [motion-maker] moved to terminate the project but preserve the structure "to the extent possible," and the motion was seconded by another councilmember. The motion passed on a voice vote recorded as all ayes. The council directed staff to: notify contractors as required by contract, reconcile all invoices and contracts, contact grantors to discuss relief or closeout terms, and return with a verified termination or funding plan.

The decision follows several months of staff analysis and public comment. City staff said they will continue work to close out invoices and to pursue any allowable relief in grant agreements, and they committed to returning to council with a detailed plan and estimated closeout costs. The motion and direction do not, by themselves, change grant agreements; staff said those discussions will continue with the California Arts Council, the EDA and other funders.