Prominent local developer John King’s 50 percent share in the historic Fremont Theatre and adjacent property that housed Mission Cinemas will go up for auction in Los Angeles on May 16 after he lost a lawsuit from a former lender claiming he owed $11.5 million.
But his partner Rob Rossi said he hopes to emerge as the winning bidder — and continue operating the art deco-styled theater on Monterey Street in downtown San Luis Obispo as a successful music venue.
“We bought (the Fremont) as a lifetime investment,” Rossi said. “I don’t plan on letting this get away from us.”
Although he’s disappointed at losing his longtime partner in the property, Rossi called the reshuffling of ownership “more or less just housekeeping.” The business is operating in the black and is in good financial shape, he said, adding that the Fremont plans to book as many as 150 acts by the end of this year.
Renovations, such as restroom remodeling and repair work, continue, Rossi said. And if the city approves, he added, the old Mission Cinemas building will be torn down to make way for a five-story mixed-use project called Fremont Square.
“I think we’re in good shape. We’ve all been surprised at the level of entertainment, it just keeps getting better and better,” Rossi said. “And the companies and people that want to be downtown love that entertainment. It’s been a breath of fresh air.”
The bidding at the U.S. District Courthouse in Los Angeles will begin at $6,000 and increase in $1,000 increments. Rossi said he is not sure what will happen to his plans for the Fremont if he is outbid.
King did not return requests for comment Friday, and Paul Metchik, a San Luis Obispo attorney representing the firm assigned to collect the debt, declined to comment other than to say the foreclosure of King’s deed of trust on the two parcels on Monterey Street is the “natural conclusion of the enforcement and collection process.”
The lender, Rhode Island-based Textron Financial Corp., sued King, wife Carole and son John G. in federal court in February 2009, claiming they defaulted on loans of more than $14 million for a Spanish Springs mixed-use project near Pismo Beach along Price Canyon Road and Vaquero de los Robles LLC, a resort project in Paso Robles.
Vaquero de los Robles was designed to be North County’s largest resort, featuring hundreds of rooms in a spa hotel, a vineyard and wine-tasting facility, a visitor center and golf courses, according to Tribune archives.
In their civil complaint, attorneys for Textron wrote that Vaquero de los Robles entered into a loan agreement with the company for $9.7 million, to mature in 2008. King defaulted, according to the complaint, and by 2008, interest and late fees had driven the outstanding debt to more than $10.4 million.
King told The Tribune in 2009 that he was in discussions with Textron for new loans to build the resort when Textron told him it was getting out of the lending business.
King fought Textron’s foreclosure in a counter-claim, arguing the lender cross-collateralized the two properties without informing him, forcing him to pay off each loan for each property entirely in order not to lose either, according to court documents.
“They were going to be our partner in building the project, and we were negotiating to extend the loan,” King said in 2009. “Now they’ve effectively cut us off at the knees.”
Like many commercial developers, King told The Tribune in 2010 that he was affected by the severe recession.
A U.S. District Court judge ruled in Textron’s favor in 2009, awarding the lender $11.5 million, including interest and other fees.
The theater has since largely dropped movie screenings in favor of a steady stream of live music acts, including Jeff Bridges & the Abiders, Ziggy Marley, Yes, The Pixies, Steel Pulse, Bone Thugs-n-Harmony, Peter Murphy, and comedians John Waters and David Cross.
King has long been a major developer in the county. He and his various companies owned the Sea Venture Beach Hotel & Restaurant in Pismo Beach, as well as the Apple Farm Inn and Sycamore Mineral Springs in San Luis Obispo. It could not be learned Friday whether he still has an ownership interest in these properties.