The failed Randy Parton Theatre may soon become an Internet gambling facility and bar. Plans for a lease-to-buy deal for the financially ailing facility, now known as the Roanoke Rapids Theater, could be announced within days by the cash-strapped city of Roanoke Rapids and a group of out-of-state investors.
“The bottom line is the citizens of Roanoke Rapids are still going to have a substantial debt to pay off, but this is a way that we can emerge from this in a few years,” said Roanoke Rapids Mayor Emery G. Doughtie.
Attorneys for the entities are conducting negotiations privately. The talks come amid a backdrop of various lawsuits now before the state Supreme Court — along with legislative and municipal attempts across North Carolina — either to outlaw or tax and regulate stiffly the prize-generating Internet parlors critics assail as an expansion of gambling.
The city originally borrowed $21.5 million and received additional state support to build the entertainment venue as the Randy Parton Theatre, expecting it to attract large crowds of tourists by trading on the Parton family name. Randy Parton is the brother of country music stars Dolly and Stella Parton. Initially, he managed the theater and was the principal headlining act at the venue.
The hope was that the theater would spark further entertainment, restaurant, and hotel development in a 1,000-acre area called Carolina Crossroads just off I-95. The theater encompasses 35,000 square feet and seats 1,500.
The project, approved in 2005, was the first major economic development underwritten by a North Carolina municipality using Tax Increment Financing.
Under TIF, a public economic development investment is supposed to improve the values of surrounding property; the incremental increase in property tax collections then is used to repay the borrowed money. But when the project failed, Roanoke Rapids was left with a debt to retire, and little revenue to do so.
The entertainment district now is mostly vacant land.
Randy Parton was replaced in 2007 as manager of the theater, a few months after it opened. Crowds had dwindled, few other musical acts were booked, Parton irritated the city by questionable practices such as buying custom-tailored clothes for him and his wife at taxpayer expense, and Parton showed up intoxicated before a performance.
The city took over operation of the 1,500-seat theater and has been unable to market it to a buyer. Though there are still occasional shows there, it mostly serves as a host facility for wedding receptions and community events that produce little revenue.
Doughtie said the lease-to-buy deal would allow the new operators to book shows and run the theater for 12 to 18 months on a trial basis. They would place the Internet machines in about 10 percent of the building’s space, none of which would be in the performance section of the theater. The suitor also is interested in further developing the entertainment district.
The theater now has an Alcohol Beverage Control permit for sales of alcohol. The new operator would have to get its own permit to continue providing alcoholic drinks.
City Councilwoman Carol H. Cowen said she’s never been inside a sweepstakes business but has no objection to them.
“We don’t have lots of people running here to buy this theater,” Cowen said. “I think our citizens would prefer selling it for some cause to bring money in here instead of increasing taxes.”
Asked whether the city would take a loss on the sale she said, “Oh, yeah, even if we get the asking price.” She didn’t give details, saying the numbers were still proprietary.
City Council hopes to be able to refinance its debt and lower payments if it strikes this deal. Jobs creation and increased sales taxes would be further bonuses.
“The payment on the theater takes about a third of our ad valorem tax money,” Doughtie said. “Our payment currently is about $1.8 million” a year, and outstanding debt on the theater and surrounding land is about $17 million.
“The only way really we have to raise revenue is through property tax, what we get through sales tax” and various fees, Doughtie said.
“We’re just really struggling to provide the basic services to the community” such as street repairs, police, and fire protection, Doughtie said. Pay raises and most capital improvements are on hold. The city has gained little traction in the General Assembly in attempts to get a one-cent sales tax approved to help pay the debt.
Aside from the investment group, whose principals Doughtie said “are not from North Carolina,” the city still has a verbal offer to purchase the theater and land from Lafayette Gatling, a former North Carolina resident and developer now living in Chicago.
Doughtie said that deal could be consummated if Gatling agrees to it in writing before the investment group reaches an agreement with the city.
“The city doesn’t need to be in the entertainment business,” the mayor said, acknowledging the city has received “a little bit of criticism from some people about the gambling stigma” associated with the Internet sweepstakes decision.
“I’m all for the theater being an Internet café,” said Rose Nicholson, owner of Carolina Cyber Center in Roanoke Rapids. She operates about two dozen sweepstakes machines.
She said a sweepstakes business at the theater likely would attract more players to the border community from Virginia, where the games are banned. So it would enhance her business instead of compete with it.
The software companies that provide the games restrict their use to a specific site within a protected zone of several miles. There are hundreds of games available, so players will rotate to different sites to try something new, Nicholson said.
Gardner Payne, owner of the S&G Internet and Sweepstakes parlor in Roanoke Rapids, is pleased that in approving ordinance amendments to allow electronic games at the theater, the city extended the rules to existing Internet cafes. Those include later operating hours and the ability to sell alcohol on premise.
But the Daily Herald newspaper in Roanoke Rapids said Payne — a Raleigh attorney and longtime Democratic Party fundraiser — objects to capping business privilege taxes at $80,000, based on $2,000 for the first five machines and $1,000 for each additional machine. He said the cap gives an unfair competitive edge to a large operator with room to grow and add many machines beyond the taxable limit.
Dan Way is associate editor of Carolina Journal.