Doug Kennedy has put his under-construction Sonora Armory entertainment complex on the market for nearly $5 million as he launches a Florida-based venture with a former top executive in the video-game industry.

Kennedy has faced accusations that he’s looking for a way out of the project, which remains without a firm opening date. He said he’s committed to completing the project and is looking at additional investments to further the growth of the downtown area.

“I’m not in business strictly to run a bar and restaurant, I’m in business because I saw Sonora as an opportunity, and there was a need for a large-scale entertainment complex to come into town,” he said.

The listing is being handled by Restaurant Exchange, a Sacramento-based commercial real estate agency that specializes in restaurants and related businesses, according to its website.

Meanwhile, Stage 3 Theatre Co., which occupied space in the building, remains without a home for what would have been its 25th anniversary this year.

The board of directors has blamed the nonprofit community theater’s ongoing troubles largely on Kennedy, claiming that he broke promises made after he assumed ownership of the building in March 2016.

Kennedy said the blame rests squarely on the board.

He said in a telephone interview from Florida this week that he regularly puts his businesses up for sale while in development, adding that he did the same with the Bourbon Barrel before it opened in October 2015.

“We’ve had two businesses that we sold before rolling the product out and one I sold right after rolling the product out, but we’ve always offered for sale prior to rolling out,” Kennedy said. “It’s a pretty standard practice for us on any project across the board.”

Kennedy’s other businesses

One of the businesses Kennedy has sold is Studio Wildcard, a video-game development company he co-founded that was purchased by Chinese game developer and publisher Snail Games in 2015.

Kennedy is the CEO of Studio Wildcard, which last year released its flagship title “Ark: Survival Evolved.” The game had sold more than 7 million copies in its “early-access” form prior to its official release, according to published reports.
Snail Games released a new game based on Ark this week. Kennedy said another is planned for release later this year.

“A lot of people don’t realize that a lot of these projects I’m doing in Sonora are based on the success I’ve had in the video game industry,” Kennedy said.

Kennedy said he’s been based primarily in Fort Myers, Fla., since 2015, though he also frequently travels outside the country for his work. He spends summers at his beach house in Delaware with his wife and kids, who live in Tuolumne County.

He’s starting a new venture capital fund with Jack Tretton, a former CEO and president of Sony’s Playstation whom Business Insider recently described in an article about the partnership as “a legend in the video game business.”

The fund, Interactive Gaming Ventures, aims to invest in publishing games from independent developers while allowing those developers to maintain the intellectual-property rights to their creations.

“When you combine the corporate world with the indie world, some powerful things can happen,” Kennedy said. “We want to let developers focus 100 percent on developing games, and we focus on running the business.”

Armory progress

Though much of Kennedy’s focus is on the new fund, he said he tries to visit Tuolumne County on a regular basis and keeps up on the progress of the Sonora Armory project through video-conferencing with his team.

The project will expand the Bourbon Barrel at 208 S. Green St. and combine the business with the former Stage 3 Theatre Co. space, in addition to a retail store and outdoor beer garden called the Green Dog Beer Co.

Kennedy’s vision is to ultimately create a large-scale entertainment complex that can accommodate more than 600 people at a time to attract more visitors to downtown Sonora. He plans to host live entertainment at the renovated venue, including music, comedy and plays.

“If everybody starts to look at Tuolumne County and Calaveras County as a music mecca hub, people will want to check out this area before they decide to go on vacation to Santa Cruz,” he said.

Several contractors and subcontractors were on site Wednesday morning.

Some of the work completed since early January includes the exterior siding and roll up windows to the beer garden, a complete overhauling of the electrical system done by Pacific Gas and Electric Co., brick work on the outdoor bar and sheetrock in the retail store and bathrooms.

In the coming days and weeks, the team plans to install the structural steel beams for the front entryway, sidewalk and curbing along Green Street, and leveling the city-owned parking lot with the new sidewalk and curbing along the side of the building.

“We’ve been at the mercy of the weather in terms of the parking lot and paving, but it’s allowed the team to move forward with interior work,” Kennedy said.

Despite putting the building on the market, Kennedy doubts someone will purchase it for the asking price and plans to see the project through to completion.
He said there will likely be a delay before it can open once the renovation is completed because they will need to hire and extensively train a staff of 50 or so people to run the various businesses.

“Is it technically for sale? Yes. Do I think someone is going to buy it? No,” he said. “If someone steps up, we’ll listen to them. Otherwise, we’ll keep moving forward, go through an extensive training process and open when we’re ready.”

Stage 3 dispute

Kennedy said he’s reluctant to give an estimated opening date because of the trouble he ran into with Stage 3 after he originally said the plan was to complete the renovation by April 2017.

Stage 3 was forced to find new venues for its plays during the 2017 season, which the theater’s board has blamed in part for having to end that season early and “go dark” indefinitely.

In December, the theater board’s attorney sent a letter to Kennedy demanding he pay $550,000 for allegedly breaching a five-year lease agreement that the board claimed it had made with the building’s previous owners months before it was purchased by Kennedy through his and his wife’s Trado Restaurant Corp.

After receiving the letter, Kennedy sent a angry text message to Sonora Mayor Connie Williams, who has served as chairwoman of the Stage 3 board since 2014. That prompted another letter from the board’s attorney stating that the content of the message bordered on harassment.

It was later revealed by Kennedy that his relationship with the board had soured months earlier after he found people associated with Stage 3 who were living in a space in the building without his permission.

The board has denied it had any knowledge that the people were living in the building and acted quickly to make them leave.

Olga Jones, a member of the Stage 3 board, said in a telephone interview on Wednesday that the theater is still looking for a new home.

“We have so many irons in the fire with trying to bring the theater back,” Jones said. “There has been discussions with a number of people, but nothing for publication yet. We’re just looking to see which one of these things will pass.”

Kennedy says the offer remains on the table for Stage 3 to produce plays at his venue once it’s completed, but Jones said the board can no longer trust he will follow through on his promises.

“We can’t do anything but hope we can find a new partner,” Jones said. “Doug has not lived up to any of the promises he made to us, and our trusting him was a huge mistake.”

Jones said it doesn’t appear as if Kennedy will follow through with completing construction on the building given that he’s put it up for sale, and she believes there will be problems with a lack of parking if it does open.

The board considered the possibility of suing Kennedy if he didn’t pay the $550,000, which it said would be enough to secure a new venue.

However, Jones said all of the attorneys they contacted wouldn’t take the case on contingency because he dissolved Trado Restaurant Corp. on Dec. 31 and formed a new limited-liability company called 209 Events, LLC, under his wife’s name.

“That’s basically who our lease was with,” Jones said of Trado Restaurant Corp. “Right now, we’re just in limbo and praying he didn’t manage to kill Stage 3.”

Kennedy responds

Kennedy and his accountant, Bob Hoyt, denied that dissolving Trado Restaurant Corp. had anything to do with a potential lawsuit from the Stage 3 board.

Hoyt said he had discussions with Kennedy dating back to last fall — months before the demand letters were sent — suggesting the dissolution of the corporation because forming an LLC would provide better tax benefits.

“It was basically driven by me purely for their financial well being and economics,” Hoyt said. “It had nothing to do with a lawsuit or anything else.”

Kennedy added that 209 Events made a filing with the county to do business as Trado Restaurant.

A public notice for a fictitious business name statement filed by 209 Events, LLC, was published in the The Union Democrat on Feb. 16.

“Why would we set up a dba as Trado if we were trying to avoid a lawsuit? It wouldn’t make any sense,” Kennedy said. “I would want everything as far away from that name as possible.”

Kennedy accused the Stage 3 board of trying to deflect the blame for allegedly mismanaging the nonprofit’s finances.

The board stated in a press release last year announcing that Stage 3 would be halting productions indefinitely due to the ongoing renovation of its former venue and an injury to the lead actress in a one-woman show that was scheduled to be the theater’s next production.

Statements filed with the IRS show the nonprofit’s expenses have exceeded revenues each year by between about $34,000 and $83,000 since 2013. Admissions in 2015 were about $43,000 less than 2013, which board members in January attributed to parting ways with a former artistic director who had a loyal following.

As far as the parking issue goes, Kennedy said he’s followed all of the city’s requirements for providing enough parking by securing agreements with several other businesses in town.
He said one of the agreements is with Bank of America to use its parking lot off South Green Street when the bank is not open, though he declined to name the businesses involved with other agreements.

Kennedy also denied the allegations that he doesn’t plan to finish construction on the Sonora Armory project, adding that he’s had discussions with owners of several other buildings in downtown Sonora about possibly purchasing them for additional business ventures.

He declined to state which specific ones he’s looked at, but he said some of the discussions are ongoing.

“I’m still doubling down and looking for investment because I believe Sonora is a jewel,” he said. “I think the opportunity for growth there is huge.”

Contact Alex MacLean at amaclean@uniondemocrat.com or (209) 588-4530.

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