How Pleasant Grove financed The Ruth theater, and what its tenant owes
The city's building authority borrowed $35 million in fiscal 2023 to build The Ruth and expects the theater's operator, Hale Center Foundation for the Arts and Education, to repay it through rent. The fiscal 2025 audit lists $34,087,000 still owed, three tenant-funded reserves below their targets under an installment schedule, and a maturity date that differs from the lease schedule.
Continuing story: Auditing Pleasant Grove
Pleasant Grove's Local Building Authority issued $35,000,000 in lease revenue bonds in fiscal 2023 to design and build a performing arts facility, according to the city's fiscal 2025 audit. The city intends to repay the debt with rent from Hale Center Foundation for the Arts and Education. [1]
The theater, The Ruth, opened for its first production in January 2025. [3]
The debt and the rent
At June 30, 2025, the bonds stood at $34,087,000 after a $913,000 principal reduction during the year, with $953,000 due within one year. [6]
The audit records a lease receivable of the same $34,087,000. Semiannual lease payments, including interest, began in December 2024 and continue through December 2046, and the audit says the lease revenue directly offsets the building authority's debt payments. [1]
The lease schedule lists $2,391,529 due in fiscal 2026, made up of $953,000 in principal and $1,438,529 in interest, and $52,611,717 in total remaining payments, including $18,524,717 in interest, through 2047. [1]
The bond table in the same report lists the Series 2022A lease revenue bonds at a 4.28% interest rate with a final due date of Jan. 1, 2027. The report does not explain the difference from the lease schedule. [2]
The tenant's reserves
Under the lease, the foundation must fund three reserve accounts in installments until each reaches its required amount: $1,650,000 for capital repairs and replacements, subject to adjustment if project costs differ from budget; $2,000,000 for unpaid operating expenses; and $2,800,000 to cover unpaid rent, cure other tenant defaults or pay rebatable arbitrage. [1]
At June 30, 2025, the three accounts held $1,334,000, $100,000 and $661,622, reported as deposits in the building authority fund. If any reserve is used, the foundation must restore it, and any balance left when the bonds are retired or defeased returns to the foundation. [1]
The city's own contribution
The audit's introductory letter says the city will provide $300,000 a year as an operational subsidy. [3]
The fiscal 2027 budget's CARE tax fund lists $200,000 for The Ruth in fiscal 2025 actual spending, $300,000 in the fiscal 2026 budget and $300,000 in the adopted fiscal 2027 budget. [5]
The audit lists The Ruth Theater at $23,031,341 among the city's major capital asset additions in fiscal 2025. [4]
The bond balance and the lease receivable are two sides of one arrangement, not two debts. A reserve balance below its eventual target does not by itself show a missed payment; the audit says the reserves are funded in installments.
Sources
- Pleasant Grove City · FY2025 Annual Comprehensive Financial Report (filed with the state), Note 4, lease receivable and reserve accounts
- Pleasant Grove City · FY2025 Annual Comprehensive Financial Report (filed with the state), Note 8, revenue bonds and long-term liabilities
- Pleasant Grove City · FY2025 Annual Comprehensive Financial Report (filed with the state), introductory letter
- Pleasant Grove City · FY2025 Annual Comprehensive Financial Report (filed with the state), capital assets and debt administration
- Pleasant Grove City · FY2027 final budget (filed with the state), CARE tax fund
- Pleasant Grove City · FY2025 Annual Comprehensive Financial Report (filed with the state), Note 8, changes in long-term liabilities
Reporting by The Utah Ledger from the public records above. AI-assisted, checked against those records.