Billings weighs paying insurance deductible and negotiating sale to ArtHouse after Babcock Theater ceiling collapse

City staff laid out options Monday for the shuttered, city-owned Babcock Theater after a May 2025 ceiling collapse left the facility unusable and the ArtHouse operator seeking a path forward.

Facilities manager Tricia May summarized a condition assessment by Cushing Terrell that divided work into three priorities: high-priority code and safety items ($1.4M–$1.7M), deferred maintenance/operational improvements ($1.0M–$1.3M), and potential future upgrades. The combined low-to-high range across all phases was presented at about $3.5M–$4.3M. May said the city had not carried liability insurance on the property at the time of the collapse; ArtHouse’s insurance was denied and the condo-owner insurer covering units above the theater indicated a potential recovery of about $469,000 after a $100,000 deductible.

ArtHouse Executive Director Matt Blixey told council the nonprofit is “very interested” in assuming ownership and will work with the city on a buy-sell that reflects their capacity; he said the $1.5M repair number in ArtHouse’s LOI was a starting point for negotiations rather than a fixed price. Several council members said they favor getting the theater back into operation but expressed reluctance to commit large TIF resources or pay several hundred thousand dollars without a clear exit plan.

Council discussion coalesced around a staff recommendation: (1) cover the near-term insurance/deductible and abate ArtHouse utility obligations while the building is shuttered, (2) buy time to negotiate a purchase-and-sale agreement with ArtHouse that transfers ownership once funding and repairs are defined, and (3) return to council with specific lease-amendment and disposition resolutions. Staff noted that using downtown TIF funds would be one financing path but cautioned the Babcock is not a clear tax-increment generator by itself.

No final sale or appropriation was approved at the work session; staff said they would draft lease amendments and a negotiated purchase-and-sale for council approval and return with clearer cost estimates.