Long-held plans to revitalize the Times Square district got a major boost Wednesday when the Walt Disney Co. announced a $ 29 million plan to restore the historic New Amsterdam Theater to its original Art Nouveau splendor and present musicals there beginning in September 1996.

Disney has been negotiating with the 42nd Street Development Project since last summer to take over the 1903 theater, which was home to the Ziegfeld Follies from 1913 through 1927. For months, the company held its plans close to the vest while working out the deal with state and city agencies. AtWednesday’s City Hall announcement Disney chairman and CEO Michael Eisner said, “With the New Amsterdam Theater, we will have a permanent home for future theatrical productions on Broadway.

“Our plans for the New Amsterdam Theater mark our expanding commitment to live entertainment,” Eisner continued. Disney’s shows there, he continued, would include both adaptations of Disney features — such as “Beauty and the Beast,” currently in rehearsal for an April opening at the Palace Theater — and original productions developed for the stage.

Eisner was joined at the press conference by Gov. Mario M. Cuomo and Mayor Rudolph Giuliani, both of whom applauded the venture.

Under the “memorandum of understanding” they signed, Disney will contribute $ 8 million toward the restoration of the theater, which is on West 42nd Street between Seventh and Eighth Avenues. The remaining $ 21 million will be loaned to Disney by the 42nd Street Development Project, a joint undertaking of city and state agencies.

Disney will oversee the design and construction of the theater, subject to city and state approval.

Resolve all terms

Disney hopes to resolve all the terms of the non-binding agreement by the end of the year. Construction, which could begin by December, is expected to take 18 -24 months. Under the arrangement — much of which was worked out by Dinkins administration officials before leaving office in December — Disney will begin repaying the $ 21 million loan once the theater has opened, beginning with $ 1 million per year and increasing thereafter.

The New Amsterdam, which hasn’t featured a live show since 1937, is also expected to generate considerable addtional tax and employment benefits.

Disney encountered early opposition from Broadway theater owners, some of whom objected to any plan that included public subsidy of a commercial venture when they were denied such aid. The owners dropped those objections last month when Cuomo, in his State of the State address, promised similar subsidies for Broadway theaters.

The project also has the support of Actors’ Equity, which, like the theater owners, originally expressed skepticism about it.

Although the union hasn’t yet reached a formal arrangement with Disney, “they are committed to complying with area standards,” Equity executive secretary Alan Eisenberg said Wednesday. Translation: Equity expects Disney to operate under the Broadway production contract negotiated between the union and the Broadway trade organization, the League of American Theaters & Producers. Disney hasn’t joined the League, but has made inquiries about doing so.

In outlining his plan, Eisner sounded a familiar Disney theme: “As important a development as the information superhighway will be,” he said, “we believe that there is a growing desire for people to interact socially at live events in theaters, sports arenas and theme parks.”

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