St. Paul leaders are hitching the future of their downtown cultural scene on a former vaudeville theater and movie house that has been closed for 30 years — and has the peeling paint and water damage to prove it.

Long the subject of renovation proposals, the 97-year-old Palace Theater is now the target of a $12 million project to become a 3,000-capacity concert venue with support from state taxpayers and two big names in the Twin Cities music business, First Avenue nightclub and Jam Productions.

Concert professionals, musicians and legislators joined Mayor Chris Coleman on Monday for a tour of the theater, near Rice Park and Landmark Center on West 7th Place.

Coleman spearheaded a bonding bill headed to the Legislature Tuesday that asks the state to back $6 million of the renovation costs. The other $6 million will be funded with about $1 million in arts grants and the rest through loans to be repaid from revenue once the theater reopens.

"This is the moment that we have to seize," said Coleman, who has eyed the Palace since taking office in 2005 but admitted "it has been hard to get all the pieces in place."

Still palatial despite its time-roughened edges, the Palace hosted the likes of Charlie Chaplin and the Marx Brothers in its vaudeville days before being converted to the RKO Orpheum movie theater in 1947.

After the movies stopped in 1982, it was used as a temporary home for "A Prairie Home Companion" through 1984 but has sat dormant since, aside from Brave New Workshop supper-club shows housed in the theater lobby.

The costliest expense would be a new heating and air-conditioning system. Repairs and paint for the walls are also needed, and all the seats on the floor and some in the balcony would be removed to make way for standing room and bar areas.

"If we [wait] any further, it's going to be that much harder for us to reopen this joint," the mayor said. "These historic buildings are not easy to get back online. But you have to do it [or else] let it sit and deteriorate more."

If all goes well, the Palace could reopen in time to mark its 100th anniversary in 2016.

Asked to assess the bonding bill's prospects, Sen. Sandy Pappas, DFL-St. Paul, said, "It's a good sign that St. Paul has this near the top of its list."

The city is also asking for $14 million in state bonding to double the size of the Minnesota Children's Museum, another downtown attraction.

Entertainment value

Just one block from the Palace is the recently closed Macy's department store. A few blocks in the opposite direction is Ordway Center, where construction is underway for a new 1,100-capacity theater, set to open in 2015.

Rep. Alice Hausman, DFL-St. Paul, sees a figurative relationship between the old and new spaces.

"[People] used to go to the big urban city to shop, but they now go to be entertained," said Hausman, who chairs the House Capital Investment Committee and will introduce the bonding bill to the legislature. "There's a statewide interest in this as well."

Signaling the concert industry's interest, representatives from Jam and First Avenue discussed how the Palace might fill a void among music venues.

Its size would put it about halfway between First Ave's main room (which holds 1,600 people) and Roy Wilkins Auditorium (5,000) among general-admission venues. Myth nightclub in Maplewood and the newly revived Skyway Theatre in downtown Minneapolis fill a similar niche.

"It's a perfect fit," said Jam Productions co-founder Jerry Mickelson, whose Chicago-based company regularly books concerts at Wilkins and Xcel Energy Center.

The Twin Cities' other historic theaters all are seated venues. By comparison, reopening the 1,000-capacity Pantages in 2002 cost the city of Minneapolis $8.9 million.

Mickelson pointed to the thriving Fox Theater in Oakland, Calif., as an example of a historic theater updated to bring young night life seekers into faded downtowns. Others that have been successfully reconfigured as general-admission venues include the Ford and Wiltern theaters in Los Angeles, the Ogden in Denver and the Riviera (which Jam owns) in Chicago.

"There are many cities that have taken on the challenge to revitalize their downtown core, and a big part of that is saving cultural institutions like the Palace," he said.

Seeking a younger audience

Frequent partners, Jam and First Avenue representatives have not signed a deal with the city but say they expect to make an official commitment to bring shows there should the bonding bill pass.

First Avenue owner Dayna Frank said Jam's involvement "will provide the booking gravitas and experience to put on a lot of great shows here." City proposals estimate 100-plus events a year at the theater, drawing more than 200,000 annually downtown.

Jon Oulman, who owns the Amsterdam Bar & Hall in downtown St. Paul, expects the Palace to draw "more of the kinds of crowds" that make downtown night life vibrant.

"There's a younger audience that comes out to concerts at venues like this, one that seeks out more to do when they're down here," said Oulman. "A lot of times, we see more business off Wilkins shows than we do Xcel shows."