Stage Set for Theater in Canoga Park : Redevelopment: L.A. expects funds for community venue where adult movie house stood.

Federal officials are likely to award the city of Los Angeles a $2.6-million grant to build a community theater on the former site of an X-rated movie house in Canoga Park that was severely damaged by the Northridge earthquake, city officials said Monday.

The city’s Community Redevelopment Agency on Thursday will formally submit an application to the U. S. Economic Development Administration for a grant to build a 500-seat theater on the site of the Pussycat Theater in the 2100 block of Sherman Way.

“We are starving for this kind of facility out there,” said Los Angeles City Councilwoman Laura Chick, who represents Canoga Park. Chick has spearheaded the effort to build the venue, which would provide a home for live stage productions and musicals.

“People don’t want to get in their cars and drive to Hollywood or West Los Angeles for this kind of entertainment,” she said.

Although the application has yet to be submitted, Chick said federal officials have expressed their support for the grant. “We have every indication from the EDA that they will be very receptive and favorable to this application,” she said.

The building on Sherman Way had operated as a theater for 68 years--as the Madrid Theater before it became the Pussycat--until it was jolted by the January, 1994, temblor. It was razed in April after city inspectors ruled that the building was damaged beyond repair.

Under Chick’s plan, the $2.6 million would be used to buy the lot, build a community theater for local and regional ensembles and help rehabilitate streets and parking lots around the site.

The city would either operate the theater or turn it over to a nonprofit group, said Chick’s chief of staff, Karen Constine, who has worked behind the scenes on the project for months.

She said construction of the theater--to be christened the Madrid Theater in honor of the site’s original edifice--is also a way to revitalize Canoga Park’s central business district, which includes Antiques Row. Some nearby antiques merchants may keep their shops open late to draw theatergoers at night and on weekends, Constine said.

Chick agreed, saying the theater will quash the stereotype that the Valley has no appreciation for the arts.

“Who’s going to go?” she asked rhetorically. “The entire San Fernando Valley.”

Chick is planning a news conference at the location Thursday to unveil potential designs for the new theater.