The historic State Theater, though small, has long had a prominent presence on Congress Avenue in Downtown Austin. The scale and detail of its façade make an important contribution to the character of the avenue, which is regulated as an historic district. In the 1970s and 80s, however, the movie house fell into disrepair and remained vacant for over 10 years.

In 1994, Austin voters approved a bond package to pay for the rescue of the theater, and the City authorized the Live Oak Theatre Company to renovate the building as a live performance venue. A tight urban site with difficult conditions compounded complex programmatic requirements. The existing building provided Black + Vernooy with a number of design challenges, including asbestos abatement and bringing the building into compliance with ADA and life-safety codes.

The first phase of design encompassed a renovation and reconfiguration of the original house and lobby to accommodate a 350-seat theater. Black + Vernooy exposed much of the balcony framing in the house, which resulted in a more open feel while paying tribute to the original structure. Seat risers were carved out and the stage lowered to achieve better sight lines, and box seats were added to the north side of the theater. Walls in the lobby were re-plastered, and the historic façade and neon marquee were restored. Office space and classrooms with a small stage were added to the upper floors to accommodate the administrative and educational needs of the theatre company.