DOWNTOWN ‚Äî AMC Theatres is pulling back from negotiations with City Hall to put a state-of-the-art multiplex theater in the heart of the Downtown, saying the project no longer pencils out.
The AMC development team said that the 70,000-square-foot project would not make them enough money to justify the cost of building it, according to a city staff report.
The company has been in exclusive negotiations with City Hall since September 2009.
The negotiation period ended Nov. 26, just a month and a half after the Planning Department released the draft environmental impact report for the project, an expensive study that looks at the traffic, pollution and other impacts caused by the development.
“Last week they let us know they would not be pursuing exclusive negotiations,” said Andy Agle, director of Housing and Economic Development with City Hall.
The team told city officials that the cost to build the project had increased over the past three years, Agle said.
“I don‚Äôt know if there have been any changes on the income side in terms of the operations of the theater,” Agle said.
City officials will go before the City Council on Tuesday to request that they put the project out into the open market to see if any other private companies want to put a theater at the 1320 Fourth St. site.
Neither representatives from AMC Theatres nor Metropolitan Pacific Capital, their partner in the project, returned calls for comment by presstime.
At the beginning of November, city staff told the Daily Press that City Hall was still in negotiations with AMC and Metropolitan Pacific Capital over a development agreement for the space.
Development agreements are contracts between City Hall and developers that allow projects to go above and beyond the dictates of the zoning code in return for benefits like investments in transportation systems or public art.
At the time, those negotiations were expected to wrap up by the end of November.
Part of the problem was the sheer length of those talks, said Rob York, a real estate consultant for Downtown Santa Monica Inc., the public-private company that manages the Downtown for City Hall.
“The issue with the current negotiations is that they dragged on and the exclusive negotiating period is lapsing,” York said.
Officials still want a theater in the space, which will be left empty when Parking Structure 3 is demolished.
Santa Monicans go to the movies, Agle said, and it would be preferable to have a good theater in the Downtown for them to attend rather than driving out of the city to catch a flick.
“The second reason really relates to how Downtown Santa Monica works,” Agle said. “It‚Äôs a district that has a variety of things going on. It‚Äôs not just a shopping district, or a restaurant district. It‚Äôs part of an entertainment district.”
A modern theater would also be a draw for the city, which will be linked to the rest of Los Angeles even further by the incoming Exposition Light Rail Line, set to arrive in 2015.
Although AMC is backing down, the company has put a lot of resources into the project over the last three years, York said.
That includes building design and a hefty environmental report that was almost complete when they backed down.
“I wouldn‚Äôt rule them out,” he said.
The final fly in the ointment is the fate of the Criterion 6, one of three theaters that AMC owns in Santa Monica.
The City Council picked AMC to develop the city-owned property on Fourth Street because the council did not want to approve a 2,167-seat theater without reducing the number of theater seats available elsewhere. AMC, which owned the majority of the theaters in the city, was the only company that could promise the 1,600 seat reduction the City Council requested.
That may no longer be the case.
The property owner of the Criterion 6 received permission in November to convert the theater into general retail, and that remains in play despite the fact that AMC backed out.
“Ultimately, it‚Äôs the property owner that makes those decisions,” Agle said.