With movie attendance recently down 30 percent, the rush is on to open a new 12-auditorium cinema with Imax, digital sound and 3D projection, stadium seating, good food and loads of amenities.I had previously written about City Hall’s attempt to lure moviegoers back to Downtown last Sep. 21 and 28.

The plan is to replace an aging 339-vehicle city parking garage at 1320 Fourth St. with a new cinema complex.

Invitations for a quality exhibitor to build and operate it on a long-term lease were issued. To not overtax available parking, City Hall wanted assurances the proposed 2,200 seat complex would not add a large number of new theater seats to the current 5,500 Bayside District inventory. This could only be accomplished by removing or shrinking existing auditoriums — a condition that restricted bidders to the three firms with theaters Downtown.

AMC Entertainment, Inc., which operates the AMC 7 and AMC Broadway 4 on Third Street, in partnership with well connected, Santa Monica-based developer Metropolitan Pacific Capital, LLC, submitted a bid, as did Arclight Cinemas with no Santa Monica properties. Only AMC could meet council’s mandate to limit overall seating.

At the Sep. 8, 2009 City Council meeting, housing and economic development staff asked council’s permission to engage in exclusive negotiations with AMC because, “… AMC currently operates two other cinema sites in the district and they propose to close the Loews/AMC Broadway 4 and remodel its AMC 7 with reduced seating capacity. With the loss of 1,049 seats from the closure of the Broadway 4 and 548 seats by remodeling the AMC 7, the net gain in seats is projected to be 570 — an increase of approximately 10 percent over the total number of existing seats in the district.”

But AMC doesn’t own the Broadway 4. As a tenant , it can’t permanently close and permanently terminate its theatrical use. Only AMC’s landlord, Promenade Gateway, LP can permanently close the fourplex if AMC fails to renew its lease in 2014. Then, it could secure another exhibitor without City Hall approval to take over.

The late Mayor Ken Genser mentioned AMC’s lack of ownership (a key point continually omitted from staff reports) and doubted AMC alone could permanently close the fourplex. He made a motion that staff continue to work with AMC and return to council with either a guarantee that AMC could permanently close the fourplex or, if not, council would decide between the AMC and Arclight proposals. The motion passed, but unfortunately council placed no deadline for obtaining a guarantee, something staff, AMC and its partner have shamelessly exploited.

Eight months later, there is still no guarantee of closure and everything is moving full speed ahead as if it were a done deal although AMC’s request for a presentation at Wednesday’s Planning Commission meeting has been continued.

At last Monday’s community meeting, involved parties could only say, “we’re confident a deal will be worked out with AMC’s landlord.” However, there have been no negotiations for the past six months because AMC and Metropolitan Pacific didn’t want to pay anything to AMC’s landlord.

Stopping movie operation at the Broadway 4 location has unconscionably been agreed upon by council, staff, AMC and its partner. If AMC were to cease movie operations for a 12- or 18-month period (depending on state coastal zone requirements), the long-allowed theater use would expire and the city would indefinitely refuse to issue the required theater conditional use permit. Promenade Gateway would be unable to lease the space to another exhibitor and forced to find a non-theatrical tenant, possibly at less income and a large capital outlay.

This conspiracy to deny Promenade Gateway of its rights — which it found out about six months after the scheme was conceived — prompted AMC’s landlord to retain legal counsel, which has investigated litigation against all wrongdoers. Huge claims for damages would ensue if a settlement with AMC isn’t reached.

With AMC’s failure to produce a plan for permanently shuttering the fourplex, it now appears promises of permanent closure and removal of 1,049 seats was a ruse to provide it with an overwhelming advantage and a big head start over other bidders. With the proposed 12-plex being fast-tracked to the “point of no return,” It appears AMC and Metropolitan Pacific will be awarded the contract by default even if they never deliver on their promise.

I don’t recall when a project has been handled so poorly. The only possible explanation for this is either shear incompetence or payoffs under the table

Because of the lies and length of time that has passed, City Council needs to limit the time remaining for AMC to resolve its predicament. If there’s no deal within two months, council should terminate negotiations with AMC, eliminate the reduced seating requirement and totally reopen the bid process.

Then, council should ask for a thorough investigation of this entire affair because this taint smells all the way to Montana Avenue.

Bill can be reached at mr.bilbau@gmial.com

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