DOWNTOWN — An exclusive contract negotiation between City Hall and AMC over the development of a new cinema is expected to commence soon after the movie house giant confirmed its ability to shut down one of its existing theaters on the Third Street Promenade.

The question of whether the Kansas City-based company could shut down Broadway 4 if a new cinema opened on Fourth Street was raised during a City Council meeting in September when city officials expressed concerns about the potential oversaturation of theaters in Downtown. The council directed its staff to confirm whether AMC can promise that Broadway 4 will not come back to life as a movie theater and if so, allowing the negotiations for the development of a 12-screen cinema at the site of Parking Structure 3 to continue.

“Essentially we would now quickly negotiate an exclusive agreement which provides the time frame for AMC to secure entitlements from the city,” Andy Agle, the housing and economic development manager for City Hall, said.

Any agreements would need approval from City Council.

AMC and Metropolitan Pacific Capital are proposing to develop a new 12-screen, 2,167-seat theater at 1320 Fourth St. The project also includes shutting down Broadway 4 in the 1400 block of the promenade and renovating Santa Monica 7 in the 1300 block, the latter of which would see the number of seats decrease by at least 475. The result will be nearly 1,600 fewer seats from existing AMC facilities in Downtown.

A representative for AMC was not available for comment.

AMC is currently negotiating with the property owner of Broadway 4 to terminate the lease, which would preclude its future use as a theater. The existing lease runs through Oct. 31, 2014 and comes with three, five-year options for extension through the end of 2029.

“While we are hopeful that a suitable agreement with the landlord will be negotiated, we are not relying on such an agreement to accomplish the closure of the AMC Broadway 4 facility,” Tom Hudak of AMC and John Warfel of Metropolitan Pacific Capital said in a letter last month to City Hall.

If negotiations are unsuccessful, AMC plans to close Broadway 4 for at least a year before the new cinema opens, removing all equipment and furnishings such as screens, seats and projectors, allowing the Conditional Use Permit (CUP) for the property to operate as a theater to expire.

“You need a CUP to operate as a movie theater and if somebody comes in within that one-year time frame, they can start a movie theater without getting a CUP,” Agle said. “After a year, that operating right has terminated and (a new theater operator) would have to get a new CUP.”

City Hall received proposals from AMC and Pacific Theaters, which were essentially identical except Pacific offered about 10 percent more in land rent but was not able to make assurances that an existing theater in the area would be taken offline. Pacific does not operate a theatre in Downtown.

The council in September asked that city staff return with a counterproposal from Pacific Theaters if AMC was unable to make assurances about Broadway 4.

Upgraded theaters have long been considered essential for the promenade to maintain its competitive edge. While the promenade has remained a vibrant shopping and dining destination on the Westside, its cinemas have been lacking, particularly compared to other theaters in the area that offer more screens, comfortable seating and better technology.

melodyh@smdp.com

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