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This topic comprises 4 pages: 1 2 3 4
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Author
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Topic: Selling your parking lot to your city to finance digital
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Mike Frese
Master Film Handler
Posts: 465
From: Holts Summit, MO
Registered: Jun 2007
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posted 04-27-2014 01:34 PM
I ran across this interesting way to finance a theater's digital conversion. (The following was written by someone at the local newspaper)
"The **** Town Council is currently mulling whether to purchase a piece of land from **** Theatre owner Joe Poe of *****. The sale is something that the theatre owner and town officials have discussed off and on for at least the past two years, but nothing concrete had ever materialized.
At a March 24 town council meeting, Town Manager presented a plan for the town to purchase the parking lot (next door to the theater) for $91,000. That figure came from an independent third-party appraisal.
It was stated that funds for the purchase would come from money sitting in the town’s Downtown TIF account, so no new tax dollars would be used.
Change is needed at the **** theatre as the movie industry has shifted away from producing 35 mm film in favor of digital systems. From the moviemaker’s standpoint, the change made perfect sense. Why continue producing movies on celluloid film that can become damaged or deteriorate when they can be stored on a hard drive and shipped at a fraction of the cost?
How many people still use VCRs or 35mm film cameras? I have a couple of cameras sitting on a bookshelf at home and another at the office, but displaying them for nostalgia is about all they are good for these days. Meanwhile, the VCR and boxes of movies on tape acquired back in the days of Columbia House Movie Clubs are stored away in the basement, likely never to see the light of day again.
The ****** Theatre is in a similar situation. Eventually, sooner rather than later, movies will simply no longer be put on film. What happens then? Unless the theatre converts, there will be yet another iconic empty building in our downtown.
Some may question why the town would spend money to aide in a local business. It’s a valid concern. But something else to consider is that the theatre owner is not simply selling the parking lot to pocket a quick buck. The money received from the sale is going to be reinvested into the ***** Theatre to ensure movies will remain a part of **** for many years to come.
Where would the town be without its movie theatre? People already complain there is nothing to do in the town. Taking away yet another form of entertainment doesn’t seem to be a step in the right direction.
Other theatres around the state and the nation have looked to their communities to help keep them open. Some have done fundraisers, while other have sought tax breaks to free up needed cash to purchase the digital projector systems."
My understanding of TIF projects is that they are designed to be used to create more tax revenue for the entity involved. In my region, they have been largely used to build new retail developments.
If the city buys the parking lot, the parking lot will no longer be assessed property taxes. A decrease in taxes collected would result.
This particular city has no sales tax so the theater remaining open will not add to the sales tax revenue vs being closed.
It would seem that the only positive cash flow would be an increase in business assets (new projectors and sound equipment) which would result in more business personal property taxes being collected. Is that enough to support this decision?
This theater has been for sale for years. Maybe as long as 3 years. Having the theater converted would certainly make the theater more appealing to a new buyer. So the seller could benefit with a subsequent sale.
This is also the same owner/operator who at another theater seeked public donations while receiving a VPF. This has been the only time I have seen a theater seek VPFs (the plans offered before Sept 2012) and donations. I recall a decent donation from the town's friends of the library group.
More power to any theater owner who can swing such a deal. Seems like a questionable deal to me.
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Leo Enticknap
Film God
Posts: 7474
From: Loma Linda, CA
Registered: Jul 2000
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posted 04-28-2014 02:07 PM
If this is a published news story, I can't see any need to redact it - the information is already in the public domain.
The one thing that strikes me here is that if the city buys the lot, it can then start to charge the theater's customers to park on it. Those customers may then start to look for places to park on nearby residential streets, thereby p!ssing off the local inhabitants. Some customers may be ticketed, and then storm off vowing never to see a movie in that theater again. In short, they could be trading a short-term problem for a long-term one.
A small theater I worked at in England in the late '90s had a tiny car park - it could take about 15 vehicles in total. To start with we didn't police it at all: the staff always arrived long before the first customers, and so we never had a problem parking there. But eventually we would get so many complaints from customers unable to find a space, either in our little car park or the surrounding streets, that we just had to put a gate and a "staff only" notice on it, and tell customers that if they wanted to come by car, they had to park in the nearby multi-story at £1.50 an evening. Paradoxically, the complaints diminished to almost zero: because it was made clear to customers that we could not provide parking for them, period - even the small chance of getting a spot - they accepted that and didn't even try.
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Leo Enticknap
Film God
Posts: 7474
From: Loma Linda, CA
Registered: Jul 2000
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posted 04-29-2014 11:08 AM
Good point. It looks like this deal wouldn't be potentially on the table at all if the city didn't want to help the theater survive, and therefore that they wouldn't want to do anything that would hit its customer base seriously.
The problem is that whoever wins the next election (or even several elections down the line) might not feel the same way.
Bobby has a valuable point, though, and it boils down to this. Either the theater is a fundamentally viable business that is trying to find a way to cope with a major one-time cost (or, more likely, the prospect of a major, one-time cost every 5-10 years, given the likely lifespan of digital projectors and servers), or it's not and this issue is simply forcing the bigger one to the surface.
If it is fundamentally viable, I'm wondering why a commercial loan wouldn't be an option. Maybe it would take adjustments to the business model to cope with (e.g. more screenings, a ticket price rise, rentals for special events, etc. etc.), but might it be preferable to the irreversible loss of an asset that makes a positive contribution to the bottom line at present? If, however, the place is on the edge of viability and the digital issue is just highlighting that, then this won't solve the problem: it'll just delay the day on which it has to be faced. In that scenario, the town council might achieve more by investigating subsidising the place like an arts center type venue, or getting a grantwriter in to see if any philanthropic money could be secured to help keep the place going, or infrastructural investments (rather than sell-offs) to being costs down; that sort of thing.
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