SR-12-11-2012-3J 401-001-06City Council Meeting: December 11, 2012
Agenda Item: _::�--J
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Solicitation of Cinema Development Proposals for 1320 Fourth Street
Recommended Action
Staff recommends that the City Council authorize staff to negotiate in the open market
for cinema development at the City -owned property at 1320 Fourth Street.
Executive Summary
The development team for the proposed AMC cinema on City -owned property at 1320
Fourth Street has informed staff that they will no longer pursue exclusive negotiations
for cinema development on the site. Staff seeks Council authorization to enter into
discussions and negotiations with other prospective development teams regarding the
cinema opportunity at the site.
Background
On September 8, 2009, Council authorized exclusive negotiations with Metropolitan
Pacific Capital Inc. in partnership with AMC Entertainment Inc. (AMC Development
Team) to develop a multiplex cinema on City -owned property at 1320 Fourth Street, the
current site of Parking Structure 3. Authorization of the exclusive negotiations followed
a formal request for proposals (RFP) process that led to selection of the AMC
Development Team. An exclusive negotiating agreement with the AMC Development
Team expired on November 26, 2012. On November 29, 2012, AMC informed staff that
the development team would not seek an extension of exclusive negotiations.
Discussion
In ending exclusive negotiations, the AMC Development Team informed staff that the
proposed project would not meet their expectations with respect to financial return.
Rather than immediately discarding the cinema opportunity on Fourth Street, staff would
like to explore whether other cinema providers could pursue a cinema development that
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generates a sufficient financial return while meeting City objectives. City staff will reach
out to the two other development teams who responded to the RFP that was issued
in 2008, as well as solicit offers from other qualified parties. Staff believes that soliciting
offers and directly negotiating in the open market could more quickly identify
prospective development teams and proposals compared to conducting a new RFP
process. If any of the discussions and negotiations shows promise, staff would return to
Council for further direction.
A primary advantage of leasing the City -owned site to the AMC Development Team is
that AMC operates all three cinemas on the Third Street Promenade and planned to
reduce its existing cinema seat -count downtown by closing one of its existing cinemas
or renovating its existing cinemas to reduce the total number of seats. Such a reduction
may occur nonetheless, as an administrative approval was granted in November 2012
that allows for the conversion of the 1,500 -seat Criterion 6 to general retail use. If the
approved conversion to retail ultimately occurs, it would result in a 27 percent reduction
in the number of cinema seats downtown.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of open
market negotiations.
Prepared by: Erika Cavicante, Senior Development Analyst
Andy Agle, Director
Housing and Econo
Development
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Forwarded to Council:
Rod Gould f
City Manager