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    Theater Square Takes Shape In Downtown San Bernardino

    Employment opportunities now available at the Regal Cinemas Stadium 14

    Construction underway for what will be the beautiful new entrance to the Regal Cinemas Stadium 14 Theater at Theater Square in Downtown San Bernardino. Photo by Carl Dameron

    Installation of palm trees and other landscaping on the grounds of the new Regal Cinemas Stadium 14 Theater at Theater Square in San Bernardino. Photo by Carl Dameron

    Workers completing what will be the new driveway, allowing families to drop off moviegoers at the new Regal Cinemas Stadium 14 Theater at Theater Square in San Bernardino. Photo by Carl Dameron

    (San Bernardino, Calif.) The landscaping is underway, the concrete is poured and palm trees grace the newly laid walkways. With construction in high gear, residents of San Bernardino are witnessing a revitalization of the downtown area. At the heart of this is the highly anticipated Theater Square with its centerpiece the Regal Cinemas Stadium 14, opening this summer.

    “Our residents deserve a quality downtown theater where they can enjoy dinner and experience a movie,” said Chief Executive Officer of the San Bernardino Economic Development Corporation, Emil Marzullo. “Our businesses need this too, a flourishing downtown means we are better equipped to strengthen our local economy and to attract more people to the downtown to spend money with our existing businesses.”

    Located at 450 North E Street, home of the previous cinema, Regal will operate 14 of the pre-existing 20 screens. The remaining six screens are being remodeled as restaurants and shops, dressing rooms and storage for the California Theatre, and the “Alley Cat Theater,” a new performance venue featuring relaxed surroundings and an intimate atmosphere.

    “Regal Entertainment Group is thrilled to be part of this exciting Theater Square development in downtown San Bernardino,” stated Vice President of Marketing and Communication for Regal Entertainment Group, Russ Nunley.  “Crews have been working hard to create a totally modern cinema designed to impress moviegoers.  Already interest is high as Regal has received hundreds of employment applications.”

    Job opportunities are another benefit of the Theatre Square revitalization. Not only are San Bernardino residents gaining a local venue where dinner and a movie will be within comfortable walking distance, but with the newly revitalized area, it is creating new employment opportunities.

    Applications are currently being accepted for approximately 40 management and employee positions being created by the new Regal Cinemas. Those interested are asked to complete the online application by visiting www.REGmovies.com and clicking on the job opportunities icon at the bottom of the page.

    For more information on Theater Square call Kathy Robles at (909) 663-1044.

    -end-

    Facts sheet for Theater Square and Regal Theater Lease

    Theater Square – Regal Theater Lease Overview
    Overview

    1. The movie theater currently has 20 screens. The San Bernardino Economic Development Corporation (“SBEDC”) will keep 6 theaters and convert 4 into restaurants or retail.
    2. The SBEDC retains ownership of Theater Square including the theater and the restaurant sites.
    3. The SBEDC proposes to lease 14 theaters to Regal Theater Group, the largest theater group in the United States.
    4. One SBEDC retained theater will be used as a flex theater for meetings, events and small events like a comedy night
    5. One SBEDC retained theater will be used by the California Theatre of the Performing Arts
    6. The Regal Theater lease was approved by the City Council acting as the Economic Development Agency on November 21st by a 4 -3 vote.
    7. The Regal Theater lease will go to the SBEDC board for approval on Tuesday November 29th at approximately 4:00 p.m. at 201 North “E” Street Third Floor, San Bernardino, CA – Conference Room
    8. A lease agreement for exclusive right to negotiate with restaurant/retail tenants will also be submitted for approval at the SBEDC board meeting.
    9. If approved, Regal will start construction in approximately 30 Days
    10. If approved restaurants/retail construction will start construction in approximately 30 Days
    11. The SBEDC is responsible for external construction.
    12. Regal Theater is responsible for internal theater construction.
    13. Restaurants/retail developers will responsible for internal construction
    14. There are three additional theaters in a few blocks of Theater Square.
      1. The California Theatre next door
      2. The Fox Theater on Court and D Street
      3. The Sturges Center for Fine Arts at 780 North “E” Street
    15. Together the Regal Theaters, the live theaters and new restaurants and retail expand our current downtown entertainment district and will draw more nightlife and create the synergy to bring more businesses to downtown San Bernardino.   This strategy has worked effectively for Old Town Pasadena, the Gas Lamp District in San Diego, the Promenade in Santa Monica, and other communities across the country.

    Restaurants
    A lease agreement for exclusive right to negotiate with restaurant/retail tenants will also be submitted for approval at the November 29 SBEDC meeting. Restaurants will be in theaters 2, 20, 18 and 19 facing the front of Theater Square.
    We currently have five major brand name chain restaurants interesting in opening at Theater Square.

    1. Sports Bar
    2. Mexican restaurant
    3. Upscale hamburger restaurant
    4. Coffee restaurant
    5. Sandwich/Deli chain

    External Construction

    1. Open the front of four theaters and add two story windows for restaurant rental space.
    2. Remove and replace all paving stones. Old paving stones going to the San Bernardino Parks and Recreation Department for additional projects.
    3. Replace and expand all sewer lines and underground utilities
    4. Add 75 parking spaces on “F” Street
    5. Add 20 – short term (20 min) parking spaces in theater square close to restaurants
    6. Create pads for additional restaurants and retail opportunities
    7. Change building title to allow 4 restaurants to have separate ownership from main theater
    8. On the west side of Theater Square, create new temporary pocket parks with benches etc . . . for families to relax between performances.   These sites will become a restaurant at some time in the future.


    Regal Internal Construction

    1. New box office attached to the theater
    2. New concession stand in the front portion of the lobby
    3. Remove side concession stands and build additional bathrooms
    4. New digital projectors
    5. New digital THx and Dolby Sound
    6. New seats
    7. New carpets
    8. New large format theater Regal’s RPX
    9. New lighting
    10. New paint
    11. New décor
    12. More . . .

    Parking – over 1,500 Parking spaces are now available within 2 blocks

    1. Onsite in the parking lot beside the theater
    2. In a new parking lot behind Stater Bros. (75 spaces)
    3. Across Fourth Street at the Carousel Mall parking lot
    4. Across E street at the State Building.  For evening and weekend performances only.

    Cost

    1. New parking lot on “F” Street:                                               $260,000

    (Now under construction)                                                      Tax Increment (T.I.)

    1. Theater Square Design/Engineering Construction:                  $3,450,000

    (Now under construction)                                                      2010 Recovery Act Bond Funds (T.I.)
    Theater Financing
    SBEDC                 $1.41 million:              New Market Tax Credit (Grant)
    $3.29 million:              2010 Recovery Act Bond Funds (T.I.)
    Subtotal           $  4.7 million
    Regal                     $1.24-$3 million:         Corporate
    Total               $7.7 million
    Project Income      $8.5 million:                Over 10 years plus 15% percentage rent

    Target Opening Date
    Estimated theater and restaurant opening May of 2012

    Exit Strategy
    After two years operating profit, the SBEDC will sell the Theater complex at market value. Current value is estimated to be $11 million.

    San Bernardino EDC APPROVES REGAL Stadium 14 LEASE

    “For us, this isn’t a theater deal, for us this is an economic development deal,” said Marzullo. “Without Regal, you can’t get the restaurants. Without the restaurants, you can’t get downtown to begin to expand.”

    Artist concept drawings show the beautiful new entrance to the Regal Stadium 14 Theater in Theater Square in Downtown San Bernardino. Regal Entertainment Group operates 6,605 screens in 528 locations in 37 states and the District of Columbia. The theater is set to open in Spring of 2012.

    Artist concept of Theater Square. “Together the Regal Stadium 14 theaters, the areas three live theaters along with new restaurants and retail expand our current downtown entertainment district and will draw more nightlife while creating the synergy to bring more restaurants, night clubs and other businesses to downtown San Bernardino”, said Marzullo.

    “E” Street view of the Regal Stadium 14 theater artist concept. “Together the Regal Stadium 14 theaters, the areas three live theaters along with new restaurants and retail expand our current downtown entertainment district and will draw more nightlife while creating the synergy to bring more restaurants, night clubs and other businesses to downtown San Bernardino”, said Marzullo.

    Regal Stadium 14 Theater concept shots patrons exit new restaurants in front of the theater as cars drive through the new driveway.

    Artist concept drawings show the new “E” Street entrance to the Regal Stadium 14 Theater in Theater Square in Downtown San Bernardino. Regal Entertainment Group operates 6,605 screens in 528 locations in 37 states and the District of Columbia. The theater is set to open in Spring of 2012.

    Artist concept drawings show the beautiful new entrance to the Regal Stadium 14 Theater in Theater Square in Downtown San Bernardino. Regal Entertainment Group operates 6,605 screens in 528 locations in 37 states and the District of Columbia. The theater is set to open in Spring of 2012.

    Concept drawings show the new driveway allowing families to drop off theatergoers at the new Regal Stadium 14 Theater in Theater Square in San Bernardino. There will also be parking in front of four new restaurants including a Coffee Bean and Tea Leaf.

    Artist concept of Theater Square. “Together the Regal Stadium 14 theaters, the areas three live theaters along with new restaurants and retail expand our current downtown entertainment district and will draw more nightlife while creating the synergy to bring more restaurants, night clubs and other businesses to downtown San Bernardino”, said Marzullo.

    Construction continues at Theater Square in downtown San Bernardino. Construction workers have removed the old paving stones, and are replacing and expand all sewer lines and underground utilities, creating a new drive way for easy theater drop off, adding 20 – short term (20 min) parking spaces in theater square close to restaurants and creating pads for additional restaurants and retail opportunities. The Regal Stadium 14 Theater is set to open in Spring of 2012.

    (San Bernardino, Calif.)  The San Bernardino Economic Development Corporation (EDC) board approved the lease of 14 theaters to The Regal Entertainment Group in a unanimous vote on Tuesday night.  The new theater will be called Regal Stadium 14.

    The San Bernardino City Council acting as the San Bernardino Economic Development Agency approved the lease last week in a 4-3 vote.

    “The lease won’t go into effect until the city Planning Commission and City Council approve a development agreement for the project,” said Emil Marzullo, the interim director of the Economic Development Agency, and chief executive officer of the EDC.

    The development agreement is scheduled to go before the Planning Commission on December 15, and then to the council on January 9.

    About 40 people, including 12 college and high school students, applauded the unanimous vote to lease the 14 theaters to The Regal Entertainment Group.

    Several students who spoke at the meeting told the EDC board of directors that they are ready to see movies at a downtown San Bernardino theater.  Many also said the theater will create jobs and bring money into the city.

    Marzullo refuted several issues, which were brought up by City Attorney staff.

    One issue was whether Regal has to show first-run movies. Marzullo said, “ There is no intention of the theater to be a discounted, second-run-only theater, and the economics of the deal would not support a second-run theater model.

    As to the risk of the EDC subsidizing Regal, Marzullo said, “The lease actually reduces the risk, because the monthly cost of the closed CinemaStar Theater is $70,000 a month, with no income.”

    Another concern is that Regal’s lease requires the City not impose a living wage ordinance.  “That’s not an issue in San Bernardino as we are currently one of the most affordable city’s in Southern California.  That provision is for cities like Irvine where the cost of living is significantly higher,” said Marzullo.

    Mayor Patrick Morris, Rikke Van Johnson, Tobin Brinker and Dennis Craig supported the theater lease as a catalyst to help downtown San Bernardino attract more restaurants and businesses.

    “For us, this isn’t a theater deal, for us this is an economic development deal,” said Marzullo.  “Without Regal, you can’t get the restaurants. Without the restaurants, you can’t get downtown to begin to expand.”
    “Regal Theater Group proposes to open 14 renovated theaters in May of 2012.  Five national restaurant chains are slated to open at the same time,” said Marzullo.

    At the same meeting the EDC also approved an agreement for exclusive rights to negotiate with restaurant/retail tenants at Theater Square with the Yavitz Companies.  Yavitz has successfully created major retail/entertainment developments in Southern California including the Grove in Anaheim.
    Sandra Yavitz, company president said, “Five national restaurant chains are currently interested in Theater Square.  The restaurants includes:  The Coffee Bean and Tea Leaf, a Sports Bar, a Mexican restaurant, an upscale hamburger restaurant, and a sandwich/deli restaurant chain.“

    The EDC will retain ownership of Theater Square, including the theater and the restaurant sites.
    “Together the 14 Regal Theaters, the areas three live theaters along with new restaurants and retail expand our current downtown entertainment district and will draw more nightlife while creating the synergy to bring more restaurants, night clubs and other businesses to downtown San Bernardino”, said Marzullo.
    He added, “This strategy has worked effectively for Old Town Pasadena, the Gas Lamp District in San Diego, the Promenade in Santa Monica, and other communities across the country.”

    Parking will not be a problem at Theater Square.  “There are more than 1,500 free parking spaces available within two blocks including: parking in front of the theater and restaurants, onsite in the parking lot beside the theater, across Fourth Street at the Carousel Mall parking lot and across “E” street at the state building parking structure.  The state building parking lot is used for evening and weekend performances only, “ said Marzullo.

    The total cost for the theater square is projected at $7.7 million.  Costs are as follows:
    1.     New parking lot on “F” Street:                                                 $260,000

    (Recently competed)                                                            Tax Increment (T.I.)


    2.     Theater Square Design/Engineering Construction:                         $3,450,000

    (Now under construction)                                                            2010 Recovery Act Bond Funds (T.I.)


    Theater Financing
    EDC                        $1.41 million:                        New Market Tax Credit (Grant)
    $3.29 million:                        2010 Recovery Act Bond Funds (T.I.)
    Subtotal                        $  4.7 million

    Regal                         $1.24-$3 million:             Corporate
    Total                        $7.7 million

    Project Income            $8.5 million:                        Over 10 years plus 15% percentage rent

    What is the exit Strategy for the EDC?  “The plan is to establish a rental income base and after two years operating profit, we will sell the theater complex at market value with a tenant that is the industry leader.  With the Regal lease in place and generating profits, the theaters future value will be significantly higher than the current estimated value of $11 million,” said Marzullo.

    “I am excited that this Spring San Bernardino High School and college students will join the rest of us in watching Men in Black 3, Transformers 4 along with the rest of the summers blockbuster moves at newly renovated, first class theater just a short drive from our homes,” said Marzullo.

    For more information on Theater Square call Kathy Robles at (909) 663-1044.

    About the San Bernardino Economic Development Corporation


    The City of San Bernardino Economic Development Corporation is a focused, diversified organization whose mission is to enhance the quality of life for the citizens of San Bernardino by creating jobs, eliminating physical and social blight, supporting culture and the arts, developing a balanced mix of quality housing, along with attracting and assisting businesses both independent and through public-private partnerships.

    About Regal Entertainment Group:


    Regal Entertainment Group (NYSE: RGC) is the largest motion picture exhibitor in the United States. The Company’s theatre circuit, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres, operates 6,605 screens in 528 locations in 37 states and the District of Columbia. Regal operates theatres in 43 of the top 50 U.S. designated market areas. We believe that the size, reach and quality of the Company’s theatre circuit not only provide its patrons with a convenient and enjoyable movie-going experience, but is also an exceptional platform to realize economies of scale in theatre operations.  Additional information is available on the Company’s Web site at www.REGmovies.com .


    Theater Redesign Will Bring Immediate Benefit

     

     

    Theater-goers in Indian Hills can park at a central location and enjoy not just their local Edwards Theater, but also six restaurants and several retail stores that are entered separately, but in the same building. When the San Bernardino Economic Development Association leases its downtown movie theater to Edwards’ owner Regal Entertainment Group, theater-goers there will enjoy a similar experience, as four of the current theaters will be converted to restaurants. Photo by Chris Sloan

    Leasing the downtown San Bernardino theater to Regal Entertainment Group could, in time, jump-start development in the area, perhaps including remodeling or rebuilding Carousel Mall to become an open-air retail center similar to Corona Crossroads, which is anchored by an Edwards Theater. Photo by Chris Sloan

    (SAN BERNARDINO, Calif.) A family arrives at an Inland Empire Edwards Cinema one or two hours before the movie they wish to see begins, knowing the adjacent restaurants will give them a variety of choices for dinner.

    Shall we have chicken? Or Mexican? Or perhaps Italian or Chinese? Maybe we also want yogurt or coffee after the movie? Should we go shopping after that?

    Those are the real-life choices that family would have at one particular Edwards Cinema, located in Indian Hills near Riverside. At this location, six restaurants, a high-end grocery store, two smaller retail stores and the theater form a semicircle around the front of the parking lot, beckoning guests to a quality dinner and movie experience.

    That experience, and much more, could happen in San Bernardino when the City’s Economic Development Agency leases the former cinema at 450 E Street to Regal Entertainment Group, operator of Edwards Cinemas Regal Cinemas and United Artist theaters. In time, that theater could be an anchor to a new retail center where Carousel Mall now stands.

    Regal Entertainment Group’s plan is to lease only 14 of the 20 screens the former theater operated. Four of the other six would become restaurants, the other two offices, storage and dressing rooms for the California Theater.

    “Twenty screens in one theater is too many in the current market, so Regal Entertainment Group wants to give the front six theaters back to us,” said Interim Agency Director Emil Marzullo. “That creates an additional $1 million in value to us.”

    That value comes primarily from leasing four of the theaters to restaurants. Like the restaurants at the similarly designed Edwards Cinema near Riverside, these restaurants would share a building and parking with the theater, but would each have their own entrance.

    “When we publicly announced our intention to enter into a lease with Regal Entertainment Group, representatives of several major retail outlets asked us about the possibility of doing business in San Bernardino,” Marzullo said. “That includes some restaurants that would be great fits with the downtown theater.”

    Four restaurants next to the theater is just a start. The Economic Development Agency staff hopes a theater the caliber of Regal’s Edwards Cinemas will jump-start development in the downtown area.

    For instance, it could spark a private developer to remodel Carousel Mall into an open-air mall that would extend to the premises of the theater. This would be similar to Riverside Plaza, Ontario Mills and many other retail centers that have Edwards Cinemas as one of their main draws.

    “The public must realize that any redevelopment of the Carousel Mall will not occur quickly,” Marzullo. “It is crucial for the Economic Development Agency to help start other projects in the downtown area in the meantime. This will remove empty, blighted buildings and make the downtown area a more desirable place for the Inland Empire region’s residents to visit and for nationally recognized companies seeking to do business here.”

    The Economic Development Agency is negotiating a 34-year lease with Regal Entertainment Group. The lease starts with a 10-year term. After that, if it’s mutually beneficial, the lease could be renewed in five-year increments for up to 34 years.

    And, by then, with the Economic Development Agency’s help, downtown San Bernardino will look much different and better than it does today.

    The Economic Development Agency will present an update on its lease negotiations with Regal at the city council meeting, 6 p.m. Monday, Jan. 10. Regal Entertainment Group is the largest cinema operator in the world with 546 multi-screen theaters, containing almost 7,000 screens.

    Everyone is invited to attend this presentation. Residents of San Bernardino who have Time Warner Cable can also view the presentation live on Channel 3. It will also be shown over the Internet at www.iemediagroup.tv.

    For more information call Deputy Agency Director Don Gee at (909) 663-1044.

    About the San Bernardino Economic Development Agency

    The City of San Bernardino Economic Development Agency is a focused, diversified organization whose mission is to enhance the quality of life for the citizens of San Bernardino by creating jobs, eliminating physical and social blight, supporting culture and the arts, developing a balanced mix of quality housing, along with attracting and assisting businesses both independently and through public-private partnerships.

    -end-

    Regal-Edwards Best Fit For Downtown Movie Theater

    Members of the San Bernardino Area Chamber of Commerce Koffee Klatch listen to San Bernardino Economic Development Agency Interim Director Emil Marzullo present the Agency’s reasons for seeking to lease the downtown San Bernardino theater to Regal Entertainment Group. Photo by Carl Dameron

    San Bernardino Economic Development Agency Interim Director Emil Marzullo explains to members of the San Bernardino Area Chamber of Commerce Koffee Klatch why he believes Regal Entertainment Group will bring the best economic development to San Bernardino of any theater operator chain from which the Agency received proposals for operating the downtown San Bernardino theater. The Agency staff believes Regal Entertainment Group will attract additional development to the downtown area. Photo by Carl Dameron

    The San Bernardino Economic Development Agency is giving a series of presentations to explain why it seeks to lease the downtown San Bernardino theater to Regal Entertainment Group, owner of Edwards Cinemas, Regal Cinemas and United Artist cinemas. The first of these was to the San Bernardino Area Chamber of Commerce Koffee Klatch on Dec. 22, 2010. Photo by Carl Dameron

    (SAN BERNARDINO, Calif.) The City of San Bernardino Economic Development Agency is holding a series of community presentations to explain why it’s seeking a lease with Regal Entertainment Group, owner of 540 multi-screen theater chains including six Edwards Cinemas with a total of 98 screens in the Inland Empire.
    San Bernardino Economic Development Agency Interim Director Emil Marzullo leads these presentations, which have been given to business and community leaders.

    The first of these presentations was to the San Bernardino Area Chamber of Commerce Koffee Klatch, at 7:30 a.m. on Dec. 22, 2010.

    Marzullo has been with the San Bernardino Economic Development Agency since 2008. When he began working there, it had leased the theater to Cinemastar, a now defunct theater chain that had also operated theaters in other Inland Empire locations.

    “When I came to the agency, Cinemastar was in its final meltdown phase, going out of business,” Marzullo said. “They weren’t cleaning the carpets. Their late movie ended before 9 p.m. They were doing all the things they should do if they wanted to go out of business.”

    The San Bernardino Economic Development Agency obtained a Housing and Urban Development (HUD) loan to assist in financing a portion of the construction project. This costs the Agency $60,000 a month, but would be paid by a theater operator.

    After the theater was built in 1999, the developer was experiencing financial problems, and transferred the theater ownership to the Economic Development Agency.

    Cinemastar originally made the payments on the loan. But for two years before the theater closed in 2008, the Economic Development Agency had a forbearance agreement in place with Cinemastar, which allowed them to defer half of the payment.

    “When the forbearance agreement ended, Cinemastar closed its doors,” Marzullo said.
    A short time later, the San Bernardino City Council approved the theater’s outright sale to Maya Cinemas, which operates theaters in Bakersfield and Salinas.

    “Maya Cinemas’ owners said all the right things, like we don’t need your money, we want to do this on our own dime,” Marzullo said. “Eighteen months later, they still couldn’t pull off the deal.”

    The Economic Development Agency then marketed the vacant theater building to mid-size and large theater chains, and received proposals from Regal Entertainment Group and seven other theater operators.
    Regal Entertainment Group’s proposal was one of four the City of San Bernardino Economic Development Agency selected for further analysis. Two operators, including Regal Entertainment Group, sought to lease the theater and the other two sought to purchase.

    The other theater proposals analyzed are from Cinema West, which operates 12 multi-screen theaters in northern California; Brenden Theaters, which has six theaters, four in California and two in Nevada, with a total of 86 screens; and United Entertainment Corporation, which has 15 multi-screen theaters in eight states, including one in Lake Elsinore.

    “Regal doesn’t own theaters, they lease them,” Marzullo said.  “But this isn’t a real estate deal. It’s a theater deal with economic development at its core.”

    “Since we announced our intent to enter into a lease with Regal Entertainment Group, we have had several inquiries from other nationally known retail companies who are interested in locations in downtown San Bernardino,” Marzullo said.

    “We clearly did not want a real estate deal, because that’s what we had with Cinemastar,” Marzullo said. “We had a real estate deal with a low-profile theater chain that could not sustain itself over time.”
    “The real question is ‘will they be here 10 years from now?’”  Marzullo said. “If a company can be in place, and not only survive, but thrive, they become a springboard for additional private development.”
    “San Bernardino does not have all the money needed to develop downtown,” Marzullo said. “We have to bring in business that will attract other businesses.”

    Although the Economic Development Agency staff has formally recommended the Agency enter into a lease with Regal Entertainment Group, theater operator Cinema West is still requesting the Agency give consideration to its proposal to buy the theater.

    “We asked Cinema West if they would sign a 10-year operating covenant, and they would not,” Marzullo said. “That tells me they are coming in to buy it at the lowest price, put in a tenant and sell it in three years. Then we would be right where we were with Cinemastar, which was a low-name theater operator that can’t compete in this market. That’s why we propose Regal as the tenant.”

    For more information on the Regal/Edwards Cinema project, call Deputy Agency Director Don Gee at (909) 663-1044.

    About the San Bernardino Economic Development Agency

    The City of San Bernardino Economic Development Agency is a focused, diversified organization whose mission is to enhance the quality of life for the citizens of San Bernardino by creating jobs, eliminating physical and social blight, supporting culture and the arts, developing a balanced mix of quality housing, along with attracting and assisting businesses both independent and through public-private partnerships.

    -end-

     

    SAN BERNARDINO EYES LEASING DOWTOWN THEATER TO REGAL CINEMAS

    A theater like the Edwards Cinema in Corona could possibly occupy 450 E Street in San Bernardino in the near future. The San Bernardino Economic Development Agency is negotiating a lease with Regal Entertainment Group, owner of Edwards Cinemas, Regal Cinemas and United Artists theaters.

    450 E Street is an empty building today, but in 2011 could be home to a new Regal or Edwards cinema. The San Bernardino Economic Development Agency is negotiating a lease with Regal Entertainment Group, owner of Edwards Cinemas, Regal Cinemas and United Artists theaters. Photo by Chris Sloan

    (SAN BERNARDINO, Calif.) On January 10, 2011 the City of San Bernardino Economic Development Agency will give a progress report on a proposed lease of its downtown movie theater to the Regal Entertainment Group.

    Regal Entertainment Group operates Edwards Cinemas, United Artists, and Regal Cinemas. It is negotiating with the city to open a 14-screen theater at 450 North E Street.

    “The San Bernardino Economic Development Agency, current owner of the theater property, seeks to enter into this lease because the caliber of theaters operated by Regal Entertainment Group will likely attract additional development to the downtown area.  Once this development occurs, it is the Agency’s intent to sell the theater property at a higher price than it now could,” said San Bernardino Mayor Patrick Morris.

    “Our residents deserve a quality downtown theater where they can go enjoy dinner and a movie,” Interim Economic Development Agency Executive Director Emil Marzullo said. “Our businesses need this too, because with a flourishing downtown, we will be better able to strengthen our local economy and bring more people to spend money with businesses already here.”

    The Economic Development Agency’s plan is not without critics. Proposed alternatives are to sell the theater property immediately to another company, which then may or may not reopen the theater or attract other development to the downtown area.

    As Marzullo sees it, allowing a quality theater to open and bring in additional development far outweighs the benefits of a quick sale.

    “If San Bernardino is to reopen the downtown movie theater, the only measure of success should be whether the reopening of the movie theater spurs additional private investment and business in downtown restaurants, shops, and entertainment,” Marzullo said.

    “Merely reopening the movie theater and hoping it stays open would not be a success. That would simply repeat the failures of the past.”

    “Historically, public investment in downtown San Bernardino, though intended to create economic growth, has often failed to produce results, Marzullo said. “Past public investments have been made with insufficient plans to ensure they encouraged private investment.”

    Marzullo cited the original development of this movie theater and the Inland Empire 66ers baseball stadium built during the mid-1990s as examples.

    “Neither public investment was tied to plans for additional private investment,” Marzullo explained. “As a result, both have sat for 15 years in isolation doing very little to spur private investment and economic growth.”

    “Let’s make sure this time around our efforts result in spurring other economic development around the theater,” Marzullo said.

    Previously, to ensure this project’s success, the Economic Development Agency retained several expert consultants to evaluate eight proposals it has received for the theater property. These consultants determined that Regal Entertainment Group not only created the greatest return on investment of the public dollars, but also had the greatest chance of attracting additional private investment and business in and around the movie theater complex.

    “In fact, once it became known the Agency was negotiating with Regal Entertainment Group, development groups and businesses began contacting us regarding the opportunities adjacent to the Regal-operated movie theater, Besides, what city would not want a Regal/Edwards theater in their community?” Marzullo said.

    One of the expert consultants is The Fransen Company, Inc. of Newport Beach, which has helped cities in the United States, Canada, Mexico and the Caribbean to analyze and plan projects that brought economic growth. In California, these projects include Third Street Promenade in Santa Monica and the Olympic Training Center in San Diego.

    “In my opinion, the Regal/Edwards lease proposal will produce the best economic returns for San Bernardino, compared to the other proposals received,” said Fransen Company, Inc. President John Fransen.  “Once the lease with Regal is completed, it will fill an empty cinema building with a best-of-kind theater operator. The building can then be sold with a credible tenant in place versus selling an empty building at a discount to a low bidder.”

    Fransen noted that Regal Entertainment Company operates 6,705 screens in 37 states and Washington, D.C. Almost 100 of these screens are at six Edwards Cinemas located in the Inland Empire. Other proposals were from much smaller theater companies that do not have any theaters in the San Bernardino area.
    “Regal Entertainment Group has the marketing power, the market share and the economic strength to support the new cinema in downtown San Bernardino,” Fransen said. “The risk associated with a smaller cinema operator trying to enter this competitive market is a major consideration.”

    “Regal/Edwards Cinemas is a known commodity that other investors trust,” Marzullo said.  “Since Regal Entertainment Group believes there is a good market in downtown San Bernardino, and is willing to stake its national brand name, goodwill and money, this encourages other businesses to make their own investment.”

    Marzullo compared Regal/Edwards Cinemas to an “anchor tenant” in a shopping center.  “The type of anchor tenant largely dictates what secondary tenants sign leases,” he said. “If you attract a strong anchor, you attract strong secondary tenants.”

    “Other theater operators could certainly operate the cinema,” Marzullo said. “Merely reopening the movie theater is absolutely the wrong measure of success.  Success will only be achieved by movie theaters that attract additional private investment and business into downtown. These are basic principles of commercial real estate and economic development.”

    About the San Bernardino Economic Development Agency


    The City of San Bernardino Economic Development Agency is a focused, diversified organization whose mission is to enhance the quality of life for the citizens of San Bernardino by creating jobs, eliminating physical and social blight, supporting culture and the arts, developing a balanced mix of quality housing, along with attracting and assisting businesses both independent and through public-private partnerships.

    Setting the record straight on the downtown theater

    Dear Community Resident and Leader,

    A petition is circulating throughout the community that contains an error-filled memorandum regarding the reopening of the downtown movie theater. On January 10, 2011 the mayor and common council will conduct a public hearing to consider a 34 year lease agreement with the Regal Entertainment Group (operator of Edwards Cinemas, United Artists, and Regal Cinemas). It is apparent from the information contained in these memoranda, that legally confidential information is being disseminated to advance certain private and political agendas.  More troubling, is the fact that this information is so factually inaccurate that its purpose is clearly to misinform the public about the proposed reopening of the movie theaters.

    I am writing this letter to provide you the facts, in the hope our City does not once-again “shoot itself in the foot” because of self-interests, as we have done so often in the past.  It is time for San Bernardino to make decisions guided by professionals and experts, not politics and self-interest.  Our residents deserve this and our businesses need this.

    Historically, public investment in downtown San Bernardino intended to create economic growth has often failed to produce results because the plans and decisions did not give sufficient consideration to ensure that the public investment was a true catalyst for private investment.  Past public investments have been made with insufficient plans to ensure it encouraged private investment.  The original movie theater and the baseball stadium built during the mid-1990’s are good examples.  Neither public investment was tied to plans for additional private investment.  As a result, both have sat for 15 years in isolation doing very little to spur private investment and economic growth.

    Thus, if our City is to reopen the downtown movie theater, the only measure of success should be whether the reopening of the movie theater spurs additional private investment and business in downtown restaurants, shops, and entertainment.  Merely reopening the movie theater and hoping it stays open would not be a success – that would simply repeat the failures of the past.

    To ensure success, the City retained several expert consultants to evaluate options for reopening the movie theaters.  These consultants have proven track-records in the disciplines of theater development and operations, retail development and modern urban planning and design principles. These consultants have assisted other cities in our state and nation in making decisions that ensure targeted public investments are a catalyst for private investment.

    I attach and share with you, comments received from the Fransen Company, one of our retained retail and entertainment experts for this project. John Fransen, principal of the firm has successfully aided communities across the nation in these types of projects.

    The City solicited proposals from cinema operators to reopen the movie theater and asked these experts to evaluate not only viability of the proposals to successfully reopen the theaters, but also to evaluate which proposals had the best chance to succeed on the only measure of success that counts – the ability to immediately attract additional private investment and business to the city.Gareth from PAN created this useful resource

    The consultants’ concluded that of the 8 proposals received, Regal Cinemas not only created the greatest return on investment of the public dollars, but also had the greatest chance of attracting additional private investment and business in and around the movie theater complex.  In fact, once it became known the City was negotiating with Regal Cinemas, development groups and businesses began contacting the City regarding the opportunities adjacent to the Regal-operated movie theater.

    Why?  Very simply, Regal Cinemas is a known commodity that other investors trust and are willing to assume that if Regal believes there is a good market in downtown San Bernardino, then they are willing to make their own investment.  It is very similar to an “anchor tenant” in a shopping center.  The type of anchor tenant largely dictates what secondary tenants sign leases.  If you attract a strong anchor, you attract strong secondary tenants.

    Does that mean only Regal Cinema could be successful in reopening the downtown movie theater?  No.  Other theater operators could certainly operate the cinema.  The fact that the City received eight proposals is evidence of the market for a theater complex in downtown.  Merely reopening the movie theaters is absolutely the wrong measure of success.  Success will only be achieved by movie theaters that attract additional private investment and business into downtown.

    It is unfortunate the error-filled memorandum being circulated by certain local self-interests ignores these basic principles of commercial real estate and economic development.  The memorandum advocates the City immediately sell the theater property to a northern California real estate speculator, so this company can profit from leasing the theater to an operator like Regal Cinema or worse, a small unknown theater franchise. Does anyone remember the name Cinemastar?

    The problem in selling the property without a well capitalized operator, is that the City has no ability to ensure the theater actually reopens; the City has no ability to ensure the theater is operated by a company that will attract other private investment and businesses to downtown; in fact, once the City sells the property, it has no ability to ensure it’s even reused for movie theater at all.

    If we are committed to having a movie theater in downtown San Bernardino (which the market indicates strong support for), then let’s make sure this time around our efforts result in spurring other economic development around the theater.  Experts with a proven track record of success have advised the City that Regal Cinemas provides the best opportunity of ensuring a successful outcome.

    I am hopeful that City will follow the professional advice and recommendations it has received to best ensure that our limited public investment spurs economic development – a formula for success seen in other cities like Ontario, Riverside, and Rancho Cucamonga, but rarely in San Bernardino.  To do otherwise would be to once again follow the mistakes of the past and let self-interest prevail over the collective and long-term economic health of this City.

    Sincerely,
    Emil Marzullo
    Executive Director
    City of San Bernardino Economic Development Agency