Cinema impasse in the Peninsula

A movie-theater complex down the Peninsula isn’t doing as well as it was expected to. It offers an object lesson in taking government projections as gospel.

It used to be easy enough to argue that Redwood City’s lackluster revenues from its ambitious downtown retail-cinema redevelopment resulted from overly optimistic projections of business volume. But now city officials are giving another primary reason for the shortfall: “Continued operation of the Century 12 Theatre at the East Bayshore Boulevard location is crimping attendance at the downtown theater,” as City Manager Ed Everett charged in his 2007-08 budget presentation.

Redwood City was counting on $2.4 million in parking revenues for the first 12 months after the new Century 20 retail-cinema complex opened on Broadway. But it earned only $850,000, despite downtown parking rates being boosted to handle the expected customer turnover.

Once the new cinema opened downtown, Redwood City leaders were mistakenly assuming the 25-year-old Century 12 Theatre east of Highway 101 would be closed by Cinemark, which bought the Century Theatres chain from the Syufy family. However, this vital guarantee was never written into any redevelopment deal contracts.

The current standoff took shape in 2005 after the Syufys — who still own the Bayshore Boulevard site of the older cinema — couldn’t get City Council approval to build 600 condominiums on their property. They responded by announcing they would continue leasing Century 12 to Cinemark indefinitely.

Even worse for city coffers, Cinemark regularly opens No. 1 movie hits at their old Century 12 rather than their new downtown theater, possibly because the eastside cinema marquee can be seen from Highway 101. This all takes a financial toll on Redwood City, because its parking-related expenses ballooned this year to $2.1 million after being only $430,000 in 2006.

Redwood City’s 2007-08 budget projected a $1.1 million surplus, but now Finance Director Brian Ponty is recommending that the City Council pay off the parking shortfall from reserves.

Meanwhile, City Manager Everett is pursuing closed-door negotiations on a complex deal to establish a major auto mall on the Syufys’ eastside theater site.

The city is also flooding its new downtown center with free summer events, seeking to generate more buzz for the district. This is smart thinking, but we hope Redwood City officials can additionally facilitate a productive nonmovie use for the Century 12 property and staunches the city’s revenue losses.

Perhaps it would not be so bad for members of the Redwood City Council to take a second look at something like the 600-condominium proposal. Now might be the time for Peninsula cities to become more open-minded about allowing housing into the commercial zones east of Highway 101. And for citizens to be a little more skeptical about government projections.

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