Could Atascadero lose Galaxy Theatres? Property faces foreclosure due to COVID
The Atascadero property that’s home to Galaxy Theatres is facing foreclosure as the building’s marquee tenant has been hammered by the COVID-19 pandemic — and local leaders are rallying to try and save it.
The El Camino Real property is part of the Colony Square development and contains the movie theater, Que Pasa Mexican Cafe and a SLO Donut Co location. The group of lenders that hold the mortgage could foreclose on the property within 30 days because owner Jeff Nelson has struggled to make payments.
Galaxy Theatres provides 80% of the property’s rent, and it has largely remained closed since March 2020 due to state coronavirus restrictions, Nelson told The Tribune. The pandemic has hurt many movie theaters, and other local venues — including Park Cinemas in Paso Robles — have asked for community support to stave off eviction and permanent closure.
The Tribune has reached out to the group of lenders — which includes Wells Fargo, CW Capital, SEER Capital, Jeffries LoanCore and Wilmington Trust — and is awaiting comment.
Galaxy’s temporary closure means Nelson has been unable to make his mortgage payments since May 2020, he said. Nelson’s only possible recourse would be to aggressively push for rent payments from his tenants, something he doesn’t want to do amid the continuing economic struggles caused by the pandemic, he said.
“We weren’t going to do that,” Nelson said. “That wouldn’t have been right. We’ve been taking the brunt of it.”
Nelson is hoping the lenders will withdraw the foreclosure notice as he seeks federal relief funds for entertainment venues closed due to COVID-19.
The U.S. Small Business Administration is offering $15 billion in relief through the Shuttered Venue Operators Grant. The relief program became law in December and will provide the funds to eligible businesses and organizations, including movie theater operators, live venue operators or promoters, theatrical producers and operators of museums, zoos and aquariums, the program’s website said.
While he waits for the funds, Nelson plans to fight the foreclosure, and he’s asking for community support to help keep the property afloat. He fears foreclosure could end up closing the movie theater, which is currently very behind on rent payments.
“We’re going to resist the lenders’ actions at all levels,” Nelson said. “This is a classic David and Goliath struggle.”
Elected leaders lobby on behalf of Galaxy Theatres property
Colony Square is a key component of Atascadero’s downtown and has long been targeted for additional development. Nelson is part of another company that’s been planning to build a mixed-use development with a hotel, restaurant and retail space on another property near the theater for at least three years.
That development has been delayed by market and parking studies and the pandemic, he said.
Atascadero, San Luis Obispo County and state representatives all consider the theater property to be an important economic linchpin for the Colony Square area, and they’re lobbying the lenders to hold off on the foreclosure.
The City Council on Tuesday passed a resolution declaring support for the theater and its importance to the community. Congressman Salud Carbajal, Assemblyman Jordan Cunningham and District 5 Supervisor Debbie Arnold also expressed their support for the Galaxy Theatre property.
“Over the past year, too many local businesses have been forced to permanently shut their doors — resulting in unprecedented job loss on the Central Coast,” Cunningham said in a city news release.. “With new programs available to small businesses, I join my colleagues by imploring the bank to halt foreclosures and give businesses who have been able to survive this long a chance at a California small business grant.”
Mayor Heather Moreno emphasized the critical role the theater plays in Atascadero.
“Until COVID-19 struck, the businesses of Colony Square, including its anchor, Galaxy Theatre, were a major contributor to the progress and success of Atascadero’s downtown,” Moreno said the release. “Our community needs an open and thriving Colony Square with its vital entertainment venue, Galaxy Theatre. Continuity of ownership and allowing these businesses the opportunity to make a comeback are critical to the successful recovery of our downtown, while foreclosing on these properties could have a long-term, devastating impact.”
This story was originally published February 24, 2021 at 6:37 PM.
