Atascadero's council wants study to determine whether town can support two theaters

The Atascadero City Council on Tuesday heard proposals from two competing theaters for the city’s downtown.

Both La Plaza and Galaxy Theatres are offering 10 screens at their theaters.

Councilmembers were slated to vote Tuesday on whether to allow La Plaza Cinemas to be built on El Camino Real after receiving pushback from the public and Colony Square competitor Galaxy Theatres, but decided to put off making a decision until June 8.

Near the end of Tuesday's roughly three-hour discussion on the project, most of the council was leaning toward not approving the request to build La Plaza until more specifics were included in its proposal. Details on available parking options, what land the applicants need to buy and where they are on the negotiations to buy those lots and a conceptual plan detailing additional shopping developments were among the details the council wanted.

The council did decide to pay up to $10,000 of city money to fund a study to determine if two theaters, each with 10 screens, could survive in town. La Plaza applicants say it can while Galaxy Theater officials say the town can only support 10 screens total.

Mayor Roberta Fonzi said she knows the city has little money, but the La Plaza proposal is important to the community and no one but a consultant can know if Atascadero can really support two theaters.

“Theater A and Theater B disagree,” on whether Atascadero can support 20 screens, Mayor Roberta Fonzi said when addressing why she wants more economic studies of the two proposed projects. “This is truly the gist of the problem. We don’t know. We are not in the theater business. And we want these projects to succeed.”

Frank Rimkus, Galaxy’s chairman and chief executive officer, has said he is concerned that there may not be enough demand for two theaters, both of which could fail.

The Atascadero Planning Commission recommended approval earlier this month of the La Plaza Cinemas to be built nearly across the street from Colony Square.

John Roush, Larry Wysong and Michael Sherer are La Plaza’s co-developers. Roush had long planned to build a theater as part of Colony Square. However, rising project costs and long delays prevented Roush from getting the financing he needed to build a theater there, he has said.

Independent studies, of which the city has copies, show that Atascadero can support 10 movie screens, not 20.

But Roush said the studies the city has on the feasibility of 20 screens doesn’t take into account the cities and communities outside the area, including Cal Poly, whose residents may frequent the 20 screens.

“Competition is just and it is fair,” said Ben Hoff, one of the property owners in negotiations with La Plaza. “If Mr. Roush has the better project, then let him take his shot. This is a free market society. Let competition exist.”

Councilmembers Ellen Beraud and Tom O’Malley said they want to see a master plan for the entire La Plaza development.

Roush, however, said he will not spend the money on a more detailed plan of the shopping center until he gets the movie theater approved.

He said he believes the project will only be successful with a theater.

In a letter addressed to the Atascadero City Council on Monday, Rimkus asked the City Council to think about the market before allowing a competing theater to build across the street. He said he is no longer certain his company has a future in the city if La Plaza goes through.

“I am concerned that instead of having a successful project in Colony Square, you are poised to create two failed projects,” Rimkus wrote, adding that 20 screens would leave the city with an “over-saturation of theaters.”

Rimkus later said the end of the letter was not a threat and that his company wants to be in Atascadero.

The council did waive the city's current 40- to 45-foot height restrictions for buildings in the downtown.

Reach Tonya Strickland at 781-7858.

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