Theaters caught in melodrama

The applicant in Atascadero’s proposed La Plaza Cinemas does not want to do the feasibility study the City Council is requiring of him to determine if two movie theaters could survive in town.

The issue has ignited wide speculation in the North County community about the future of the La Plaza project — one side claiming the City Council is trying to stall La Plaza to satisfy taxpayer investments it has in another development, while the other side is saying the council is simply looking out for the success of downtown.

The council in May required a dual-theater feasibility study before moving forward with its consideration of granting La Plaza a conditional-use permit to build nearly across the street from Galaxy Theatres. Galaxy is another movie operator now under construction in downtown’s Colony Square, in which the city has invested $1.5 million. The council wants a third party to see if both theaters can be successful. La Plaza and Galaxy are each to pay half. Galaxy offered its share.

The council is concerned that by allowing La Plaza to build, the city would be setting up both projects to fail.

Larry Wysong, La Plaza’s applicant representing the Hoff Family whose land the theater would be built on at El Camino Real and Atascadero Avenue, says the feasibility study is an unwarranted request for a business and wasn’t one of the conditions the Planning Commission set forth when approving the project in April.

Wysong claims that the city was welcoming of La Plaza until Galaxy’s chairman and chief executive officer told the City Council — the day before it was to consider the Planning Commission’s recommendation — that he is no longer certain his company has a future in the city if La Plaza goes through.

This week Mayor Roberta Fonzi said the council isn’t acting in a conflict of interest. “We want successful businesses so the city succeeds,” she said.

She also said the council is seeking the most information it can to best steward the taxpayer dollars invested in Colony Square.

Some people are also concerned about an e-mail that Anita Robinson, chief executive officer of Mission Community Bank — one of the Colony Square lenders —wrote to the city. In it, she says that if the city continues to support La Plaza, it puts Galaxy at risk.

Her e-mail then quotes an unnamed bank board member. “We approved a loan that was guaranteed, in part, by the city’s $1.5 million back-up,” it says. “There is no way that I would approve this loan if I knew that another cinema would be building in the same area.”

Fonzi and Councilman Tom O’Malley said the city is not afraid of the banks, either, when making its decisions.

John Roush, the theater operator who would own La Plaza Cinemas, is one of Wysong’s associates along with real estate broker Mike Sherer. Roush has historically been the one to present the project to city officials and the public.

The City Council also wants La Plaza to bring more information on a much larger shopping and eatery development Roush has been publicly discussing to one day be built around the theater.

Meanwhile, Wysong said he hasn’t applied for any larger projects and that he shouldn’t be required to submit master plans yet. “I am looking to build the theater, and that’s what they should be voting on,” he said.

Most of the council said they’d like more information on the larger development so they know what they’re approving in the long run.

Reach Tonya Strickland at 781-7858. Stay updated by following @tstrickland on Twitter.