So who didn't see this coming? I largely blame the city for this
Companies such as IMAX and Pyramid Brewery came to K Street with the impression from the city that the rest of K Street was on its way. The city has owned 10th and K for years now and it is no closer to completion than the day they purchased it. Does anyone actually know when they purchased it? I want to say somewhere around 1996/1997
There is going to come a point in time where companies are no longer going to be willing to gamble on K Street and buy the cities lame rhetoric and fairy tales of a thriving K Street
At this point in time where K Street is still struggling, spending the 375K over 5 years to keep IMAX is an easy decision
Council weighs IMAX subsidy
The theater's landlords want the city to contribute $375,000 for rent over the next five years
By Terri Hardy -- Bee Staff WriterPublished 2:15 am PST Monday, March 6, 2006
Millionaire developers George and Angelo K. Tsakopoulos are asking for a city subsidy to keep the struggling IMAX theater downtown from shutting its doors.
The brothers, who own the Esquire Plaza building on K Street, want the city to kick in $375,000 in redevelopment funds over five years to help the theater make its lease payment, said Wendy Saunders, the city's economic development director.
Previous Esquire Plaza owner David Taylor for years took a reduced rent to help offset the theater's losses. But after he sold the building in 2004, the Tsakopoulos brothers were unwilling to make the same arrangement when the IMAX lease came up for renewal, Saunders said."
George told them he expected them to pay the full $425,000," Saunders said.
Neither George nor Angelo Tsakopoulos returned calls for comment.
IMAX has never made its target attendance figures, and theater officials believed they would be forced to close if they were required to pay the entire lease amount, Saunders said.
"Although IMAX has a 20-year lease, the losses it has sustained over the course of the lease has led IMAX officials to the conclusion that it would be more cost efficient to cease operations than to continue," Saunders wrote in a report that will be presented Tuesday to the City Council.
The city then decided to intercede.
"K Street is fragile; we have not achieved the things we want to there, and we knew it would be bad if IMAX went dark," Saunders said. "George agreed to reduce the rent by $75,000 a year if the city matched that amount."
Under the agreement, the IMAX lease will remain at $275,000 a year.
Doug Link, IMAX theater director, said Friday that IMAX might have survived without the help, but the city outlay is money well spent, given the millions of dollars it already has put into K Street and Esquire Plaza.
"The city is protecting its investment," Link said. "K Street is going to be fully developed soon and there's going to be a lot of foot traffic in the area. Our projection is that in the next few years, (business) is going to be great."
Saunders on Tuesday will recommend to the City Council that Sacramento spend redevelopment funds to help the IMAX. In return, IMAX would agree to stay at the location five years."
Our perspective is once K Street truly transforms, in five years' time they shouldn't need more assistance," Saunders said. "Or, losing the theater will not be so damaging."
If the council agrees to the subsidy, it would not be the first time Sacramento taxpayers have helped the theater.
In 1998, the Sacramento Housing and Redevelopment Agency agreed to give $6 million to the Esquire Plaza project, which included restoration and reuse of the Esquire and Encore theaters.
The assumption was that the area soon would be transformed into a thriving entertainment district. The city redevelopment agency was negotiating to bring an AMC theater to 10th and K streets, but that deal fell through.
In her report, Saunders said the Esquire Partners and IMAX were counting on the AMC to bring heavy foot traffic. IMAX estimated its annual attendance would be 650,000 to 700,000. Actual attendance has averaged just over 226,000 for the past seven years, Saunders said.