Champlin Mann Theater Bailout Coming?

October 10, 2016 at 8:35 am Leave a comment


By Andrew Richter

I’ve said it before and I’ll say it again: when did the government become a bank? An issue has arisen in my new home town of Champlin that once again calls into question the role of government.

At a Champlin City Council and Economic Development Authority (EDA) joint work session Monday, Sept. 26, city staff and the EDA board discussed the latest developments regarding the future of the Mann Cinema 14.

The Manns are looking into a $4 million renovation and have requested financial assistance from the city. The renovation would entail the removal of the existing seating and the installation of new seats, adding liquor sales and online ticketing options.

Originally, the Manns requested $750,000 from the city to assist with their project, but at a previous work session in August, the EDA determined it was not comfortable contributing $750,000. Instead, city staff began negotiating a deal that involved a 10-year, forgivable loan for 10 percent of the project cost capped at $400,000. The loan would carry an interest rate of 3 percent and be forgiven after 10 years with the stipulation it would operate as a first-run theater as opposed to a discount theater. The deal also stipulated that majority ownership must be maintained by the Manns.

OK wait a minute; A $400,000 forgivable loan if they become a first-run theater? What’s that mean? They don’t have to pay it back?

In past discussions staff had spoken with the EDA about abating the theater’s property taxes for up to 20 years. At the most recent work session, the EDA expressed it was not interested in abating the theater’s taxes. Staff believes the city can recoup those costs over a 10 year period in terms of additional taxes generated from the project including liquor licence fees.

Abating their property taxes? Good grief!

“In terms of recouping the investment, there are city taxes indicating that a new and improved theater consistent with what was done in Plymouth would generate $8,300 a year more in taxes,” said Deputy City Administrator John Cox. “If they, like Plymouth, opened up a bar that would generate another $6,700 a year. So that is $15,000 per year and applying a modest interest rate of 2 percent over 22 years, the city would be able to recoup that investment of $400,000.”

If it’s such a great deal why don’t they get a bank loan?

The property currently produces $105,000 annually in taxes.
Additionally, if the Manns sell a majority of that theater within 10 years or the term of the loan they would be responsible for paying back that loan with interest. This information is according to most recent city documents and may change as negotiations continue. Nothing has been agreed upon by both parties nor has it been approved by the council.

“Every dollar we spend on this, you have to keep in mind, those are dollars that we are not spending on other important priorities like the Mississippi Crossings,” Cox said.

Other uses
The Manns recently renovated their Plymouth Theatre and have experienced a 189 percent increase in sales since completing the project. Other revenue figures, such as concessions, bar sales and commissions have increased similarly. However, staff said it is important to note that Manns Plymouth Theatre has limited competition with the nearest renovated theatres being in Eden Prairie and Burnsville. In Champlin, the landscape is more competitive with a recently renovated theatre in Coon Rapids, and soon to be re-seated theaters in Maple Grove and Andover. It is this competition that is dictating that the Champlin theater be either renovated or be closed.

According to city staff, the Manns have stated that the theater has never made a profit since opening in 2002.The EDA also discussed other options with staff in terms of what else the building could be used for. “Riverway Church has shown an interest in the facility as a church or community center,” Cox said. “This use would result in the property becoming tax-exempt.”

Well we can’t have that…..gotta grab every dollar LOL

The EDA also discussed if the property could be sold to another theatre operator, but the Manns do not believe that is likely given their conversations with other operators. A real estate broker with Wakefield Cushman believes the property’s best re-use is a tear down. The 9 acre theatre site could support a variety of uses including commercial and multi-family residential. The broker estimated that the property has a value of $2.35 million to $3.13 million minus demolition costs.

OK here’s what the EDA (which is the city council) had to say:

EDA COMMENTS

The question that circled the discussion table Monday night was, “How much is the theater worth to this community?”

The board shared these comments with staff:

“I hate to lose the theater,” said EDA member Kara Terry. “It’s an amenity — one of the few amenities that teenagers have here in our community. They employ many teens; it’s a very valuable experience. I would support keeping them in our community. I would prefer to go the 5 to 7 percent route with no burden to the tax payers.” EDA President ArMand Nelson asked what burden is put on the city if the Manns close. “It’s an association of which the Manns are a majority property owner,” said City Administrator Bret Heitkamp. “That’s an issue we’d have to deal with.”

Board member Bruce Miller said he is against providing financial assistance to the Manns for the project altogether. “Everybody that I’ve talked to, money or not, said the theater is an amenity to the community that could have significant economic impacts on our community if it were to close — not only for future businesses that come to the community but for residents that look to it as an amenity,” said EDA Board Treasurer Ryan Karasek. “I do not want to raise taxes for the residents — period. I’d be more inclined to make that investment and we collect that revenue back in our general fund from an increased property tax perspective.”
Karasek added that he would be in favor of providing financial assistance to the Manns at five to seven percent of the project cost and not to exceed $250,000.

Why does Karasek get so much ink here? And his opinion makes not a drop of sense. He wants to aid the theater but not raise taxes; well where does the $400,000 come from then? Is the Fed going to print you money?

Member Eric Johnson stated that, in his opinion, the city can no longer afford to contribute $400,000. “We have other projects we need to use those funds for,” Johnson said. “To me, it’s in that 5 to 7 percent of $4 million. To me, the max you go up to is $300,000. I agree with Kara, this is a unique amenity that the city absolutely needs because we don’t have a lot of things like this available to our residents.” The EDA Board directed staff to continue negotiations with the Manns stating that the city would contribute a percentage of the project cost to be determined in later negotiations.

Judging by the comments here I’m guess there will be a bailout…..oh excuse me an investment. Bruce Miller is probably the only dissenting vote at this point.

To say this is ridiculous is an understatement. If a business succeeds or fails out in the free market you can’t run to government to bail them all out; how do you pick and choose who to bail out and who not to? If you bail them out what message are you sending? If you pay enough in property taxes you can get taxpayer money? You’re too big fail? How about all the businesses that open and close, where is their money?

Stay tuned to this one……

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Entry filed under: Champlin, City Government, Community, Taxation. Tags: , .

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