City faces questions
about theater policy
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BY ALGIS J. LAUKAITIS / Lincoln Journal Star
It's a classic tale of David vs. Goliath, but it's not playing at a theater near you. Rather, it's playing in the halls of government and could affect the future of downtown. The plot: A developer wants to build an 18-screen "mega-plex" movie theater as part of a new regional shopping center called Prairie Lake at 84th Street and Nebraska 2.
The twist: As part of its comprehensive plan for growth, Lincoln and Lancaster County have a 21-year-old theater policy that says you can't build a movie theater with more than six screens outside of the downtown business district.
City officials say the policy, which has been modified over the years, is designed to protect the millions of dollars that have been invested to revitalize downtown and maintain it as the city's main entertainment hub.
Allowing a developer to build a movie theater with more than six screens outside of downtown would hurt movie attendance at existing theaters, they say. Also, they say, downtown eating and drinking establishments could suffer because they rely on nighttime movie-goers for a lot of business.
"The theaters are tied to all of the other strategies that the city and the Downtown Lincoln Association have for strengthening downtown ... so maintaining downtown theater screens is very important," said Marvin Krout, director of the Lincoln-Lancaster County Planning Department.
The Eiger Corp. is the developer of the proposed 18-screen movie theater and Prairie Lake shopping center. Eiger claims that the city's theater policy is "extremely restrictive" and unfair.
"Nobody in the country that is in the theater business is building movie theaters with six screens. Everything that is being built, including the ones built by Douglas Theater Co. outside of the City of Lincoln, are much larger than that," said Mark Hunzeker, an attorney representing Eiger. "We can't negotiate with anybody besides Douglas Theaters at this point because nobody else is building six-screen theaters."
Hunzeker said Eiger is not after a share of Douglas Theaters, which currently owns 41 theater screens in Lincoln.
"Our goal here is to build a first-class facility at this shopping center," Hunzeker said. "We would like to be able to at least negotiate with more than one operator."
Earlier this year, the city hired an independent consultant to do a market study of theaters in Lincoln and examine claims made by Eiger. Based on the study's results, Krout's staff recommended that the Planning Commission deny amendment and zoning requests made by Eiger that would allow more than six screens at any theater at least 6.5 miles away from 13th and O streets. The proposed 18-screen movie theater is 7.4 miles away.
Keith Thompson, the consultant, found that Lincoln is "overscreened by 35 percent and that local patronage is higher than the national average.
Also, his reports shows that 79 percent of the projected attendance for the 18-screen movie theater would come from existing theaters.
Hunzeker disagreed with Thompson's assessment that Lincoln is overscreened. He said his firm did its own comparison with Omaha, Des Moines, Madison, Wis., Wichita, Kan., and other regional cities and found that Lincoln has more population for first-run films than any of those cities.
In a phone interview, Thompson said the population base surrounding the proposed theater is very sparse. "In order to find patrons that would attend a movie theater, you have to go into populated areas of Lincoln," he added. "Well, those areas already have movie screens."
Thompson said the 18-screen movie theater would "cannibalize" the existing theaters for customers, making them economically unsustainable. The other problem, he said, is that the 18-screen movie theater would compete with its closest neighbor, Edgewood 6, for films distributed by Hollywood.
In his report, Thompson said The Grand 14, which opened last November, would lose about 25 percent of its patrons to the 18-screen movie theater. He said such an attendance decline would make it difficult, if not impossible, for The Grand to produce enough profit to cover its debt service or to produce a return on investment for its owner, Douglas Theaters.
Hunzeker acknowledged that the city has spent a lot of money encouraging business in downtown. "We're not being overly critical of that but it's just not right for the city to invest money in a project like say The Grand and turn around and say we are not going to allow people to invest in a competitive facility because we are going to protect downtown," he said.
David Livingston, president of Douglas Theaters, pointed out that there were four theater operators in Lincoln when the theater policy was written 21 years ago.
"Although we have no authorship (of the theater policy) to say we have no interest would be erroneous because everything we have done in that 21 years has been guided by that law and the comprehensive plan which is an all encompassing document," Livingston said.
Livingston believes that Lincoln may be maxed out as far as theater screens. "Every time we add more theaters we see diminishing returns. That's a good sign that the market is tapped out, simply because we are splitting the pie thinner," he said.
Representatives of Douglas Theaters and Eiger Corp. have discussed the 18-screen movie theater project, Hunzeker said, and Douglas Theaters could bid to operate the new mega-plex, if it were approved.
"We are hopeful that they will view this as an opportunity to match what other offers are made by competitive enterprise. We are not shutting the door on Douglas at all," Hunzeker said. "In order for the playing field to be level, we ought to be able to negotiate."
Krout said the current theater policy does not need to be changed.
"I think the measuring stick would be is what impact it would have on downtown if we changed it," he said.
Krout also believes the theater policy is fair.
"It might be unfair if there was no market to develop a theater of six screens," he said. "But we do have six-screen theaters that are operating profitably here and in other cities. The 18 mega-plex is not the only model of successful theaters."
Reach Algis J. Laukaitis at 473-7243 or alaukaitis@journalstar.com.
If you go
A theater policy that only allows six screens per movie theater outside the downtown business district will be the focus of a 1 p.m. public hearing today in the County-City Building, 555 S. 10th St. A developer, who wants to build an 18-screen "mega-plex" movie theater as part of a regional shopping center near 84th Street and Nebraska 2, is asking to change the long-standing policy to bring more competition to the area and give movie-goers more choices.
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