In 1996, the Redevelopment Agency, the City of Sparks, Syufy Enterprises (“Syufy”) and Century Theatres entered into a Real Property Disposition and Development Agreement (the “DDA”). Pursuant to that DDA, Syufy Enterprises acquired property from the Redevelopment Agency and developed the 14-screen movie theater at Victorian Square. The Agency, in turn, agreed to construct various public improvements including a parking structure containing at least 700 stalls available to Syufy for use of the theater’s customers. In 1997, the City built the parking structure adjacent to the Victorian Square movie theater building, which now contains approximately 696 public parking spaces.

Syufy sold the Century Theaters business to Cinemark in 2006 and leased the Victorian Square theater facility to Cinemark for a period of ten years.  In August 2015, the City Council and Redevelopment Agency approved an agreement with Cinemark to continue providing the theater free parking in the City’s parking structure. That parking agreement failed to become effective, however, when Cinemark did not extend their lease and closed the theater on September 30, 2016.

In mid-2016, Syufy informed the City that the availability of free parking for the theater in the City’s parking structure was essential to securing a new operator. On October 10, 2016, the Redevelopment Agency and the Sparks City Council approved a Parking Agreement (the “Parking Agreement”) with Syufy Enterprises. Per the terms of the Parking Agreement, the City agreed to provide free parking for the movie theater in the adjacent, City-owned Victorian Square parking structure, subject to certain limitations. The Parking Agreement would automatically terminate on January 1, 2018 if the theater did not open for public operation by December 31, 2017.

Galaxy Theatres experienced substantial delays in their renovations to the theater that prevented re-opening of the theater prior to the December 31, 2017 deadline. Syufy therefore requested a nine-month extension of the deadlines in the Parking Agreement. To facilitate access for its tenants and customers, Syufy and Galaxy also requested approval from the City to install a direct entrance between the theater and the City’s parking structure. These changes to the Parking Agreement were approved by the City Council and Agency Board on October 23, 2017 as Amendment No. 1.

Galaxy Theatres is nearing completion of the renovations to the theater and may partially or completely re-open it prior to the September 30^th deadline. However, construction has been slowed this year by the general shortage of construction workers in northern Nevada. Syufy Enterprises has therefore requested a 45-day extension of the deadlines in the Parking Agreement.

This agenda item requests approval of the proposed Amendment No. 2 to the Parking Agreement. Specifically, Amendment No. 2 would change the date in Section 2 (Term) by which the theater must be open for public operation from September 30, 2018 to November 14, 2018 and change the automatic termination date from October 1, 2018 to November 15, 2018.

Amendment No. 2 does not modify any other provisions of the Parking Agreement.

Syufy and Galaxy Theatres strictly maintain that their investment in and operation of the theater is conditioned upon access to free parking in the City’s parking structure. In the 1990’s, the City and Redevelopment Agency worked with Syufy Enterprises to develop Century’s theater facility as an anchor for the Victorian Square redevelopment project. Until its closure in the fall of 2016, the theater remained one of Victorian Square’s principal entertainment options. Re-opening the theater is important to the redevelopment efforts of the City of Sparks as well as Silverwing Development and other parties who have invested in the Victorian Square area. For this reason, and because City staff believes that Galaxy Theatres has diligently pursued renovation of the theater property, City staff supports Syufy’s request for a time extension.

1. The City Council and Agency Board may approve Amendment No. 2 to the Parking Agreement.
2. The City Council and Agency Board could modify Amendment No. 2 subject to the consent of Syufy Enterprises.
3. The City Council and Agency Board could reject Amendment No. 2.

I move to approve Amendment No. 2 to the Parking Agreement between the Sparks Redevelopment Agency, the City of Sparks and Syufy Enterprises.