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Syufy clarified that the most successful components in having a successful theater are, amongst many other things: location, and making sure that all the blockbuster movies are offered. As far as revenue per seat and per screen it really varies dramatically from one place to the next. However, in this setting the Syufy's Enterprises are certain that this project will be successful, and have no doubts that it will revitalize the downtown of Redwood City. Tim Kelly, from Keyser Marston Associates, Inc., Economic Development Consultant addressed the council and responded to the next set of questions. The first question involved speaking to the issue of the "health" or lack of health of the industry when one operator controls the market (monopoly). Kelly's response included statement that clarified that in the history of theaters control of a certain region is not uncommon. The major challenge is that operators have a tendency to not upgrade and upkeep the physical facility of existing theaters, this in terms of the technology available. This includes: digital sound, stadium seating, wide screen, etc. Sometimes there also is a lack of number of screens, and other times there is a lack of proper maintenance of the theater. However, today the consumer is demanding state of the art theaters. Therefore, the consumer is driving the quality of the theaters. The second question answered by Kelly requested that the expert present data about cities where cinemas have failed. Kelly, stated that the only cinema he is aware of that failed is the downtown United Artists cinema in downtown San Jose. Some of the reasons for its closure are lack of free parking, and the fact that it was a freestanding structure without a surrounding retail environment. Some possible options when theaters shut down are: the structure is can be teared down, reused, or the theater stays and it becomes a discount theater. Kelly then answered the following question: how to address mechanisms to assure and guarantee percentage mix of retail usage (small, medium anchor, nighttime and daytime tenants)? Kelly stated that the contractual agreement between the developer and the City does require that such mix be present and preserved. However, Kelly reiterated that a City could not fully control the types of tenants in any project because if there are too many controls the project is not finnancable. A reasonable balance is the best solution. The final question addressed by Kelly was if there are any downsides to the project? Kelly's clarification covered the fact that this is a land use issue. The City might choose to utilize this land for the retail cinema project versus other uses such as housing. Therefore, it is more of a policy issue than an issue of finding negative points in the project. However some of the concerns might be: if a tenant doesn't work out this might cause the property to be vacated, also parking might be a concern. The next consultant to address questions was Roberta Mundie, President of Mundie and Associates. This firm performed the economic and fiscal analysis for the project. Mundie, stated that she had been asked to specifically address three questions. However, prior to answering the questions Mundie wished to make very clear that her firm, is neither a proponent nor an opponent of the project. The stock and trade of Mundie and Associates is objectivity, _r REGULAR COUNCIL MEETING MINUTES DECEMBER 4, 2000 PAGE 9 MINUTES Book No.58 Page NO. 271