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/ Chapter 1 Overview and Summary The City of Redwood City is considering the development of a downtown mixed-use retail- cinema com- plex. The project would be located on two blocks of the downtown area. One block, bounded by Broad- way, Jefferson Avenue, and Middlefield Road, would be occupÌed by a building that contains approxi- mately 80,000 square feet of retail and restaurant space on the ground floor and a 20-screen cinema com- plex on the second floor. The other block, bounded by Jefferson Avenue, Middleficld RoadlWinslow Street, and the railroad tracks, would be occupied by a multi-story parking garage and either a specialty foods market (original proposal) or an office building (Alternative 4). This report evaluates the likely economic impacts of the proposed project on downtown Redwood City. These impacts are expressed in tenDS of sales volumes and employment: The evaluation is based on an examination of relevant literature, investigation of other cities' experiences with similar projects, and application of an employment multiplier to the expected employment at the project site. Key findings of the analysis are: . Downtown multiplex cinemas have had positive economic impacts in other cities where they have recently been developed. According to the literature reviewed for this study, they have attracted large numbers of people to the vicinity of the movie complex, and those people have not only attended the movies but also spent money on restaurant meals and other goods and services. Commercial rents in the vicinity of the cinemas have increased, indicating a perceived increase in the value of these areas for business. (See Chapter 4.) Information on taxable retail sales in the vicinity of downtown multi-screen cinemas indi- cates that restaurants and specialty retailers are most likely to benefit from the presence of a movie theater. In Concord, for example, a new 14-screen cinema opened in November, 1997. A comparison of sales tax revenues in the fIrst half of 1998 to revenues from the first half of 1997 indicates that sales in eating & drinking places increased by nearly 14 percent, and sales in gro- cery and drug stores by more than 20 percent, after the cinema began operations; overall, down- town sales increased by nine percent. (See Table 6.) In downtown Santa Cruz, restaurant sales increased by 31 percent, sales in apparel stores by 33 percent, and sales in "other retail stores" (primarily specialty stores) by more than 15 percent between the year before the nine-screen cinema complex opened (1993-94) and the year after (1996-97). During the same period, sales in Santa Cruz eating & drinking places and in apparel stores outside of downtown actually declined - evidence that the cinema had a strong positive effect on downtown sales in these retail categories. (See Tables 8-10.) In two other comparison cities, sales tax revenues increased substantially (42 percent and 13 per- cent) during the year after the respective cinema complexes opened, with the gains focused in restaurants and "miscellaneous retail" outlets (see Table 11). . In. several cities for which quantitative data relating to cinema project effects on downtown retailing were not available, staff observed indications of improvements in downtown business that included increases in the number and variety of retail outlets and restaurants, a lengthened retail day, greater pedestrian activity, and a more positive image of the downtown as a "place to go." (See Chapter 4.) 1