Wednesday, September 05, 2007

Movie theater to close over parking lot rent dispute

Sept. 04, 2007

(Crain’s) — The owner of the Lincoln Village Theater plans to shutter the popular Northwest Side movie complex following a dispute over the rent for an adjacent parking lot, owned by the Metropolitan Water Reclamation District of Greater Chicago.

The six-screen theater, 6341 N. McCormick Blvd., and several other adjacent property owners have leased the nearly 1.9-acre parking lot since 1985. After negotiations over a proposed rent increase broke down earlier this summer, the district sealed off the lot with thick concrete barriers, preventing access by theater patrons. The district has demanded a more than 14-fold rent hike, to more than $800,000 a year, according to a lawsuit challenging the proposed increase filed by the property owners.

"There's no way these businesses can pay that much for parking purposes," says Alderman Bernard Stone (50th), who supports the property owners.

But Richard Lanyon, the district's general superintendent, defended the eye-popping rent increase, saying state law requires that the rent is pegged to a percentage of the fair-market value of the property, based on appraisals.

As a result of the dispute, the theater’s owner plans to give the building to a private elementary school, Alderman Stone says.

The Philip and Rebecca Esformes Girls School, currently located at 2801 W. Jarvis Ave., would move in about two years, confirms Rabbi Yitzchok Wolf, dean of Skokie-based Cheder Lubavitch Hebrew Day School, which runs the girls school.

Rabbi Wolf declines to identify the theater’s owner or comment on the financial aspects of the move, except to say the property is being “donated, for the most part.”

"We are fortunate we got this building," Rabbi Wolf says. "It's very exciting. We're confident it will be good for the community."

When construction would start to convert the building to classrooms hasn’t been decided, he says. The date of the theater’s closing could not be determined.

The theater is owned by A.A. McCormick L.P., property records show. An executive with A.A. did not return a call requesting comment.

Terri Sween, president of Chicago-based Village Entertainment Inc., which operates the movie house, says she is unaware of the proposed closing.

Last year, the district and the property owners agreed to new 39-year lease, under which the annual rent would be 10% of fair market value, according to the lawsuit.

But the district contends that the land is worth $8 million, a value boosted by the potential residential use of the property. The business owners say the site is worth no more than $540,000, according to the complaint, which was filed in May in Cook County Circuit Court.

An ordinance to downzone the site, and reduce the value, is pending before the Chicago City Council, says Mr. Stone, who sponsored the measure.

While the two sides were still negotiating, the rent was just $36,000, under an interim agreement, according to the complaint. After that deal expired in May, the district closed the lot.

The district’s Mr. Lanyon denied the barricades were a negotiating tactic, saying, "We did it to protect our property from improper use by people who weren't authorized to be there.”

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