Movie theater chains across America are reeling from restrictions put in place by Public Health departments trying to contain and mitigate the coronavirus. The closures and restrictions have made it very difficult for theaters, bowling alleys, bars, nightclubs and gyms to sustain a viable business model.
Like many businesses in Grand County, The Foundry Cinema and Bowl has been hit hard by the pandemic. The restrictions, while necessary to contain the virus, have made it difficult for the Fraser Valley Metro Rec District (FVMRD) to justify its operational lease agreement with developer Mark Unicume, Unicume Colorado.
The original agreement was a (4) Four Year Lease agreement from February 11, 2019 through February 10, 2023 w/ option to extend under mutually agreed upon terms. The rent payment was set at $25,000 per month with no annual escalations. The original agreement also had a facility purchase clause that would allow the FVMRD to buy the facility at any time prior to August 10, 2022, six months prior to the lease end date.
In an interview with Scott Ledin, Director of Parks, Recreation and Golf for the District, Ledin said the Foundry Cinema and Bowl enterprise business model was producing revenue for the district prior to the pandemic closures. “The facility was doing very well,” he reported.
On March 15th, pandemic mandates forced the FVMRD district to close the doors to the Foundry Cinema and Bowl at the height of spring break. The facility was closed for ten weeks.
In June 2020, in an open discussion regarding the facility’s future, residents of the community came forward and expressed their support for the amenity.
At that meeting, the Fraser Valley Rec District Board decided, in a 3 to 2 vote, to extend the lease on the Foundry Cinema and Bowl through December 8, 2020 to gain clarity moving forward. After consulting with the legal team and the owners of the facility, the FVMRD Board came to a short term agreement with Unicume to continue the lease with an abatement totaling more than $80,000 and no late charges. At that time, Board President Roger Hedlund said, “The owners want to make it work and we appreciate the good will.” Hedlund added, “We are not sure where this is going, but this will allow us a little bit more time to see where this goes and allow for budget discussions.”
On Tuesday, December 8th, the FVMRD Board of Directors will make a decision regarding an addendum to the lease agreement with U9200 LLC.
In October, Ann McConnell, business manager for the district, and Ledin met with the ownership group to discuss financial challenges created by COVID-19. Ledin said the ownership group is willing to offer additional lease payment abatement in 2021 if the FVMRD is willing to extend the lease agreement by two years. They have also offered to reduce 2021 monthly lease payments by 50% or $12,500, for the entire year. The two year extension on the lease agreement would allow the owner to recover that lost rent. The ownership group also understands the potential for a negative reserve fund balance at the end of 2020 and has indicated a willingness to help offset this amount, but the exact amount is yet to be determined. FVMRD will still have the option to purchase the facility any time prior to August 10, 2024, six months prior to the new addendum agreement lease termination date.
This new addendum would extend the lease to 2025 and provide some incentives for the district to move forward. Ledin said, “The ownership group is willing to work with us and supports us to continue to operate the facility as a cinema and bowling alley.”
The Foundry Cinema & Bowl is a 16,000 square foot family entertainment center that includes an eight-lane bowling alley, two-screen movie theater, gaming arcade, concession stand with a restaurant and full bar.
It is unclear what the ownership group will do if the FVMRD decides not to move forward with the new agreement, but according to Ledin, the owners have stated several times they have no interest in operating the facility as a movie theater and bowling alley. A vote by the Board against approving the lease addendum will likely place the property in the hands of a future owner.