New Hy-Vee wants theater ‘to remain a tenant’

Published 9:00 am Sunday, November 8, 2015

Oak Park Mall. - Tribune file photo

Oak Park Mall. – Tribune file photo

By Jason Schoonover, Austin Daily Herald

AUSTIN — Hy-Vee issued a statement Friday stating the company hopes CineMagic 7 remains a tenant at the Oak Park Mall site, but an Odyssey Entertainment Inc. vice president said that may not happen.

On Thursday, Odyssey Entertainment, the owner of CineMagic 7, issued a statement arguing Hy-Vee and the Austin Port Authority’s plans to redevelop the mall into a new grocery would leave the theater in “a dead-end experimental retail alleyway.”

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But Hy-Vee, which would take over as the theater’s lease holder, issued a statement saying it’d like to see the theater stay.

“As the future landlord, Hy-Vee will meet the obligations as outlined in the lease,” Hy-Vee wrote in a statement to the Tribune. “We will be making improvements to accommodate CineMagic 7 Cinema’s operation, and we hope that they remain a tenant in the center.”

But Odyssey is standing behind its prior statements. On Friday, Bryan Sieve, Odyssey’s vice president of finance and development, said that the company believes the theater’s positioning under the new plan would set it up for failure.

“We believe it’s an extremely risky redevelopment of the mall as it pertains to the theater space,” he said.

Odyssey ownership argued it supported the initial stages of the project and submitted building plans that detailed how the mall could be torn down while adding a new exterior front that provided direct access to the cinema. However, Odyssey spoke out against the plan to keep the commons area. The bulk of the Oak Park Mall closed in late 2014. Currently, only CineMagic 7 and Anytime Fitness remain in the commons area next to Shopko.

Sieve reiterated Friday that the theater would prefer an exterior entrance.

Still, Sieve congratulated the city, the Austin Port Authority and Hy-Vee for making changes and working to improve the mall in ways current ownership, Oak Park Mall Limited Partnership, couldn’t.

Sieve said it has been a tumultuous two years at Oak Park Mall for the theater, as the mall building has been deteriorating and essentially shut down late last year in preparation for the sale to Hy-Vee, which eventually stalled for several months.

On Feb. 9, Odyssey filed a lawsuit against Oak Park Mall Limited Partnership. The suit alleges that the mall failed to repair, maintain and remove snow from the parking lot; failed to heat, repair and maintain common areas; failed to provide a safe and sufficient exterior mall entrance, and access to the common areas; and that it failed to reimburse the theater for expenses incurred to repair common area HVAC units as required by lease.

“It’s just a nightmare of a situation,” Sieve said.

“We believe we have a strong case,” he added.

The theater is seeking $50,000 in damages, and the case is scheduled for a March 16, 2016, pretrial and March 31, 2016, trial.

“The mall conditions are deplorable and effectively deny tenant the use and quiet enjoyment of least premises,” the lawsuit reads. “The tenant theater is only accessible through common areas and all but one of the mall entrances to the common areas are chain locked without customer direction. The common areas are not heated. The parking lot conditions are a threat to customer safety.”

When Hy-Vee bought the mall, Sieve said they initially thought it would be a good deal until the issues with the common area space arose. He said the parties have not been able to reach an agreement.

As was indicated in Thursday’s release, Sieve said CineMagic 7 could close without an agreement.

“We’re not in any hurry to stick around,” he said.

Odyssey Entertainment bought the theater in 2011 after former owner Midwest Theatres Corp. filed for Chapter 7 bankruptcy. In 2012, the theater upgraded from film to digital, and Sieve said the company has more than $500,000 in projectors and other infrastructure at the theater.

In October, the Austin Port Authority approved a $2.9 million deal for Hy-Vee to acquire the main parcel of the mall property with the help of a $3.65 million Hormel Foundation grant.

Craig Byram, the Austin Port Authority’s attorney, issued a statement Friday morning: “The Port authority disagrees with the factual statements and allegations contained in the Odyssey press release,” Byram wrote in an email to the Tribune. “We are disappointed that Odyssey has expressed a negative opinion about a project that every other participating party and the general public unanimously agrees is a huge step forward for the community. We believe that, as this project progresses, the public will continue to recognize the substantial positive impact this project represents.”

In the agreement approved Oct. 19, the port authority set aside an additional $75,000 to reimburse Hy-Vee should any of the leaseholders decide to seek litigation for Hy-Vee’s development efforts.