HAYWARD, Calif. — The city of Hayward is buying the movie theater building downtown to increase public influence over a key location, which has the potential to revitalize the B Street corridor.
During a special meeting Monday, Jan. 8, the Hayward City Council voted, 5-1-1, to lend the Hayward Economic Development Corporation up to $8.6 million to buy the leasehold interest for the movie theater at 1069 B Street and adjacent parking lot at 22695 Foothill Boulevard, referred to as Cinema Place and the Cinema Place Parking Garage. Councilmember Julie Roche was opposed and Councilmember Ray Bonilla was absent.
Roche questioned the wisdom of investing in the building given the other ways that the $8.6 million could be spent, the uncertain future of brick-and-mortar retail and the volatility of the restaurant industry.
“Knowing we have a lot of other obligations coming up, it makes me nervous,” Roche said. “Just thinking, as a city, we’re in the business of providing services to our community, we’re not retail managers.”
Councilmembers Dan Goldstein and Angela Andrews expressed similar reservations, but ultimately voted in favor of the purchase, citing the public safety problem the building would pose if left vacant, as well as the opportunities it presents for the city to facilitate economic development in the area.
“I do still have heartburn about the amount of money,” Andrews said.
Councilmember George Syrop viewed the acquisition as an investment, highlighting the potential for the building to generate revenue for city improvements and to support small businesses by serving as an incubator or co-working space, among other things.
Assistant City Manager Dustin Claussen explained that the property yielded a profit of $634,000 in 2022, factoring in mortgage interest and property tax payments, which the economic development corporation wouldn’t have to pay. Additionally, about 95% of the leasable space in the building is currently occupied, with existing leases averaging three years.
The move to acquire the property stems from Hayward’s ongoing challenge with absentee and unresponsive landlords downtown. Mayor Mark Salinas stressed the importance of preventing the corner building from falling into the hands of owners who might neglect the property or treat it solely as a speculative investment with no regard for the community’s vision.
“This site is too important to let it go to some ghost landlord who we may never see or meet,” Salinas said.
In 2005, the now-dissolved Hayward Redevelopment Agency entered into a ground lease with the developer Hayward Cinema Place LLC for 1069 B Street, leading to the construction of the 53,000-square-foot movie theater, restaurant and retail center. The leasehold interests, set to expire in 2056, were bought by 1069 B Street LLC in 2012.
Concerns arose when the owner attempted to put the building up for auction without informing the city in August. City Manager Kelly McAdoo said the failure to inform the city and the potential for speculators to buy the building and leave it vacant prompted staff to intervene.
The city negotiated directly with the owner to secure a purchasing price of $8.5 million against an appraised value of $8.65 million. Staff requested an additional $100,000 to cover associated closing costs and related expenses.
Anticipating the purchase, the city formed the Hayward Economic Development Corporation as a nonprofit public benefit corporation during a meeting in October. The economic development corporation is expected to serve a similar function to the dissolved redevelopment agency, which would use property tax revenue to redevelop areas deemed blighted, as well as build affordable housing. Those were dissolved by state mandate in 2011.
The economic development corporation is expected to manage the property and revenues, ensuring they can be used to manage the property and support businesses and the broader community.
In the long term, the city intends to secure an independent property manager to take over the lease and bring in a consultant to assess the best potential uses for the property if a movie theater is not sustainable.
Read more about Hayward’s downtown revitalization in the February print edition of the East Bay Echo.
Sonia Waraich can be reached at 510-952-7455.
