The opening credits on Payson's new six-plex movie theater may be delayed a few more months.
Gordon Whiting, vice president of Kaibab Industry's property management division, said the company's plan to build the Sawmill Crossing shopping center and theaters at the corner of Main Street and Highway 87 has hit a snag.
An unexpected twist in the deal between Kaibab and E&W Theaters of Van Nuys, Calif. could mean a delay in construction of not only the theater, but the entire first phase of the project.
Whiting said his company negotiated rates with E&W Theaters to operate the six-screen movie theater.
Whiting said a mandate by Kaibab's lender forced an increase in rent to the theater operators.
"When we went in and applied for our financing, the bank ordered an appraisal of the project's value after it's finished, and that appraisal takes into account, very significantly, the net operating income generated by the project through rent," Whiting said. "Once the appraisal came in -- which just came in last week --the lender told us unless we could raise the rental income to a certain level, they wouldn't finance."
Also driving up costs, he said, were the high impact fees imposed by the town.
"We're going to be asking the town for some concessions, or some kind of incentive," he said. "As part of the redevelopment area, the town needs to start thinking about what incentives it can offer to try and get Main Street going again. It's time everyone stops talking about it and does something."
That rent increase wasn't in the plan for E&W Theaters, President Wil Viner said.
"The cost of the project has made the rent prohibitive," Viner said. "The last we've heard, (Kaibab) was going to go back and crunch the numbers and see if we can come to an agreement. Right now, the ball is in their court. They hold the cards. But we are still very committed to Payson."
Whiting said the next step -- if Viner pulls out of the deal --is to begin the search for a new theater operator.
"We want to give it just a little bit longer with E&W to see if we can resolve this," Whiting said. "If that doesn't work, then we're going to very aggressively approach other theater operators and find us a new tenant. This may mean a delay, but we're still committed 100 percent to the project."
To date, Whiting said Kaibab has shelled out close to $800,000 to level the land, prepare it for construction and build the channel. Kaibab has also spent roughly $225,000 on engineering and architectural plans.
"We've got an investment here," he said. "We've got 25 acres, and we're going to do something with it. That's the message we want to send."
Construction started on the project last summer, and developers predicted the theaters would be open by Thanksgiving.