Two weeks before Atascadero's Cinema Square was slated for foreclosure, on April 22 a San Luis Obispo Superior Court Judge granted a temporary restraining order halting it.
The order is welcome news in the city, Atascadero Mayor Heather Moreno said.
- File Photo Courtesy Of Galaxy Theatre Atascadero Facebook Page
"The economic health of Galaxy Theatre and the other Colony Square businesses is critical to the growth and prosperity of Atascadero's downtown," Moreno said.
According to court documents, Cinema Square owner Jeff Nelson, who leases commercial space to Galaxy Theaters, Que Pasa! Mexican Cafe, and SloDoCo, hasn't been able to make his loan payments ($551,704) since May 2020 due to statewide stay-at-home orders that resulted in temporary business closures and revenue losses.
Galaxy Theatre, which court filings state is the anchor of the property, had been closed—except for three days—since the onset of the pandemic in March 2020, until recently when the state started relaxing stay-at-home orders.
Before May 2020, Nelson had never missed a monthly loan payment. However when the lockdown prevented Galaxy Theatre from making its payments, Nelson immediately alerted the loan server in an effort to be transparent about his situation. In December 2020, one of Nelson's lenders, the New York-based Wilmington Trust, filed a complaint against Cinema Square seeking the appointment of a receiver to collect past due funds. In court documents, Wilmington Trust accuses Cinema Square of diverting rent and violating the rents and profits clause of their deed.
Galaxy Theatre is now open to the public at a limited capacity and has plans to apply for the Shuttered Venue Operater's Grant, a program established by the Economic Aid to Hard-Hit Small Businesses, Nonprofit, and Venues Act. If approved, the theater plans to pay its past due rent with the granted funds.
The theater would have applied for the grant program on April 8, but according to the U.S. Small Busines Administration the Shuttered Venue Operators Grant application portal was down. The website was back up on April 24.
Moreno said that stalling the forclosure gives all parties involved more time to work things out. It gives the theater time to apply for grants and Nelson time to negotiate with his lenders on an equity solution, Moreno said.
All parties are due to appear for a hearing on May 18. Δ