Galaxy Theater property in Atascadero facing foreclosure
A mall in Atascadero that includes the Galaxy Theater is in danger of foreclosure.
A New York loan group has initiated a foreclosure on the Colony Square property located on El Camino Real. The City of Atascadero has since passed a resolution emphasizing the importance of these businesses to the community.
Theaters have been particularly affected by COVID-19 restrictions which have made it impossible for some to pay rent. Homeowners, in turn, have also struggled to cope with mortgage payments.
The Galaxy Theater, which has been a community fixture for the past decade, has only been open for three days since March of last year.
“Closing movie theaters is something that has a huge impact on the industry itself, yes, but on the public,” said Frank Rimkus, CEO of Galaxy Theaters.
Cinema Square LLC owner Jeff Nelson said the rent was $ 41,000 per month for businesses, including Que Pasa.
He says the restaurant paid part of it while the theater, which normally contributes over 80% of that, paid none.
“We made a loan repayment in April and since then we haven’t had the rent income to make loan payments,” Nelson said.
The city’s resolution says the lender is demanding repayment of between $ 400,000 and $ 1.2 million above the amount of the missed payments.
“We are taking serious damage here for working with our tenants and it just isn’t fair,” said Nelson.
The window to apply for a federal grant for closed sites is opening soon, which could potentially make up for missed loan and rent payments.
This is an option that homeowners and the city believe should be considered before a foreclosure occurs.
“You have someone like Wells Fargo who is the prime mover on this loan and they come into a small town and threaten one of our small businesses so we would like to prevent that from happening, draw attention to that and get everyone to work together, ”said Heather Moreno, Mayor of Atascadero.
Although the lender is prohibited under New York law from foreclosing on any New York property, this move could result in the only property seized in San Luis Obispo County to date due to the pandemic.
“It’s a David and Goliath story and they threw everything at us except the kitchen sink and it was very difficult,” said Nelson.
There is a court hearing in San Luis Obispo on April 20 to determine whether the owner will be replaced by a receiver.
KSBY News has contacted the lenders involved, but one declined to comment and we have yet to hear from the other two.
Galaxy Theaters tells KSBY they don’t know enough about the federal grant funding program yet to determine if they will apply.