Economic Study: Cinema Could Have $9.6 Million Impact on Main Street

[caption id="attachment_63643" align="alignnone" width="800"] A rendering of what the rebuilt Sag Harbor Cinema — now the Sag Harbor Cinema Arts Center — would look like. Courtesy of NK Architects and Croxton Collaborative Architects[/caption]

By Kathryn G. Menu

Nick Gazzolo, the president of the Sag Harbor Partnership, always intuitively understood that the non-profit’s efforts to rebuild and redevelop the former Sag Harbor Cinema into the Sag Harbor Cinema Arts Center would benefit Main Street businesses. Now he has the study to prove it.

On Tuesday, the Sag Harbor Partnership released an economic impact study developed by HR&A Advisors, Inc., which estimates the Sag Harbor Cinema Arts Center would have an annual economic output of $9.6 million, would generate $5.6 million over 20 years in state and county tax revenue, and would create 73 year-round and seasonal jobs at the cinema and other local businesses.

“As we have been talking to people about this project, a lot of people are interested in the building, in the sign, and in great films, but then there is a larger Main Street story — the impact on local, independent businesses that we love, and that make Sag Harbor, Sag Harbor.”

Sag Harbor’s Main Street has still not recovered from a fire that tore through several buildings on December 16 of last year, damaging or destroying a handful of buildings including the iconic Sag Harbor Cinema, which had its façade demolished that night amid concerns about its structural safety.

The Sag Harbor Partnership in April announced it had contracted to purchase the cinema from owner Gerald Mallow for $8 million. On Wednesday, Mr. Gazzolo and April Gornik, the vice president of the Partnership, said they have so far raised $5.75 million in donations and pledges, including $250,000 this week from a donor who wishes to remain anonymous. The group plans to restore the cinema’s Art Deco façade, and its neon “Sag Harbor” sign, and create a cinema arts center dedicated wholly to film, featuring three separate screening rooms as well as a café.

In addition to the $8 million needed to purchase the property, an additional $5 million is estimated for the cost of construction. The center will operate as a non-profit entity, making it eligible for federal, state and county funding.

The group has also created several boards filled with artists, filmmakers, community leaders and business people to help develop, and fundraise, for this ambitious plan, including Ron Kaplan, a Washington D.C. developer with 30 years of experience in real estate finance. Mr. Kaplan brought HR&A to the table, and the firm quickly agreed to analyze the economic impact of the project, pro bono.

"As founder and CEO of HRA Advisors, John Alschuler was personally instrumental in the creation of The High Line as well as Brooklyn Bridge Park; two transformative developments,” said Mr. Kaplan. “That John immediately saw the value and potential impact of rebuilding the Cinema into a focus of Cinema Arts on the East End, and thus personally led the analysis on a pro bono basis, is testament to the potential impact of this project."

HR&A’s report assessed the economic impact from the construction of the cinema, ongoing operations at the center, ancillary moviegoer spending on or around Main Street in Sag Harbor, and off-season spending generated by summer residents who would not ordinarily stay in the village, but could be drawn to new events at the center.

According to the full report, in addition to the 73 year-round and seasonal jobs and $1.96 million annually in wages for those employees, HR&A estimates the cinema will create in and around Sag Harbor, it predicts the construction alone will create 45 construction jobs over a one-year period, and $2.25 million in construction wages.

In terms of spending generated by the cinema, HR&A estimates $7.34 million in total economic output from construction spending, and $9.61 million in spending annually throughout the village as a result of the cinema arts center.

“The benefits of cinema patronage, including moviegoers’ propensity to patron other establishments — such as restaurant and retail shops — before or after a show, are well documented. A 2012 study found that 80% of moviegoers at a theater in downtown Tucson spent money at other downtown business,” states the study. “Likewise, a 2001 study found that 50% of moviegoers attending one cinema in San Francisco were also patrons of other nearby commercial establishments. The Sag Harbor Cinema also offers the potential to draw off-season visitors to Sag Harbor, generating economic activity from typical visitor spending.”

A total of $3.41 million in state tax revenue is predicted over 20 years, with $2.14 million in county tax revenues expected to be collected over the same period of time.

“In addition to new jobs and increased spending, a new Sag Harbor Cinema will anchor the village as a place that fosters arts and culture and creates a brand of economic resilience and longevity,” reads the study. “The Cinema’s architectural character, ambitious programming, and community-centric mission can play a central role in developing Sag Harbor’s brand as a cultural destination. It presents a particularly powerful force to attract diverse activity and vibrancy in the village’s quiet off-season. A new, redesigned Sag Harbor Cinema will provide invaluable resources to year-round residents, showing regularly scheduled film screenings and offering workforce development opportunities in the film and post-production industries.”

“People understand how dinner and a movie go together, but we needed an expert to tell us how much each movie ticket means to other businesses on Main Street,” Mr. Gazzolo said. “This study supports the idea that the Cinema project is an economic engine for all of our locally owned businesses. It also helps bring people to Sag Harbor all year long.”

“We look forward to welcoming a revitalized cinema arts center to complement Bay Street Theater, The John Jermain Library, Whaling Museum, and all our other cultural institutions which make Sag Harbor the center for Culture and the Arts on the East End,” Sag Harbor Chamber of Commerce President Lisa Field said in a press release issued by the Partnership this week.

This week it was also announced that a special eBay auction has been created in support of the cinema project, featuring once-in-a-lifetime experiences like English tea with Julie Andrews, lunch with documentary filmmaker Morgan Spurlock, a walk-on role in a Martin Scorsese film, and private tennis lessons with John McEnroe, as well as vacations in Provence and San Miguel de Allende. Visit eBay.com/sagharbor.