Mayor Bill Haslam announced today a movie theater in downtown Knoxville is a go under a new design that preserves most of the buildings within the 500 block of Gay Street, including the S&W Cafeteria.

Regal Entertainment Group's eight-screen theater will be built to the north and behind the S&W. An escalator and elevator will be built within the former Walgreen's building to bring patrons from the State Street parking garage to Gay Street. "This solution is the result of the collaborative approach the City of Knoxville undertook with Knox Heritage and contains several features that make for an even better project," Mayor Haslam said. "Not only does this new design preserve the S&W and other buildings, this approach creates pedestrian access from the State Street garage that will benefit all of Gay Street and Market Square." Mayor Haslam in January allocated $10,000 in City funds to Knox Heritage to match $10,000 in private donations to explore ways to close a $3 million gap that existed between new construction and renovations. "This announcement is the result of Mayor Haslam engaging us to come up with a plan to save the buildings within the City's budget and build a theater that meets Regal's needs," said Finbarr Saunders, president of Knox Heritage.

 "This has been a great effort that produced a great result."Greg Dunn, President and Chief Operating Officer of Regal Entertainment Group, said, "We look forward to doing business in a newly energized downtown Knoxville. It has been a pleasure to work with the Mayor's Office to reach a solution that satisfies all parties. The theatre and retail space will compliment each other and be a benefit to the community for many years to come."Mayor Haslam recognized local architect and Knox Heritage member Faris Eid for contributing his time and talents in designing the new plan. "He deserves a lot of credit for making this happen," the Mayor said.

 The City of Knoxville will issue a request for proposals in early May for the development of certain buildings in the 500 block of Gay Street, including the building that previously housed the S&W Cafeteria, with the condition that the developers preserve the buildings. The buildings could be developed for retail, office and residential use. The budget for the movie theater project includes a $3 million contribution from the City's Industrial Development Board; $2.5 million from Regal Entertainment Group in furniture, fixture and equipment; with the balance of funding to come from third-party investors. The Industrial Development Board will lease the facility to Regal Entertainment. Those lease payments, in turn, will retire the debt financed by third-party investors.The City earmarked $2 million for the project in its budget for fiscal year 2004-2005, and will allocate another $1 million in the 2005-2006 budget. Construction will begin this fall and is expected to take a year.Mayor Haslam believes the movie theater is a strategic investment in downtown that will encourage retailers, including a regional store operator who has already shown strong interest, and restaurants to commit to downtown locations. That, in turn, will enable the City to recapture sales tax revenues generated downtown that would otherwise have gone to the state and apply that money to repaying the debt associated with the Knoxville Convention Center.Developing a movie theater in the 500 block of Gay Street is a cornerstone of the Kinsey Probasco plan for Market Square, which was adopted by City Council in 2002 after an extensive public participation process.

Regal Entertainment Group (NYSE: RGC) is the largest motion picture exhibitor in the world. The Company's theatre circuit, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres, operates 6,273 screens in 558 locations in 40 states. Regal operates approximately 18 percent of all indoor screens in the United States including theatres in 43 of the top 50 U.S. markets and growing suburban areas. Additional information is available on the company's web site at www.REGmovies.com.