O’Fallon movie theater will recover cost of subsidence repairs with ticket tax

To help cover more than $9 million in mine-subsidence remediation and repair costs, Marcus Theatres will assess an amusement tax on movie tickets sold at the O’Fallon Cinema.

The O’Fallon City Council approved a resolution allowing the city to collect a 5% amusement tax on each ticket purchase. The proceeds will be used to reimburse Marcus for eligible remediation and repair costs. The funds include a 4% rebate to Marcus and 1% to the city to administer the tax.

It would not affect other businesses, industries or residents, except for people choosing to buy a ticket to attend a movie, City Administrator Grant Litteken said.

Litteken said box office revenue is shared between the theater operator and movie studios or film distributors, meaning ticket price increases would not allow Marcus to retain enough additional revenue to meaningfully offset remediation expenses.

“Unlike ticket sales revenue, amusement tax proceeds are not subject to revenue-sharing agreements with movie studios,” he said.

Aldermen reviewed initial plans and the property damage at a community development meeting before advancing the redevelopment agreement for council action.

The 15-screen theater, at 1320 Central Park Drive, opened in 1996. It was owned by Wehrenberg Theatres before the chain sold it to Marcus in 2016.

In 2018, Marcus built a 13,583-square-foot, two-screen addition to the existing 44,664-square-foot theater. The addition included two premium-format auditoriums known as “Ultrascreens,” built on the east side of the building on space previously used for parking.

In spring 2024, damage was discovered, including impacts to a door frame and small cracks in the foundation. An investigation concluded it was caused by mine subsidence linked to historic underground mining in the area.

Marcus closed the affected portions to the public, commissioned an engineering analysis and began planning for mine remediation. The company later learned its insurance would cover only some repairs and would not cover the remediation.

“As a result, the substantial costs associated with stabilizing and remediating the underlying mine conditions are not eligible for insurance reimbursement,” Litteken said.

Mine remediation and structural repairs, which have begun, are estimated to exceed $9 million. Remediation involves engineering solutions such as drilling and reinforcing foundations to repair damage and prevent further sinking.

It is not the first time O’Fallon has imposed an amusement tax.

Last April, for the Park Place mixed-use development, the council approved a 5% amusement tax to be included as part of the admission fee for activities such as golf, pickleball and rock climbing.

Developers of the $300 million recreation-retail-residential-entertainment project are Bruce Holland of Holland Construction, Rich Gorazd of State Construction and Michael Hamburg of Pier Property Group.

The development is planned to include single-family homes, duplexes, apartment buildings and townhomes, along with a hotel, retail shops, restaurants, office space and entertainment venues. A Topgolf-type driving range is also expected on the 105.81-acre property.

Located across the street from O’Fallon Family Sports Park, the project is expected to take eight years to complete. Plans call for it to be built in phases and opened incrementally.

An amusement tax also went into effect in May 2022 on video game plays, collecting a penny from each player at local businesses. It is also known as a ‘push’ tax.

The 1-cent tax is paid by the person playing the machine and is collected by the terminal operator, not the establishment.

As a home-rule city, O’Fallon has the authority to regulate video gaming activity and impose a tax on amusements.