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As I understand the theatre was doing fine financially but was shut down by the city because residents of a nearby retirement home continually complained of noise. Initially the restaurant seating in the courtyard was closed to placate them but it wasn’t enough, they demanded the entire theatre closed. Why retire in a downtown location if noise is that big a issue for you?
The film: The Thin Blue Line (1988) http://www.imdb.com/title/tt0096257/ makes numerous references to this theatre