Granite City will take over the management of the Granite City Cinema on New Year's Day.

All employees of the movie theater, who were STL Cinemas' employees, will work for the city after Jan. 1. The city previously reimbursed STL Cinemas for their salaries and other operating expenses. The company received 10 percent of the theater's revenue as well.

The city owns the movie theater at 1243 Niedringhaus, and paid for its $3.6 million construction.

"We appreciate what STL Cinemas did for us," said Mayor Ed Hagnauer. "It's time for us to move on and take it over ourselves."

The Granite City Cinema's receipts since it opened in August 2010 total $789,824, according to figures provided last week.

Money saved by dropping the management contract will go for more advertising, Hagnauer said.

Theater manager Lanny Mann and assistant manager Travis Cape will continue to do day-to-day management of the movie house as city employees. Mann has been in the business since the 1970s and Cape about 20 years.

"They'll have better control of what they want this building to do," Mann said of the city's control of the theater.

The idea of the city taking over the theater's management evolved since it opened, Hagnauer said. It was easier for the city to go out on its own after the theater was open for a year, he said.

Although the city originally sent a letter Harman Moseley, the owner of STL Cinemas, that they would be ending the contract as of Jan. 15, Moseley said he wanted to end the arrangement on Dec. 31 for tax purposes.

Moseley said he would have preferred receiving a phone call to a letter informing him the city was ending the relationship.

"It stings to have done the heavy lifting and then to be kicked out," Moseley said. "I misjudged the relationship, and I misjudged the character of the people I was dealing with."

Moseley and his wife Sara own the Chase Park Plaza, the Galleria 6 and the Moolah theaters in St. Louis. Those three theaters and the Granite City Cinema have made up STL Cinemas.

Hagnauer said the contract called for 30 days notice, and that's what the city provided to Moseley.

"It was a business deal for us. We were advised to send the letter, which we did," Hagnauer said. "Kudos to him for helping us get it started."

Hagnauer said the Granite City Cinema is doing much better than people thought it would.

"We're doing well. The industry is down across the board. The theater did respectably well last year," Mann said.

Contact reporter Jim Merkel at 618-344-0264, extension 138