by LUKE BAUMGARTEN & r & & r & & lt;span class= "dropcap " & W & lt;/span & hen owner Jim Sheehan was deciding what businesses to draw to his Saranac Hotel development project, he went to the community. The response, according to building manager Dave Sanders, was nearly unanimous. "People told us they wanted food service, resi-dences," Sanders said last August, "and they wanted the Magic Lantern back." That's what people got, a home for what had been -- since the frequently-shuttered theater finally lost its lease in 1997 -- the dream of a movie theater dedicated to independent cinema.

As of last weekend, the theater was fulfilling that promise. Amid the monsoon of big-budget summer films, the Magic Lantern was a port of calm, the only place in town you could see this year's Oscar-winning foreign film or David Mamet's latest thriller or Chinese romanticist Wong Kar Wai's first English-language outing. Not all great films, but significant ones. Even more significant for Spokane cinephiles is that the films had a place to be seen. That ended Sunday at the close of business, after the decision was made Friday that the theater's financial situation was untenable.

The decision came as a surprise to Katherine Graham, the theater's founder, who, at the time, was also its executive director and operations manager. "A new business takes about two years" to become solvent, she said, "I thought we were right on track."

The board of directors thought the opposite. Citing a serious financial slide that, if left unchecked, could have found the nonprofit unable to cover its debts, board president Michael Reid said the board voted Friday to suspend operations, remove Graham from her position as operations manager, and do a little soul-searching. "We came to a place," Reid said, "where we realized that our vision for our theater needed to be clearer."

Speculation as to that new vision would be complete conjecture, says Reid, but that hasn't stopped the speculators. A minor storm kicked up Monday at Spokesman critic Dan Webster's blog over a rumored month of Meryl Streep classics. The only possibility Reid would offer on record was less absurd. "We're thinking of working with the MAC to do a weeklong festival of Native films," he said, "and maybe some First Nation Films from Canada."

Though the downtown AMC 20 was routinely beating out the Magic Lantern for the hipper, more talked-about indie films, Reid says he cannot imagine an incarnation of the Magic Lantern that turns completely away from contemporary film. "Even a cursory glance at The New Yorker or The Stranger shows how many films are out there," he said, "AMC won't bring them all." There's room for more than one first-run theater showing independent film, says Reid. "We'll find our niche."

& lt;span class= "dropcap " & G & lt;/span & raham is being kept on in what seems to be a figurehead role, but she says she'll most likely step away from the Magic Lantern completely: "As of today, I am still the executive director, but I probably won't stay on."

Graham says she has not been party to the reorganization discussions, though she is quick to assure members that their memberships will be extended by whatever length of time the theater remains closed. She spent much of Sunday at the theater, saying goodbye and also trying to assure people they'd still get their money's worth.

For most people Graham talked to, money wasn't the issue. According to her, "Everyone said, 'Oh, I don't care about that.'" Film devotees just want the Lantern to stay lit. The theater will be dark, though, for two months, in an effort to make operations more financially sound. Reid pegs that as a "maximum" estimate, though he admits anything under two months is probably wishful thinking.

With Graham out as operations manager, the board is in need of someone to book films and run the day-to-day operations of the business. Though Graham says she worked overtime every week and "as many as 100 hours" in some weeks, Reid believes the board will be able to fill both jobs with a single hire. "As long as their time is managed correctly," he said, "I don't see why we wouldn't be able to fill that with one person."

That hunt is happening at the same time as the board's efforts to solidify the theater's mission and direction. "Both tasks are of equal importance," says Reid, "You can't steer a ship without a rudder, but a ship with a rudder is pointless unless you have a map of where you want to go."

While the search for both map and rudder goes on, then, the grim solace for devotees of art house films is the board's reassurance that the Magic Lantern isn't yet sunk.

American Original: The Life and Work of John James Audubon @ Northwest Museum of Arts & Culture

Tuesdays-Sundays, 10 a.m.-5 p.m. Continues through Sept. 19
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