CLEVELAND, Ohio — The Capitol Theatre never should have succeeded. It's not off a major highway. It's not in a giant shopping center. It doesn't have 24 screens, and it's not surrounded by asphalt acres of parking spaces.

In fact, it's planted in the middle of -- gasp! -- a city neighborhood, anathema in the big-box era of massive suburban multiplexes.

But the little movie theater on West 65th Street, which opened its renovated doors three years ago this month, has been a hit in the Gordon Square Arts District, helping boost its array of restaurants, bars, shops and galleries.

"People know they can come out, have a cocktail, see a movie, then go to dinner afterward," said Joy Roller, executive director of the arts district.

"The Capitol has become an identifying characteristic of the neighborhood. It's the economic engine, and it's working."

The theater drew about 44,000 people in its first full year in 2010, and about 52,000 in 2011. This year, it's on pace to draw more than 60,000, according to the Capitol's owner, the Detroit Shoreway Community Development Organization.

"It has exceeded our expectations in terms of the amount of time it normally takes for a theater to gain acceptance and awareness in the community," said Jon Forman, president of Cleveland Cinemas. His privately held company operates eight theaters in Northeast Ohio, including the Capitol and the venerable Cedar Lee in Cleveland Heights.

The Capitol shows a mix of mainstream and independent films and has distinguished itself with special programming: a Sunday-morning classics series, a weekend midnight series, movie marathons and special events. On Saturday, it presents its third annual "12 Hours of Terror," featuring seven horror films from 10 p.m. to 10 a.m. with games, prizes and a continental breakfast.

Before the renovation, the Capitol, which opened as a vaudeville and silent-movie house in 1921, had been shuttered and left for dead since 1985. Its three theaters now have digital projection systems, including 3-D in the main auditorium, which seats 420.

"The audience supporting the Capitol is more of a specialty-film audience, similar to the Cedar Lee," said Dave Huffman, director of marketing for Cleveland Cinemas. "But it's a little younger at the Capitol because of the neighborhood."

Longtime Cleveland movie fans are well aware of the geographic split that has defined the local film scene for decades. If you wanted to see an independent movie, a foreign film or a documentary, you usually had to head east: to the Cedar Lee, the Cleveland Institute of Art Cinematheque or the Cleveland Museum of Art.

The Capitol was supposed to change that. Sort of.

The week the theater opened, Forman explained that it was not going to become a Cedar Lee of the West. "We want to make a commitment to showing specialty films at the Capitol, but we'll only be able to show them if the community supports them," he said.

The plan was for mainstream films to drive business with a sprinkling of specialty films, similar to the programming at the company's Shaker Square theaters.

This summer, "Marvel's The Avengers" and "The Dark Knight Rises" were the biggest box-office draws at the Capitol. "We need people to come in and consume films like 'The Avengers' and 'Dark Knight,' " said Forman, "because they help pay the bills and, frankly, those patrons consume more at the concessions stand, which is the business most theaters are really in but don't want to admit. But we keep hearing from people within walking distance of the theater that they would like to see more specialty films."

An unusual triple feature

The breakthrough moment for the Capitol came on the last day of August. Its three screens were flickering Matthew McConaughey as the icy murderer in "Killer Joe," Diane Kruger as the doomed Marie Antoinette in "Farewell My Queen" and the exploits of serial con artist Frederic Bourdin in "The Imposter."

It doesn't get more "specialty" than that: an edgy, NC-17-rated indie, a period piece in French and a true-crime documentary. Mainstream theaters try to steer clear of the S-word (subtitles) and the D-word (documentaries).

All three films drew large audiences and played for several weeks, even without superheroes turning the turnstiles. "It was the first time the Capitol had three exclusive engagements," said Huffman. "If you wanted to see one of those films, you had to go to the Capitol."

Forman acknowledged that the theater's success with specialty fare "doesn't mean that everyone on the East Side who is a Cinematheque, art museum or Cedar Lee-goer is crossing the river. But they are certainly aware of what's going on in terms of programming."

The Capitol has worked for another reason. "It is not a stand-alone project," said Jeff Ramsey, executive director of the Detroit Shoreway organization. "It is part of a partnership with Cleveland Public Theatre, the Near West Theatre and the neighborhood."

Ramsey's organization launched a $30 million capital campaign in 2006. It was made possible by the New Market Tax Credit and Ohio's Historic Tax Credit, as well as a loan from the city of Cleveland and grants from the Cleveland Foundation and the Ohio Cultural Facilities Commission.

In addition to the Capitol renovation, the plan included an overhaul of CPT, performance space for Near West, expanded parking and an improved streetscape, with widened sidewalks, trees, public art and better lighting. The streetscape upgrade was completed in 2009.

The group is now about $4 million shy of its goal. "We need $2 million more for the renovations to Cleveland Public Theatre, $1 million more for the Near West Theatre and $1 million for parking," said Roller.

The name may be changed

Roller and Ramsey are also addressing some branding issues. The Detroit Shoreway group recently received a $20,000 grant from the William J. and Dorothy K. O'Neill Foundation to explore which name resonates more with the public -- Gordon Square Arts District, Detroit Shoreway or perhaps something else. Long ago, the area was known as the "village of West Cleveland," Ramsey said.

The Gordon Square Arts District runs along Detroit Avenue from West 54th to West 78th streets. Detroit Shoreway is larger, stretching from West 45th to West 85th streets, and from the Shoreway south to I-90.

Whatever they end up calling the area, both Ramsey and Roller are thrilled with the infusion of businesses and night life, new townhouse developments on Bridge Avenue and the success of restaurants and taverns such as Luxe Kitchen & Lounge, Stone Mad Irish Pub, Latitude 41n and the Happy Dog, among many others.

In the meantime, the Capitol is prepping for its terror weekend, a pet project of Huffman's. "An awful lot of the credit for the success at the Capitol is due to Dave and his passion not only for film, but film at this theater," said Forman.

Huffman has an added incentive: He has lived in the neighborhood for 14 years.

"I've always liked that it's so diverse," he said. "You're living with a bunch of different people both ethnically and economically. It's also a gay-friendly neighborhood with the LGBT Center being there, and that appealed to me personally."

Huffman rented an apartment for nine years, then bought a house about five years ago.

"When I first moved there, the Cleveland Public Theatre was alive and vibrant, but there wasn't much else going on," he said. "There was always a lot of talk about all the new stuff that was supposedly coming. Then, about six years ago, things started to come alive.

"I remember when Gypsy Bean moved into the corner at West 65th and Detroit [in January 2007] and replaced this really crummy Dollar Store. The fact that a nice little coffee shop opened up there, and thrived, I thought, 'Wow, that's a sign the tide is finally turning.' "