SOMERS POINT, N.J. - Instead of being lost forever to housing development along the waterfront of this gateway town to Ocean City, a little theater tucked along Bay Avenue will be sticking around for another encore.

And the Gateway Playhouse - which has been sitting idle for nearly a decade - could become the centerpiece of an ongoing effort to redevelop the waterfront area along Great Bay as a dining and arts and entertainment district.

Earlier this month, officials announced the city had received two state grants totaling about $500,000. The money will be added to about $550,000 raised by the nonprofit Theater Collaborative of South Jersey, which has been working to reopen the venue. The money will finance long-awaited interior renovation.

While work was completed on the outside of the building after it was acquired by the city in 2006 - including an expensive roof project that helped stabilize the structure - the interior had been gutted and rendered the theater unusable. Work is expected to be completed in time to open by the summer of 2016.

"We're really poised to see this take off as a destination for both visitors and local residents," said Jim Rutala, Somers Point's city planner and grant coordinator. "And the theater is a key piece of that puzzle."

Mayor Jack Glasser agrees. "The city has been very proactive in making Bay Avenue the hub of activity - not just for Somers Point itself as a great place to live, work, and visit - but for the entire region, as well," he said.

The 5,000-square-foot building was originally constructed in 1910 as a warehouse, but within a decade evolved into a space large enough for showing "moving pictures," as the silent-film era boomed in the 1920s.

The 200-seat space became known as the quaintly named Seaside Theatre, sitting at the corner of Bay and Higbee Avenues. It was surrounded by the lively mélange of the bayfront seafaring trade and an active club scene that pulsated for decades at places such as the Bayshores and Tony Marts.

The theater ping-ponged between incarnations, as a movie house and playhouse then back again to movies. But when the nearby Gateway Casino, which sat on the now-gone Somers Point Circle at the foot of the causeway leading to Ocean City, burned down in the 1950s, the original CinemaScope screen was removed and the stage was expanded to accommodate musicals.

Stars well-known at the time, like Constance Bennett and Veronica Lake, appeared on the stage, but the operation folded in the early 1960s and the theater was bought and renovated by a company that turned it back into a movie theater and opened in 1965 with a showing of The Unsinkable Molly Brown.

The building was taken over by the South Jersey Regional Theatre in the late 1970s, and live productions returned with Actors Equity Guild performers and year-round shows. The shows were so popular that plans were underway in the 1990s to build a larger facility across the street, but the project never materialized.

Rutala and others contend that within the tear-it-down-and-build-it-up culture that is often found in some Jersey Shore towns, buildings like the Gateway can add a certain authenticity to a redevelopment effort.

And such old-fashioned theaters, whether they were former playhouses, movie palaces, or newer theatrical venues, have often been used as linchpins - with varying degrees of success - for downtown makeovers in the region.

The Count Basie Theatre in Red Bank, built in the 1920s as a Vaudeville and silent-film house, was reborn as a local arts and entertainment venue and has been operating successfully since the 1980s. The Surflight Theatre in Beach Haven, Long Beach Island, which staged live theater since the 1950s, had been struggling financially for years. The theater filed for Chapter 7 bankruptcy in February and isn't expected to reopen this summer.

But officials and others in Somers Point are applauding efforts to reopen the Gateway Playhouse.

The renovation will feature a 1,000-square-foot stage, theater seating for 240, office space with five rooms, including a conference room, and state-of-the-art lighting and sound equipment.

Not only is the Gateway expected to be a center for theatrical productions - which will be produced by outside organizations and promoters - it will also host concerts, presentations, and meetings and be utilized by local schools. The space will also be available for rental for meetings and conferences, according to Jim Dalfonso, chairman of the Theater Collaborative of South Jersey.

"We have always felt that what this place provides is not just an opportunity for people interested in theater to get back on stage and work their craft, but that it can also provide a huge economic boost for Somers Point," he said.

Dalfonso said that even in a "soft season" of shows - one in which the venue isn't continually booked throughout the year - he expects as many as 16,000 people to pass through the theater's doors.

Michael Bray, president of the Somers Point Business Association, said his members were expecting the opening of the theater to bring a boost to the entire Atlantic County town.

"This is really going to make ringing cash registers and busy venues a reality in this town," Bray said.

jurgo@phillynews.com 609-652-8382 @JacquelineUrgo