Peekskill Mayor: Red House, Paramount will be a 'Boon to Downtown'

At the end of the day, Peekskill officials said that the proposal offered by Red House Entertainment provided the city with the best options financially.

"I’m so excited to get the Paramount up and going again," Drew Claxton, the city’s deputy mayor, said Monday. "My expectation is that Red House will do more than any operator in the past."

On Monday, the Peekskill Common Council unanimously approved an agreement with Red House to lease and operate the Paramount Center for the Arts during a special meeting. Red House would lease the theater for 17 years, with a 10-year option.

The deal also calls for:

• The city to receive 5 percent on the adjusted gross income of ticket sales of every show

Red House Entertainment is projecting gross ticket sales of $900,000 in the first year, which is from  October 2013  to October 2014, and $2.2 million in year two. Foster said the theater will be open for shows before October.

Red House will also have nonprofit arm who will handle arts and cultural outreach to schools and other organizations.

Mayor Mary Foster said this agreement is an improvement over the deal the city had with the prior management group. That deal required the city to  kick in an extra $50,000 a year for operating support, only charged a dollar a year for rent during a 20 year period and only required 60 shows a year.

Foster also said the old lease agreement required the city to pay a percentage of the utility costs except for a period between 2009 and 2011.

"The city took the charge very seriously as the Paramount was dissolving, and it was dissolving with close to $500,000 worth of debt behind it, that we were able to structure an agreement with an enterprise that was committed to generating a very healthy cash flow —both for themselves and for the city," Foster said.

The Paramount has been closed since October, after the original management group failed to reach its fundraising goals.

Red House Entertainment was one of three organizations who submitted bids to operate the theater earlier this year. The  Tarrytown Music Hall and the Paramount Phoenix Group were the other two bidders.

Foster said Red House’s proposal was the only that one had a plan that offered to provides a percentage of revenues to the city. She believes the theater will provide a steady revenue flow to the city and, once again, be an economic boon for the downtown.

"We think we have very clear definitions in our operating lease around what adjusted gross income is and we feel comfortable that the operator has included enough language that we all know, on going forward basis, what we’re all talking about," Foster said. "So no one sits in our seats three years from now and says ‘I wonder what this means’."

Foster said the city still has to deal with the issue of paying off the rest of a $100,000 loan from Key Bank that was used to purchase equipment for the theater. She said that Red House is still looking to strike a deal with the bank for some of the equipment.

"There was no one coming to table, offering to pay out Key Bank and Key Bank is not willingly going away," Foster said. "And so that is an ongoing matter the city will be dealing with—but it has not gotten in the way, at least at this point, with the lease."

Councilwoman Kathie Talbot, who had served on the city’s Paramount selection committee, said Red House’s business model of combining a for-profit and a not-for-profit entity will provide a strong base.

"There was tremendousdue diligence in our selection process and now, I’m thrilled beyond words, vey hopeful, and very excited to have theParamount reopen again," Talbot said.

On May 15, Peekskill officials and Red House Entertainment are holding a press conference and public celebration at the Paramount Theater. The event, which starts at 11 a.m., will feature a ceremonial signing of the agreement and an announcement of the 2013 lineup of performances.