Red House Plan Has Edge Among Paramount Bidders

Peekskill officials are moving forward with negotiations with one of three companies bidding to lease and manage the Paramount Center for the Arts.

During Tuesday’s Common Council work session, the review committee charged with looking at the proposals for the management of the Paramount recommended that the Council choose Kurt Heitmann's Red House Entertainment group.

Red House Entertainment, along with the Tarrytown Music Hall and the Paramount Phoenix Group, are the parties bidding to take control of the Paramount, which has been closed since October.  Following the meeting, the council gave acting City Manager Brian Havranek the go-ahead to carry out due diligence with the party it is interested in running the theater.

Although the council did not say which entity they planned to negotiate with, Mayor Mary Foster said she was impressed with Red House Entertainment’s plans for engaging the downtown business community. 

“This is not about who’s the best booking agent in the nation, but who actually understands how to reach out to the best booking agents to bring in the acts that work in our community and that will really bring some brand value to the city,” Foster said. “But from my perspective, Red House is the only one who really got it on how to integrate the Paramount with the business community.”

Jason Angell, director of the Peekskill Business Improvement District and a member of the review  committee, said the committee looked at four things before making its recommendation:

• The vision offered for operating the Paramount.
• The financial strength of the operating structure.
• The strength of each group’s financial plan.
• The experience of the management team. 

“We thought that Red House had a dynamic, creative vision for operating the Paramount,” Angell said. “We thought that their programming vision differentiated them from other regional competitors that are performing arts centers. We thought that their financial plan and their programming plan exhibited the idea of running the Paramount at full capacity in terms of programming." 

Angell also said the committee felt that Red House Entertainment's vision did the best job of incorporating the local business and art community.

The Paramount Phoenix Group, which includes Arnie Paglia, owner of Division Street Grill in Peekskill and Antonio Ciacca, a jazz recording artist and professor at the Juliard School who once served as the director of Jazz at Lincoln Center, was more concentrated on fine arts, according to Angell.

"While the committee believes that a fine arts program should be a part of any group that operates the Paramount, it was a very significant programming focus and we felt that was potentially unsustainable in the local market,” Angell said.

Angell acknowledged the Tarrytown Music Hall’s track record and experience.  But Angell said two questions came up when the committee looked at the Tarrytown proposal.

“Were they putting forward a dynamic vision for programming the Paramount and did their proposal exhibit that they would operate the Paramount at the same capacity they are operating Tarrytown and really make it operate at full capacity?” Angell said.

Angel said the Tarrytown Music Hall projected revenues of about $435,000 in the first year and $657,000 in its second year running the Paramount.

“That is compared to $7 million in revenue the Tarrytown Music Hall did in 2011,” Angel said. “We’re not expecting that the Paramount revenues get up to speed right away, but that did give us some concern that the Paramount would not be operating at that same high level of programming.”

Angell described Red House’s proposal as high tech, with a focus on community arts and programming ideas that would differentiate the Paramount from community arts centers. Angell said the committee was impressed by the fact that Red House wanted to have a consistent programming schedule that could build niche audiences.

Programming ideas included themed festivals that would draw people to the city,music performances Friday and Saturday and high definition simulcasts of films and live concert series. 

Red House proposed 80 events in year one and 200 events in year two, Angell said. Angell said  the Tarrytown Music Hall proposed a lot of morning school shows and community programs, with 20 to 30 marquee shows in year one, compared to the 100 marquee shows the Music Hall had in 2011. 

“That was one area of concern, booking at a much lower level for marquee shows at the Paramount,” Angell said.

Paramount Phoenix proposed a programming schedule of 30 films and 30 live shows.

While the Paramount Phoenix Group and Tarrytown Music Hall want to operate the Paramount using a non-profit model, Red House wants to use a hybrid model that uses a for-profit operating entity with a non-profit subsidiary. 

“It’s not the only time it’s been done,” Angell said of Red House’s approach.  “I believe the Denver Performing Arts Center uses this hybrid approach very well and the committee saw two real benefit to this approach. The first would be that the for profit approach means that Red House has a vested interest in running the Paramount at full capacity.”

By having the nonprofit subsidiary, Red House would also show its commitment for the fine arts and community events.

Angell said the Tarrytown Music Hall’s proposal raised some concerns because it involves taking the Paramount Theater and absorbing it within its existing board of directors. 

“When we asked in our interviews if they were willing to have a board of directors that was both equal Paramount and equal Tarrytown, to ensure that both theaters got the same level of staffing, investment, priority in programming, they would not commit,” Angell said.

Red House also said that it had seed money of $100,000 ready to invest in the project and are looking at a startup budget of $500,000 to $700,00, Angell said. Red House Holdings, which was founded by Heitmann, also plans to back the endeavor and had $20 million in revenue last year.

The Paramount Phoenix group said it had $150,000 in seed money available and would put a minimum of $250,000 in start up costs. 

Tarrytown said it had no seed funding on hand. 

Red House also proposed a budget of $1.8 million this year, with losses of about $375,000. The group expected to double its revenues in its second year. 

While Red House would pay all of the utilities at the Paramount, Tarrytown is proposing splitting the costs with the city. The Paramount Phoenix is proposing that the city handled the building’s utilities. 

“At the end of the day, we felt the Red House start up approach we felt was the most realistic in terms of getting over the hump in terms of how the Paramount was closed,” Angell said.