Agreement signed to reopen movie theater
CHESTERTOWN — A deal has been struck for the return of a first-rate, first-run movie theater to the Washington Square shopping center. By a 2-1 vote Tuesday night, the Kent County Commissioners approved an allocation of $75,000 from the Kent County Revolving Loan Fund to Chesapeake Movies Inc. The money will bridge the gap in funding between Chesapeake Movies and property owner Silicato Development, which had been negotiating since last fall to fill the empty space created when Chester 5 Theatres abruptly closed in June. The plan is to have the refurbished multiplex open by the end of June or early July — “60 days, hopefully less,” Michael Klein, president of Chesapeake Movies, said in a telephone interview Tuesday night after the commissioners signed off on the agreement. “We’ve been anticipating the vote, and we actually had the company that is gong to install the projection and sound equipment come to the theater today,” Klein said. He said he also has been in contact with Chestertown Zoning Administrator Kees de Mooy about signage for the theater. Chesapeake Movies Inc. intends to invest about $500,000 in a complete overhaul of the theater, which had little to no upgrades in its 21-year run as Chester 5 Theatres.
The county’s loan is to Chesapeake Movies — the principals are Klein, Robert Weinholt and Ira Miller — with the Town of Chestertown as the co-guarantor, according to the guaranty agreement signed by Town Manager Bill Ingersoll and Klein. The town has agreed to repay the $75,000 loan through the amusement tax revenue generated by gross ticket and concession sales. In a separate agreement signed between the principals and Chestertown Mayor Chris Cerino, Chesapeake Movies pledged that if after three years there remains an outstanding balance on the original advance of $75,000, the balance would be paid in full within 30 days of the expiration of the third year. As an added protection to the town, if Chesapeake Movies shuts down before the full repayment of the advance, the total remaining balance shall be payable to the town within 30 days of the cessation of operations. Should Chesapeake Movies default on its repayment obligation, the town is entitled to ownership of the theater seats, the concession stand, fixtures and any equipment “to satisfy that obligation, with such possession to be considered full satisfaction of the entire amount due,” according to the agreement that Cerino, Klein, Miller and Weinholt signed April 18. Jamie Williams, the county’s economic development coordinator, told the commissioners Tuesday night that the reopening of the movie theater “has to be the most talked about thing.” She said the Eastern Shore Entrepreneurship Center is administering the loan. Whatever concerns Cerino had about guaranteeing repayment of the loan to the county — Cerino could not commit to that when he requested the commissioners’ help on April 10 — had been worked out, Williams said when quizzed by the commissioners. President William Pickrum voted against awarding the loan, saying he had reservations about a plan that tied repayment to the entertainment tax. “This is taxpayer money and taxpayers deserve some confidence that it will be paid back,” Pickrum said during Tuesday night’s meeting. This is only the third loan the county has made through its revolving loan fund, Williams said in an interview last week. She explained that the fund was created in the Fiscal Year 2016 budget with $200,000 in seed money. It’s a partnership with Mike Thielke, executive director of the ESEC, who administers the fund. Thielke has the capability to leverage additional funds through the Department of Housing and Community Development, bringing the total to as much as $400,000 available for Kent County, Williams said. The interest is 2 percent on the loan to Chesapeake Movies, which will pay for the servicing fees charged by the ESEC. “We’re not making any money on it,” Williams said. She described the loan as “a perfect economic development project that’s also a community development project.” “If we don’t take this opportunity to work with both of these entities — the property owner and the business owner — I don’t feel that Kent County will have a shot at a movie theater,” Williams said in an interview in her office April 19. Work to get the movie theater deal back on track began in earnest about a month ago when Klein, Miller and Weinholt attended a Chestertown council meeting asking for financial help. They needed an advance of $75,000 to bridge the funding gap after negotiations with Millsboro, Del.-based Silicato Development had reached an impasse. The theater ownership would pay 4 percent of its revenue through the amusement tax annually, with a projection that the town would recoup its loan in five to seven years. Per the terms of the newly inked deal, the final payment of the balance of principal and interest is due October 2021. At the March 19 council meeting, Mayor Cerino said he was concerned about setting a precedent in fronting money to a business or entrepreneur in negotiations with a landlord and that he needed assurances that the taxpayers’ money would be safeguarded. After discussion, the vote was 4-0 to proceed as a facilitator in the negotiations. Councilwoman Linda Kuiper was absent. Town Manager Bill Ingersoll was authorized to look after the town’s interests as Silicato Development and Chesapeake Movies worked toward an agreement. In Tuesday night’s telephone interview, Klein recommitted to a complete overhaul of the 14,400-square-foot space that anchors the shopping center at the northern gateway to town — what is going to be called Chesapeake Movies. There will be raised platform seating with high-back rockers, new drapes and carpeting, wider screens, and state-of-the-art projection and sound systems. Everything will be new and modernized, including the lobby, the concession stand and restrooms. Some of the prep work already has been done; the old seats and most of the drapes were taken down in September after negotiations had begun between Chesapeake Movies and Silicato. They expect to hire 12 to 15 people, including a theater manager. Anyone who is interested in a job should contact Klein at chesapeakemovies @gmailcom. The plan includes making this a community theater, involving Washington College, the local film society and the broadcasting program at Kent County High School. The theater could be rented for fundraisers and birthday parties. They are exploring the idea of selling beer and wine and partnering with area restaurants to provide a dinner theater option or joint marketing promotions such as dinner and a movie.
The space most recently occupied by Chester 5 Theatres in the Washington Square shopping center is expected to re-open this summer as Chesapeake Movies.
Michael Klein, president of Chesapeake Movies Inc., rolls out the plan for a thoroughly renovated and modernized theater to the Chestertown mayor and council members March 19.