City council instead moved to continue negotiations with HSV Entertainment, current operators of the theater, to strike a lease extension agreement and to market the venue for sale.

The motions came after a closed session in which the two options were discussed.

The offer that was rejected came from JP Amusements, which include local businessmen Michael Dunlow and Phillip Moncure.

Councilman Wayne Smith made the motion to go with JP Amusements and a second was offered by Carol Cowen.

Council members Ernest Bobbitt, Carl Ferebee and Suetta Scarbrough voted against the motion.

Ferebee offered the next motion to offer the lease to HSV, which runs the venue under the name Royal Palace Theatre, with an option to purchase. His motion also included a clause that would allow the city to market and sell the building.

That motion passed by a 3-2 vote with Cowen and Smith voting against the measure.

“Some papers have to be drawn up,” said Jay Hickey, a partner with HSV.

City Manager Joseph Scherer confirmed that until negotiations are finalized, the current HSV lease, which expires in August, is not completed.

“We will continue to work with council on drafting a proper lease extension,” Hickey said.

Scherer said the city needs to negotiate terms of a new lease that would run through June of next year.

Ferebee said afterward the vote to work with HSV and to market and sell the venue came down to a matter of loyalty. “I don't have any negative feelings on the other motion. I do feel we have a partner that has shown some loyalty to making a go at the theater.”

Ferebee said the way the vote stands, it gives the city some flexibility to be able to market the theater to anyone willing to negotiate.

Hickey said HSV's goal is to buy the theater. “That's what we are striving for. We're not doing this to run an Internet sweepstakes business.”

Scherer declined to release details of JP Amusements offer.