The deal formalized by a unanimous City Council vote Thursday evening guarantees that Park City will pay the institute $220,000 a year for 10 years beginning in 2007. In addition, it states that the Park City Chamber of Commerce and Visitors Bureau will increase its grant to the Sundance Institute from $50,000 to $160,000 per year during the same period.

The agreement also outlines an option that can carry the contract forward through 2028.

"It was apparent tonight that Park City is the home of the Sundance Film Festival," said Mayor Dana Williams. "Park City has always prided itself in being a town with a certain kind of funk. The Sundance Film Festival exemplifies that funk."

Park City officials sought to keep the nation's top independent film festival in Summit County because, among other things, the 10-day annual extravaganza brings an estimated $41 million into the local economy.

The Sundance Institute will set up shop at the Silver Star development at the mouth of Thaynes Canyon in fall 2006.

According to the agreement, Sundance will put "Park City, Utah" in all its marketing materials sent throughout the U.S. and around the world.

The contract came with unanimous support from the Park City Chamber of Commerce and Visitors Bureau, said board member John Rogers, who also is president of the Park City Lodging Association.

The chamber's board also voted unanimously to increase its Sundance grant, he said.

"It's been rewarding watching this come together. There is unequivocal support in the business community," he said. "We love our partnership with Sundance and want it to continue for a long, long time."

Representatives from the Park City Restaurant Association and Historic Main Street Business Alliance told the council Thursday that their members, too, fully support the Sundance/Park City contract.

Jill Miller, the institute's managing director, said Sundance "looks forward" to continuing its long association with Park City.

"We have enjoyed being part of the community for more than 20 years through the film festival and this agreement formalizes our connection with Park City on a year-round basis, and for a long time to come," she said in a prepared statement.

The contract comes shortly after an Oct. 18 announcement by the Sundance Institute that it planned to turn two blocks of 300 South in Salt Lake City into a "festival district" during the January film festival.

"Sundance Institute is proud of our involvement with the Salt Lake community, and this will not change due to our move to Park City," Miller said.

Sundance history

1978: The Utah/U.S. Film Festival debuts at Trolley Corners in Salt Lake City.

1981: The festival is renamed U.S. Film Festival and moves to Park City.

1986: The Sundance Institute founded by Robert Redford takes over the festival.

1991: The festival is renamed The Sundance Film Festival and opening night is moved to Salt Lake City.

2004: Opening night moved back to Park City.

2006: Sundance institute headquarters to move to Park City.