SIOUX CITY | Bill Barstow envisions a day in the not-too-distant future when patrons attending a movie at the downtown Promenade Cinema 14 can stop next door for dinner or a drink before or after their show.
With the end of a years-long legal quagmire involving the city of Sioux City, banks and the complex's developer in sight, it's time for the building that houses the Promenade to finally become the downtown destination that its California-based owner planned it to be, Barstow said.
"You're going to see an explosion, and it's going to be impressive," said Barstow, president of Omaha-based Main Street Theaters, which owns the Promenade movie theater that has operated in the building since 2005.
The Sioux City Council on Monday passed a resolution to approve a settlement agreement with developer Civic Partners. The deal paves the way for the dismissal of the developer's bankruptcy case that has been ongoing for more than six years.
Once the case is dismissed, Barstow and the leasing agent who has been working on Civic Partners' behalf believe interest will pick up from businesses and entrepreneurs looking to locate in the building, which occupies a prime spot at the end of Historic Fourth Street and across the street from the Convention Center and a soon-to-be-built 150-room Courtyard by Marriott hotel.
"It's going to open up the door a little more for prospects. It's prime time real estate downtown, great foot traffic," said Beau Braunger, a senior associate at Sioux City real estate firm NAI United and the leasing agent for Civic Partners.
Barstow's already making plans to spiff up the Promenade as soon as he and Civic Partners finalize a new long-term lease agreement, which he hopes to have completed soon. Renovation plans include reclining seats in all theaters and an improved concessions area.
"We just need to ink a deal, and let's take off running," Barstow said.
Barstow said the bankruptcy settlement will resolve years of frustration for his business. With the large market share the theater enjoys, he always dreamed of what could be possible with bars and restaurants located in the same building.
"Who in their right mind wouldn't want to see thousands of people walking past their door?" Barstow said of potential restaurant and bar owners.
Civic Partners built the $13 million, one-story complex at 924 Fourth St. in 2004 with millions of dollars in tax incentives and loan guarantees from the city and promised to fill it with restaurants, bars and shops. Shortly after the facility opened the following year, water problems led Main Street Theaters to seek a renegotiation of rent payments for the movie theater space. A settlement lowering the lease amount paid by Main Street to Civic Partners fell apart in 2010 and led to Northwest Bank (known as First National Bank at the time) to foreclose on the property, saying the developer had defaulted on a $5.63 million loan.
Civic Partners filed for Chapter 11 bankruptcy protection in April 2011, and since then, the case has been tied up in court. The litigation led to uncertainty about the building's future and likely turned many business owners away from considering locating in the nearly 12,000 square feet of retail space that has remained vacant. Only one other business currently leases space there.
Braunger said that during that time, he had three or four potential tenants who were seriously interested in leasing space, but the red tape involved in leasing space from a property in the midst of a bankruptcy action prevented lease agreements from gaining approval.
Braunger even fielded a few inquiries about whether the building was for sale, but no offers were ever made on the property, he said.
Barstow and Main Street Theaters offered to buy the building in 2010, prior to the bankruptcy filing. He said that he made the offer to help resolve the foreclosure matter. He does not plan on making another offer on the building, he said.
"Frankly, I haven't even thought of that for years," Barstow said. "We thought it best to put our head down and let the landlord take care of their case. Our job was to protect the investment and run a really good theater."
The foreclosure action was dismissed earlier this year when Civic Partners and Northwest Bank reached a deal in which a company affiliated with Civic Partners and its owner Steve Semingson bought the Civic Partners loan from the bank. The agreement approved Monday allows the city to recoup $1.45 million of the $2.5 million a judge ordered the city to pay to cover the portion of the defaulted loan it had guaranteed.
Since Monday's council action, Braunger said he hasn't gotten any new interest in leasing space in the complex, though it could still be weeks before the case's final dismissal.
"I think people are waiting to see until it's finally done," he said.
Braunger expects that interest to pick up, and he thinks the space could be filled in 18 to 24 months.
That's where Barstow's dreams of a destination restaurant, maybe a brewpub, kick in. With the legal issues nearly settled, the developer's initial vision for the property can finally be realized.
"We think everything's running in the right direction," Barstow said.
SIOUX CITY | On the evening of Aug. 30, an undercover Sioux City Police detective walked into Red Dragon Body Therapy on Hamilton Boulevard and paid for a massage.
During the course of his visit, the female massage therapist agreed to perform a sex act for money, according to a police account of the incident. She was soon arrested.
The 50-year-old woman was charged with prostitution and booked into the Woodbury County Jail. The charge has since been dismissed as police continue to investigate the incident, with suspicion that human trafficking was involved. The Red Dragon is now shut down.
Police say a complaint from a nearby businesses led to the investigation.
"They said things just didn't look right," Police Detective Bruce Hokel said.
Currently, Hokel said, police rely mostly on submitted complaints to spur their investigations into activity such as prostitution, human trafficking and drug dealing out of businesses claiming to offer legitimate massages.
Being proactive can be difficult, he said, as police lack a way to systematically monitor and track such businesses, their owners, employees and licensing statuses as they cycle in and out of the city, he said.
"One of the biggest problems we have right now is it's very difficult to find who's all responsible, who works there," he said.
But Hokel said a new proposed ordinance that would require licenses for all massage therapy businesses within the city limits would provide a valuable intelligence tool in monitoring who is working at each business. It also would give the police more power of enforcement.
"An ordinance like this would really assist us in at least laying the groundwork for who would be the business owner, who should be managing it, who should be licensed of people that are there doing the massages," Hokel said. "We'll have a better idea of who's here and how long they're here, where they're coming from, stuff like that."
Under an initial draft of the ordinance, which received the first of three required readings by the City Council two weeks ago, licensing applications would include identification and information on the businesses' employees, their criminal records, any denials or suspensions of their state massage licenses and other information necessary for background checks.
Licenses would not be granted if the applicant or any owners, managers, employees or agents have a criminal conviction for a sex crime or for keeping a house of prostitution, or if they are a registered sex offender or have been denied a license by any other community. The City Clerk's Office will initiate an annual review process to confirm business ownership, services provided and the business name.
Edits to some items in the ordinance -- such as the amount of required insurance and limits on hours of operation -- could be on the way as city officials work with legitimate massage therapy business owners to make the ordinance more palatable to them. Those changes will show up in subsequent readings of the ordinance.
Owners of some legitimate massage therapy businesses have taken issue with parts of the ordinance, saying it groups them unfairly in with prostitutes and drug dealers and amounts to over-regulation. An online petition opposing the ordinance started two weeks ago by a local massage therapist had reached 720 signatures as of Friday.
Hokel said he values the inclusion of business feedback and that the ordinance is not meant to trip up any legally operating business.
"The businesses that we know are on the up and up, it really just helps us document them and they can hold their head high and say that yeah we are clean," he said.
Hokel said he believes the new ordinance would both help police take better action against problems they know is going on, as well as gain a fuller picture of other places where it may be happening.
Including the Red Dragon incident, Hokel said police have made two arrests in the past two years relating to illegal operations at massage therapy businesses. He added that authorities have received complaints that some businesses are passing fake massage therapy licenses.
Hokel said the frequency of complaints fluctuates, but police generally average a complaint related to suspicious activity at a massage business about once every two weeks.
Bernadette Rixner, co-chairwoman of the Siouxland Coalition Against Human Trafficking, agrees the ordinance will provide a valuable tool for police. She said the state has seen a rapid influx of places offering massage services over the past year and a half, some of which have been places for human trafficking.
"They may indeed be trained to give massages," Rixner said. "But they are also expected to provide sex services to you."
Sioux City is following the lead of Johnston, Iowa, which adopted a similar ordinance. Hokel said he has been in discussion with several other Iowa municipalities, and they are watching to see how Sioux City's ordinance pans out.
"They are having the exact same problems as we are," he said.