SIOUX CITY | Dreams of shops, restaurants and bars filling a downtown Sioux City commercial and entertainment complex may soon come true now that a legal journey full of twists and turns has ended.
Chief Bankruptcy Judge Thad Collins on Thursday approved a settlement agreement between the city of Sioux City and California-based Civic Partners, the developer of the building that houses the Promenade Cinema 14 movie theater and vacant commercial space. Collins' signature brought an end to more than seven years of legal wrangling.
"It's a huge relief for us and huge relief for city staff and the council to have this off their plate," said Jeff Wright, a private Sioux City attorney who represented the city throughout the case.
Though not all city council members were thrilled with the settlement, they approved it, allowing the city to recoup a portion of the money lost in the real estate deal.
"These are the kind of deals you plug your nose and vote for them, even though they stink," Mayor Bob Scott said before the Nov. 27 vote to approve the settlement.
Under the terms of the settlement, the city stands to regain at least $1.45 million of the $2.5 million the deal cost the city. Civic Partners will forgive the final $300,000 payment the city owes on a defaulted loan guarantee and reimburse the city for the $300,000 payment made in 2017. The developer also has agreed to pay the city $852,000 within one year of the dismissal of its bankruptcy case. That total could rise to $1 million if paid after one year of the dismissal but within two years.
The city agreed to reduce the property's assessment of approximately $10 million to a minimum valuation of $6 million for five years. The agreement will reduce Civic Partners' property tax bill and improve its cash flow. The city will also drop a separate lawsuit against Civic Partners owners Steve and Rose Semingson.
The agreement's approval clears the way for development that had been hampered for years by the uncertainty surrounding the building, which is considered prime real estate at the end of Historic Fourth Street and sits across the street from the Convention Center and a soon-to-be-built 150-room Courtyard by Marriott hotel.
"We couldn't be happier for a resolution between the landlord and the city," said Bill Barstow, president of Omaha-based Main Street Theaters, which owns the Promenade movie theater that has operated in the building since November 2004.
The settlement has allowed Barstow to work on securing a long-term lease agreement with Civic Partners.
"We're getting close to a long-term commitment that will cement the relationship between the landlord and the theater," Barstow said.
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, 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 had been tied up in court with several rounds of rulings and appeals. 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.
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 Steve Semingson bought the Civic Partners loan from the bank.