Theater owner went bankrupt before

STERLING – A businessman who is benefiting from a local project to reopen the old downtown theater went bankrupt a couple of years ago and ended up paying very little of city loans he obtained for a theater in Decatur.

In December, the Sterling City Council voted to lend $550,000 from its capital fund to the Greater Sterling Development Corp., which used the money to buy the downtown movie theater owned by Ralph White since 2009 but vacant since 2007.

The development group paid $235,000 for the building and planned to use the rest of the money to remodel it. The project is seen as a way to improve a blighted structure and attract people downtown.

The group agreed to sell the theater on contract to Skip Huston of Avon Theater Management, who agreed to buy the building by making monthly payments for 11 years. Additionally, the development corporation will collect rent on other units in the building; three of the four are occupied now.

Nine years ago, Huston got two loans from the city of Decatur, funneled through a local economic development group – one for $190,000 and another for $25,000. It helped pay to renovate a buildling into a two-screen theater, next to the existing Avon Theater.

Huston made eight payments on the larger loan and two on the smaller one, and then he stopped.

He filed for bankruptcy 2 years ago, and as a result of the process, he settled with the city of Decatur, paying $10,000 on the $215,000 in loans, plus the previous payments. The theater is still open.

"The loan was a struggle to collect from nearly the beginning," Decatur City Manager Ryan McCrady told Decatur TV station WAND last week.

Contacted Wednesday, Huston declined to comment. Decatur city officials didn't return messages.

Heather Sotelo, executive director of the Greater Sterling Development Corp., said the local agreement is structured differently.

"He is basically renting to own," she said. "He doesn't own the building. If he doesn't pay, we have a brand-new theater. We could find dozens of people who would run it. He runs a really good business. The city of Decatur and others couldn't speak highly enough of him."

Before, she said, the theater building was "totally, 100 percent falling apart."

Sterling Mayor Skip Lee said the city closely examined Avon Theater Management before voting to lend the money.

"If Skip Huston doesn't live up to his side of the bargain, we end up with a modernized theater and a rehabilitated building," the mayor said. "Many theaters are going out of business in the transition from film to digital. We'll have a digital setup with 3-D capability. We have a very sellable item."

Sterling protected itself by not letting Huston own the theater until he made all his payments, he said.

"There may have been something in how they structured the deal in Decatur that they didn't protect their citizens," Lee said.

City Council members Retha Elston and Joe Martin said they knew about Huston's bankruptcy before they voted on the issue.

WAND ran a story last week about Huston's bankruptcy and Sterling's deal. It interviewed City Manager Scott Shumard, with the old theater in the background. (Shumard was out of town Wednesday and couldn't be reached for comment.)

Sotelo and city officials wondered why the issue of the bankruptcy is coming up now, suspecting politics in Decatur played a role.

"Someone is on some sort of hunt," Sotelo said.

Lee said the story was coming "all of a sudden" out of Decatur.

"It's a closed story," he said. "It's all been settled."

The local theater is expected to open this summer, but no date has been set. Avon calls its business concept "brew and view," featuring beer, wine and food for patrons. The company expects to hire 12 part-time employees.