Naked City

With bankrupt former tenant Future Protocol a victim of the dot-com bust, the old Cinema West is up for lease again. (Photo By John Anderson)

The old Cinema West building -- once the home of an adult movie house reviled by its neighbors and the local vice squad -- is back on the market after its most recent tenant, an Internet services company, fell victim to hard times.

The sluggish economy has hardly put a dent in the frisky porn industry, however. Despite its unpopularity in the Dawson neighborhood where it used to ply its trade, the X-rated movie operator is now ringing up sales at a fairly constant rate at its new space further south, if one recent "slow" Monday afternoon is any indication. The company, part of a Dallas-based chain, expanded its local business model, changed its name to Megaplexxx, and moved to a new location on I-35, between William Cannon and Slaughter Lane. "When the economy is bad, we do good. When the economy is good, we do better," reports Megaplexxx manager Bobby Pittman, who holds little nostalgia for his old South Austin digs.

Austin-based Future Protocol, meanwhile, has vacated the historic theatre-turned-contemporary office space at South Congress and Live Oak, just six months after its celebrated move into the site that bears the inventive design work of architect Juan Miro. The abandoned building's most distinctive feature these days is the big "For Lease" sign strung across the top of the same marquee that promoted family movies in the Thirties and X-rated movies throughout the Eighties and Nineties.

"The building has a lot of nice little touches from its old Austin Theatre days, and nothing that had anything to do with Cinema West," said CSA Realty Group owner Juan Creixell, who manages the lease operations of the space. He said he gets at least five inquiries a day from prospective tenants, including a recent call from the city of Austin's real estate department, which three years ago considered the property as a possible home for the Twin Oaks library branch. Creixell says he is currently in negotiations with "two to three" companies and hopes to have a contract signed within 60 days. "There is a tremendous amount of interest in the building, partly because of its unique character," said Creixell, who is among a group of investors who bought the building in March 1999 from Henry Benedict, a South Austin property owner.

Future Protocol signed a lease agreement with Creixell in the summer of 1999, but a series of construction delays postponed the tech company's move-in date for more than a year. It was downhill from there. "By the time they moved into the place, in October or November of last year, they weren't in good shape at all," said Future Protocol lawyer Steve Sather, of the Austin law firm of Naman Howell Smith & Lee. The company began looking for ways to dig itself out of a deep financial hole, and found a potential savior in Avatar Technology Inc., which tentatively agreed to acquire Future Protocol's assets and take over its lease. "We thought we could salvage their customer base and get some good employees out of the deal," recalled Avatar CEO David Winsman.

To simplify the transaction, Future Protocol cofounders Jennifer Hussey and Rich Finney filed for Chapter 11 bankruptcy protection in February, with the idea being that Avatar would be the first in line to snap up its assets. But the Avatar deal never materialized. "The wheels came off of everything at the end of March," said bankruptcy lawyer Sather. "Avatar said the reason was because it couldn't reach a deal with the landlord to take over the lease. And we were all set to get ugly about it. We were saying, 'you didn't have to walk on this deal because of a disagreement over the rent.'"

Avatar CEO Winsman calls the lease disagreement a "snippet" of what went wrong with the plan. He said that after both parties missed two deadlines to finalize a contract, the Avatar board of directors started getting impatient and refused to approve another deadline extension. "I jumped the gun and thought we had a deal," Winsman said. "I had even moved 10 of our 38 employees into the building, but even while we were negotiating the lease [with Creixell] he was showing the building to other people. That didn't make us feel too good. We had staff there for about a week, I think. Then we moved out." Creixell confirms there was a disagreement with Avatar about the lease, but he says the conflict centered on "a little minor issue that amounted to $500."

Future Protocol, meanwhile, is technically down to zero employees since the two remaining cofounders aren't drawing a salary, said attorney Sather. He added he would file a motion this week to dismiss his client's Chapter 11 filing, and that Future Protocol's goal is to continue its debt payment schedule with Wells Fargo, its largest unsecured creditor.

Meanwhile, Megaplexxx manager Pittman has a goal of his own. "We're trying to take the adult business out of the gutter," he says of his 11,000-square-foot shop, which contains a dizzying array of inventory ranging from videos to leather goods to clothing to novelty gadgets. "We call our shop a one-stop adult theatre because we've got everything you need right here," he says. "My own motto is, 'If we don't have it, you don't need it.'"