Dollar Bank begins foreclosure action against August Wilson Center
By Debra Erdley
Published: Friday, Sept. 27, 2013, 10:30 a.m.
A bank that holds a $7 million mortgage on the August Wilson Center for African American Culture initiated foreclosure proceedings and asked an Allegheny County judge to oust the management, appoint a receiver and bar the center from seeking bankruptcy protection.
Dollar Bank said the nonprofit defaulted on its mortgage in February and allowed insurance on the $40 million Downtown facility to lapse in April. The bank said it notified the center's board members of the default by letter in April and August.
“Attempts by Lender to achieve a consensual resolution have failed,” the bank's lawyers said in the court petition filed on Thursday. Common Pleas Judge Christine Ward scheduled a hearing for Tuesday.
Center board members deferred comment to interim director Oliver Byrd.
Byrd, a retired bank executive and the center's third director in four years, did not return calls. A greeter at the center told the Tribune-Review on Friday afternoon that Byrd was unavailable.
The center bears the name of the Pittsburgh native and Pulitzer Prize-winning playwright who based all but one of his plays in the Hill District. The facility was expected to be a glittering addition to the Cultural District.
Dollar Bank's filings cap financial difficulties that began with cost overruns during construction four years ago.
The bank's petition signals the depth of the problem, one expert said.
“Banks, as community citizens, are always reluctant to do something like this. It is not very common,” said Scott Leff, a senior consultant at Bayer Center for Nonprofit Management at Robert Morris University.
Attorneys for Dollar Bank declined to comment.
Mulu Birru, former director of the Urban Redevelopment Authority of Pittsburgh and one of the center's founders, said he believes people will rally around it.
“A lot of people from all walks of life participated in the planning process for the center between 1995 and 2004. It was meant to honor the contributions of African-Americans in Southwestern Pennsylvania, and it was very well received by the funders, the political leadership and the African-American community,” Birru said.
Robert Vagt, president of The Heinz Endowments, called the center a vital cultural asset. Since its inception, he said in a statement, the foundation provided it with $9 million, “and we stand ready to be a part of any comprehensive plan that reasonably provides for the center's future activities and is supported by the community.”
State Sen. Jim Ferlo, D-Highland Park, said bank officials repeatedly tried to resolve issues and learned from a Trib article that the center deemed its business model a failure.
“I think this is a step in the right direction,” Ferlo said of the foreclosure action. “There is such major dysfunction at the center, and then there is the inability of the August Wilson board to comply with basic rules, let alone the urgency we're in.”
Ferlo said he believes the center could operate effectively under different management if leaders reach out to the community.
“It was and is a public asset,” he said. “Unfortunately, it was run by a nonprofit group that was inadequate and inexperienced.”
At least $13 million from taxpayers and millions more from corporations and foundations went toward construction of the center. It has a 486-seat theater, a gallery, a dance studio and classrooms. Yet the center, which furloughed more than half its employees in spring, ended the last fiscal year with a $1.8 million deficit.
Court records show liens by vendors and contractors, including a $204,220 lien filed in August seeking payment for security from International Investigative Services of Bethel Park.
The Allegheny County Regional Asset District, which funds arts and cultural amenities from the sales tax, suspended this year's $300,000 grant for the center — after paying $75,000 — because its management would not provide an audit. Director David Donohue said the RAD board is weighing its request for additional money next year.
Elizabeth Boris, director of the Urban Institute's Center on Nonprofits and Philanthropy in Washington, said the August Wilson Center appears “in disarray.”
“Ignoring notices, the lack of an audit and the lack of insurance are not standard operating procedure. Those are all really big red flags,” Boris said. “Certainly ordinary governance procedures are not being followed, and that raises big questions about what the board is doing.”
Debra Erdley is a Trib Total Media staff writer. Reach her at 412-320-7996 or firstname.lastname@example.org. Staff writers Sam Spatter and Adam Smeltz contributed to this report.
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