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Cost of legal battle over Wilson Center put on taxpayers' tab

Keith Hodan | Tribune-Review
Taxpayers are on the hook for legal fees of nearly $1 million in the fight for control of the August Wilson Center for African American Culture, Downtown. The center opened on Liberty Avenue in Downtown in 2009.

By the numbers

$17.4 million: Taxpayer money and grants used to build August Wilson Center

$7.96 milllion: Debt center owes to Dollar Bank as of June 30

$691,000: Fees for court-appointed receiver, receiver's legal counsel and consultants

Source: Allegheny County Common Pleas Court records

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Monday, July 14, 2014, 11:22 p.m.
 

Taxpayers are on the hook for legal fees approaching $1 million in the fight for control of the August Wilson Center for African American Culture.

The public's price tag continues to climb as the battle plays out over whether the debt-ridden Downtown building can be sold for $9.5 million to New York developer 980 Liberty Partners, which wants to build a 10-story hotel atop the two-story center.

Allegheny County Common Pleas Judge Lawrence O'Toole on Wednesday will hear arguments from two public entities — the city's Urban Redevelopment Authority and the state Attorney General's Office — that object to the proposed sale based on claims that deed covenants restrict the building's use to a black cultural arts center.

Dollar Bank, which the center owes $7.96 million, would prefer that the 980 Liberty Partners deal close rather than foreclose on the property. The bank argued that the URA executed an intercreditor agreement that waived deed restrictions.

“It's my view that these covenants are not enforceable,” said Judith K. Fitzgerald, the court-appointed receiver who is earning $350 an hour to resolve the center's debts.

Fitzgerald has racked up $691,000 in fees for herself, her legal counsel and her consultants for work completed from November through June, according to a URA court motion filed last week. The judge approved nearly $250,000 in bills submitted by the receiver for work through January.

“The fees are what they are, and the court's going to determine what's reasonable,” Fitzgerald said. “We're filing fee applications with a lot of detail on what services we're providing.”

The URA “does not agree to the reasonableness of these fees, which are to be paid ahead of the interests of Dollar bank and the URA,” wrote Shelley V. Segal, an authority attorney.

“The receiver has expended untold fees to delay this court's consideration of the covenants,” Segal added.

“I'm not attempting to delay anything; I'm trying to get a sale done,” Fitzgerald said.

“My focus at this point is to try to get a sale done that's in the best interest of the whole community,” Fitzgerald said. “I want to get the creditors paid, I want to keep the mission of the center going, and I have been on a path with my professionals to do that.”

The city's URA agreed in June to pay $60,000 to outside counsel Clark Hill Thorp Reed to handle its side of the case. State Sen. Jim Ferlo, D-Highland Park, a URA board member, opposed that move. He argued that the URA should be investing in neighborhood-based arts initiatives in areas such as the Hill District, East Liberty and the North Side.

“I just see it as a bottomless pit that's not going to make anyone happy,” Ferlo said of the dispute during a URA board meeting last week.

The $751,000 in legal fees between the receiver and URA don't include months of work by the URA's in-house counsel and the state attorney general's office, which joined the URA in trying to preserve the center as a “public asset.”

“We cannot determine the overall cost for the office in this specific case,” attorney general spokesman J.J. Abbott wrote on Monday in an email. “Our attorneys all work on a variety of cases at any given time and work as much as is necessary to protect the public's interest.”

The 980 Liberty Partners has promised to let the center continue to operate as an independent entity within the building, and to provide gallery and office space rent-free, plus at least 120 days of use of the performing arts center, in exchange for a $1 or $2 fee per ticket sold. The URA and attorney general — along with Mayor Bill Peduto, County Executive Rich Fitzgerald and three local foundations — question whether those concessions would be enough to keep the center's mission at the forefront.

The legal costs follow $17.4 million in taxpayer-funded loans and grants pumped into the 2007 construction of the $40 million center, which opened in 2009 and closed to the public less than five years later amid financial woes.

More public money could be at stake under a $7.2 million backup bid that the Pittsburgh Foundation submitted. That bid — contingent on 980 Liberty Partners' deal collapsing — includes $2.2 million from the URA and Allegheny County through grants and loan forgiveness.

The attorney general's office has employees working on a full accounting of the center's assets and review of past finances.

“If we find that there was a breach of fiduciary duties, we could seek further action,” Abbott said.

Natasha Lindstrom is a staff writer for Trib Total Media. She can be reached at nlindstrom@tribweb.com.

 

 

 
 


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