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Foundations discuss details of bid to buy August Wilson Center

Natasha Lindstrom
| Monday, Aug. 11, 2014, 2:11 p.m.

A coalition of local foundations on Monday heightened its public opposition to a hotel developer's proposal to buy the debt-ridden August Wilson Center for African American Culture for $9.5 million.

Foundation leaders slammed a deal tentatively approved by Allegheny County Common Pleas Judge Lawrence O'Toole to sell the Downtown building to New York-based 980 Liberty Partners as a “wrong decision” that threatens to destroy the original intent of the August Wilson Center, named for the Pulitzer Prize-winning playwright from the Hill District.

“The deal would throw away more than $35 million in government, foundation, corporate and private investment in what was always promised to be a charitable asset for the good of the whole community,” Grant Oliphant, president of the Heinz Endowments, said in a statement, “and it would hand an architectural treasure off to a private developer for a fraction of what it cost to build.”

The $40 million center opened in 2009 with at least $17.4 million in taxpayer money and more than $20 million from The Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation.

Less than five years later, the center is closed to the public, its nonprofit board of directors has been dissolved, and court-appointed receiver Judith K. Fitzgerald is working to resolve the center's $10 million in debts.

Dollar Bank, which is owed $7.96 million, has scheduled an Oct. 6 sheriff's sale to auction the property if the receiver can't complete the sale to 980, which wants to build a 10-story hotel tower atop the existing structure.

“The foundations seem to be saying that somehow the August Wilson Center is going to disappear into a hotel, and that's just not the case,” Fitzgerald said on Monday.

The developer has said it would grant the center a 99-year lease to use office and gallery space rent-free, prominent signage, a separate entrance, options for rental revenue and at least 120 days a year use of the performing arts center in exchange for a $1 or $2 fee per ticket sold at events.

Oliphant argued the developer's plan would gut the building's core to transform it into a lobby and “shove the ‘cultural' space into pieces of the facility and parts of the calendar.”

“You don't go to a hotel to see unique art or attend a performance that's going to challenge your thinking on social and racial equality,” said Molly Beerman, interim CEO at The Pittsburgh Foundation. “The two just do not mesh.”

The foundations — along with the city's Urban Redevelopment Authority and state Attorney General's Office — favor a $7.2 million back-up bid submitted by The Pittsburgh Foundation. That offer includes $1.2 million from the URA and $1 million from a county-affiliated entity.

Under the foundations' plan, The Pittsburgh Foundation would own the building. Dollar Bank would not be repaid in full, and smaller creditors would have to take some losses.

The center would be placed into a newly formed nonprofit. Beerman did not say whether any former board members would be welcomed back, but she asserted the center would be debt-free and “radically different.”

The Pittsburgh Cultural Trust would run day-to-day operations, and the foundations would “consider ongoing support for operations, management and maintenance” of the center for three to five years. The foundations expect the center to get more public funding, too.

“We're really committed to shepherding the building and the programming to the point where it can get the proper balance between earned income and philanthropic support,” Beerman said.

Beerman said the foundations tried to strike a compromise with 980 Liberty Partners during a meeting on May 13. The foundations wanted the developer to take out a 99-year-lease only for the air rights of the building, requiring the hotel lobby to be built above the existing two stories. Matthew Shollar of Squirrel Hill, a 980 partner, said the developer cannot secure financing for an air-rights-only deal.

Meanwhile, O'Toole has scheduled a trial on Sept. 29 during which the URA will argue deed restrictions that “run with the land” prohibit the proposed sale to 980. The developer extended its due diligence period until shortly after that trial.

“We continue to see this as a totally fundable deal,” Shollar said. “The contentious nature of what's happening certainly has not made it an easier or a shorter process.”

Natasha Lindstrom is a Trib Total Media staff writer.

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