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Clock ticks on sale of August Wilson Center under foreclosure threat

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James Knox | Tribune-Review
The view from the second-floor donor room of the August Wilson Center on Tuesday, July 1, 2014, Downtown.

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Thursday, July 3, 2014, 10:09 p.m.
 

The clock is ticking for a court-appointed receiver to close a sale on the debt-ridden August Wilson Center for African American Culture before a bank decides to foreclose.

A $7.96 million default judgment issued by Allegheny Common Pleas Court Judge Lawrence O'Toole gives Dollar Bank the legal authority to foreclose on the Downtown center, which has not made a payment to the lender since February 2013.

Dollar Bank would rather see the center's receiver, Judith K. Fitzgerald, sell the property for $9.5 million to 980 Liberty Partners, a New York developer that wants to build a 10-story hotel atop the two-story Downtown building.

“If a sale to 980 closes, that's a great thing,” Dollar Bank attorney Eric Schaffer said on Thursday during a hearing in O'Toole's courtroom.

The 980 group is eager to complete the deal, too, now that an engineering study has shown its hotel tower is structurally feasible. Last week 980 put down a $50,000 deposit, allowing the developer until Sept. 25 to complete its due diligence on plans for the 200-room hotel.

If all goes smoothly, 980 could close on the sale in October, Fitzgerald wrote in a motion filed on Tuesday.

“We're not looking for a delay,” 980 partner Matthew Shollar said. “From our perspective, there are no impediments at this time on our ability to close — other than these discussions around the deed restrictions.”

The 980's hotel plan has spurred objections by several parties with a stake in the cultural center, including the city's Urban Redevelopment Authority, Mayor Bill Peduto, County Executive Rich Fitzgerald, three local foundations and the state Attorney General's Office. The $40 million center was built with at least $17.4 million in taxpayer funds and more than $20 million in foundation contributions.

The developer has said it would give the August Wilson Center use of office and gallery space rent-free, and use of the performance arts center for at least 120 days a year with a $1 or $2 fee per ticket sold.

Critics question just how much of the space the hotel would usurp, and the URA argues it would violate deed covenants restricting the building to a black cultural arts center.

That bitter dispute over use restrictions is a fight “for another day,” the judge and attorneys agreed on Thursday. The judge provided no timeline for when those arguments would be heard, and he did not set a date for the next hearing.

In hopes that 980's deal will crumble, a coalition of three foundations led by the Pittsburgh Foundation increased its bid to buy the center to $7.2 million — an offer sweetened this week by $1.2 million from the city's Urban Redevelopment Authority, plus $1 million from an undefined entity of Allegheny County.

That bid drew criticism from URA board member and state Sen. Jim Ferlo, D-Highland Park, who does not want any more public money poured into the center.

“Supposedly, we gave $1 million for funding. I'd like to know where it came from,” said county Councilwoman Heather Heidelbaugh, as she took a seat in the front row of O'Toole's courtroom at the hearing. “There needs to be accountability for the taxpayers.”

Rich Fitzgerald said the Allegheny Regional Asset District has money set aside.

While the litigation plays out, Dollar Bank wants its own court-appointed receiver to represent its interests and reduce expenses wherever possible, Schaffer argued in court on Thursday. That could mean minor cost-cutting moves such as cranking up the thermostat several degrees to save on air conditioning or downsizing security staff.

“At some point we just have to say we don't know when or where it's going to end,” Schaffer said. “We want to have greater control ... over what's going to happen.”

Michael Shiner, attorney for Judith Fitzgerald, argued the current receiver is representing the interests of Dollar Bank, along with smaller lenders, as part of her work to resolve the August Wilson Center's debts, which total more than $10 million. Her primary duty is to the creditors, and her secondary duty is “to preserve the charitable mission to the extent possible,” he said.

Dollar Bank, which pledged to cover the cost of the second receiver, said it would continue to fund “reasonable expenses” and work with Fitzgerald to rent the space out for some scheduled events.

Next up: a swanky dance party fundraiser featuring an open bar and dessert buffet hosted by Pittsburgh's Cultural Trust on July 11.

Natasha Lindstrom is a staff writer for Trib Total Media. She can be reached at 412-380-8514 or nlindstrom@tribweb.com.

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