A former U.S. bankruptcy judge appointed to try to save the August Wilson Center for African American Culture has concluded that it is an impossible task under current circumstances.
In a report filed Tuesday, conservator Judith Fitzgerald recommended that the Downtown center be sold and its assets liquidated to pay off a $7 million mortgage and other outstanding debt. She said there is "simply no possibility of continued viability of AWC as it currently exists."
Ms. Fitzgerald made her recommendation, which will be discussed at a hearing Friday, after being rejected at attempts to secure funding for operations from the Heinz Endowments, the Richard King Mellon Foundation, the McCune Foundation, the Allegheny Regional Asset District, and mortgage holder Dollar Bank.
The result of the meetings with those entities and others "led to the unfortunate conclusion that there is no financial support for continuing the long term operations of AWC, and AWC cannot continue to operate without that support," she wrote.
And without such funding or more time from the bank to put together a business plan to "rebrand" the $40 million center so that it can continue to fulfill its mission, there's little hope of recovery, Ms. Fitzgerald said.
"Thus, the conservator is left with an impossible task; that is, to conserve an entity that has no strategic plan and insufficient cash to operate -- and has run out of time," she wrote.
Ms. Fitzgerald estimated the center's total accumulated debt at $9.5 million to $10 million. She added the center doesn't have the money to pay off debt or to fund normal operations or feasibility studies. Nor is money available to hire professionals or experts needed to help turn around the facility, she added.
In an interview, Ms. Fitzgerald said that she was not trying to cast either the foundations, RAD or Dollar Bank in a "bad light." She said the bank has funded insurance costs and has paid utilities even after filing for foreclosure in September. It also has put up money to pay Ms. Fitzgerald's fees as a conservator.
The foundations, she said, had put a lot of money into the center in the past but "they're not comfortable putting more in right now."
"I'm really not trying to cast any aspersions. I'm trying to explain why this process has been frustrating," she said. "I'm simply saying we can't get any money released and without it we can't go forward."
In her report, Ms. Fitzgerald said the foundations have "their own alternative proposals that they want to pursue" regarding the center but declined to discuss those in an interview. She also said that Dollar Bank rejected another alternative pitched by the foundations, one she again declined to discuss.
The Heinz Endowments and McCune Foundation had no comment on Ms. Fitzgerald's report. Officials with the Mellon Foundation could not be reached for comment.
RAD is still holding $225,000 from its 2013 allocation in escrow for the August Wilson Center and has set aside $300,000 for this year. David Donahoe, RAD executive director, said those funds are available to the center if it files a plan of operation and a budget "that makes sense," as all organizations are required to do. So far the center hasn't done so, he said.
Ms. Fitzgerald said she was told at a meeting last month that RAD would release $125,000 if the foundations would match it. Since the foundations have refused to provide any money, she hasn't pursued the RAD funding, she said.
In a statement after the release of the report, Eric Schaffer, attorney for Dollar Bank, said, "The court charged the conservator with conducting a thorough investigation and her report shows that she has done just that. The conservator's conclusions appear to be well-founded."
Ms. Fitzgerald said she doesn't have any formal offers for the building should a liquidation be ordered but added she does have confidentiality agreements with some parties looking at the space.
Her first choice, she noted, would be to sell to a buyer interested in keeping it as a cultural center. Another possibility would be to find entities willing to do long-term leases lucrative enough to pay off the building's debt.
The Pittsburgh school board has passed a resolution to form an ad hoc committee to explore a possible purchase.
One person who opposes the recommended liquidation is former Pittsburgh Urban Redevelopment Authority executive director Mulugetta Birru, a founding member of the center. He is one of four founding members who are trying to save the center.
"This is a community asset, and I hope the attorney general will step in and I hope some leadership in Pittsburgh will step up and try to find a solution," he said.
An attorney for the state attorney general's office, which intervened in the case after Dollar Bank filed for foreclosure, could not be reached for comment.
County Common Pleas Orphans' Court Judge Lawrence O'Toole appointed Ms. Fitzgerald in November as part of a bid to save the center and its mission in the face of mounting debt and the possible foreclosure.
Opened in 2009, the center was designed to celebrate African-American culture in Pittsburgh and throughout the country and to pay homage to August Wilson, the late Pulitzer Prize-winning playwright who grew up in the Hill District and who set nine of his 10-play cycle there.
History of the August Wilson Center for African-American Culture
What began as an idea by passionate artists in the 1980s morphed into the the African American Cultural Center of Greater Pittsburgh and finally, a building and an opening under the name of famed Hill District-born playwright August Wilson. Fundraising tended to be difficult; the project cost rose from an estimated $35.9 million in 2005 to about $40 million.
1984: Emma Slaughter, an artist from Homewood, founds the Homewood Art Museum, a group seeking to build a black museum in the neighborhood. With empty plots of land but limited funding, the group begins sponsoring exhibits in the early 1990s in lieu of constructing a building.
1996: Over the course of several years, a consortium of local leaders meet to debate the idea. Ms. Slaughter, insistent that the cultural center was her idea and should be located in Homewood, found herself at odds with city leaders. URA director Mulugetta Birru and Councilman Sala Udin were among those who were open to a Downtown location.
1998: A feasibility study is conducted using funds from a variety of sources, including local foundations.
Late 1990s: Meetings and conversations on the potential museum begin to take shape, with a proposal to locate it Downtown. Ms. Slaughter remains steadfast in her desire for the facility to be in a black community.
2002: The African American Cultural Center of Greater Pittsburgh is established; the name was changed to the August Wilson Center for African American Culture in 2006.
2003: The cultural center selects as director Neil Barclay, who left in 2009 just before the center's opening.
2006: Work begins on the 65,000-square-foot facility.
May 11, 2013: Lacking cash to make payroll, the center lays off almost a dozen staff members.
September 27, 2013: Dollar Bank moves to foreclose on the $40 million building for mortgage nonpayment; The center borrowed $11 million -- refinanced to $7 million -- to complete construction. The bank said the center had not made its February mortgage payment of $53,639, nor any after that.
Nov. 27, 2013: RAD votes to withhold its $300,000 allocation until the troubled center emerges from foreclosure with a sound financial plan.
Mark Belko: email@example.com or 412-263-1262. First Published January 21, 2014 1:56 PM