Hearing set in August Wilson Center covenants dispute

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Dollar Bank wants to make sure it has a say in any decision regarding deed restrictions that could affect the sale of the August Wilson Center for African American Culture.

Dollar is concerned because of claims by the city's Urban Redevelopment Authority that the covenants would apply even if the bank foreclosed against the center, which has defaulted on its $7 million mortgage. 

The covenants prevent the Downtown building from being used for anything other than an African American culture center and require URA approval for exterior alterations to the $40 million building.

Dollar has argued that the covenants are secondary to its mortgage and would not apply in a foreclosure or even in the sale of the building to 980 Liberty Partners, the New York developer that has offered $9.5million for the property and plans to build a 200-room luxury hotel on top of it.

The URA maintains, however, the restrictions are not subordinate to the mortgage and would remain in effect in the sale to 980 or even in a foreclosure.

In an emergency petition filed today, Dollar said any determination regarding the covenants could affect the value of the property or a sale to a third party and impact its interests. 

It is asking for an extension until July 23 to file a formal written response to the URA's request for a declaratory judgment that the covenants apply in the sale to 980.

Judge Lawrence O'Toole of Allegheny County Common Pleas Orphans' Court will hold a hearing tomorrow on whether the restrictions apply in the sale to the developer.

If he rules in the URA's favor, it could kill the proposed deal to 980, which submitted the high bid for the property, which is being sold by court-appointed conservator Judith Fitzgerald to pay off the mortgage and other debts.

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