Three foundations withdraw bid to purchase August Wilson Center

The future of the August Wilson Center for African American Culture is mired in more uncertainty today after a high-profile candidate to purchase the Downtown venue dropped out of the bidding.

In a statement Monday, The Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation withdrew their $4 million offer to buy the financially troubled center, saying court-appointed conservator Judith Fitzgerald appeared to favor a higher bid for the property. To persist would be "futile," they said.

Ms. Fitzgerald, a former bankruptcy judge, said in an interim report released last week that she intended to pursue a $9.5 million bid offered by an unnamed local developer who wants to put a hotel on top of the $40 million Liberty Avenue building, which opened in 2009.

That bid not only was the highest of the four received, but Ms. Fitzgerald said the developer also is offering the August Wilson Center free gallery, office and storage space. It also would get use of the theater for at least 120 days a year at a nominal fee.

In addition, the buyer is willing to enter into a long-term license agreement with the center that effectively would keep it intact and operating in the building. Ms. Fitzgerald said the bid would allow the center to continue its mission by removing facility costs and debt obligations and "restoring the path to financial viability."

But in their statement, the foundations said they had "significant concerns" about the higher bid. They contended it "would apparently give the center only limited access to its own theater and create an arrangement whose eligibility for future charitable funding is questionable at best."

"The foundations will leave it to the Orphans' Court to determine whether such an arrangement is in furtherance of the mission of the August Wilson Center, but at this point it is clear that persisting with our bid would be futile," they wrote.

Ms. Fitzgerald will make a recommendation on the sale of the building to Orphans' Court Judge Lawrence O'Toole, who ultimately will decide who gets the property.

"I did not anticipate the withdrawal of the bid by the foundations," Ms. Fitzgerald said Monday, "but it has left a clear path forward for the receivership, which is to pay creditors and to sustain the mission of the August Wilson Center."

The foundations' decision came even though their bid appeared to have the backing of Pittsburgh Mayor Bill Peduto and county Executive Rich Fitzgerald, both of whom questioned whether the higher offer would preserve the building's mission as an African-American culture center.

After learning of the decision, Mr. Fitzgerald said he is still hoping to get the foundations involved as part of a group that buys the center. "Hopefully, it's not a finale, just a little temporary setback," he said.

Mr. Fitzgerald added, however, that he "can't criticize" the foundations for bowing out. He maintained they were "not treated well, quite frankly, in this whole process" of finding a buyer for the building.

In her interim report, Ms. Fitzgerald, no relation to the executive, said that the foundations' offer, for all intents and purposes, dissolved the August Wilson Center as an organization and proposed to form a new nonprofit entity "of an undefined mission, somehow related to African-American culture."

The foundations, which said they have invested more than $20 million in funding the venue, took exception to that language. They said they always intended for the center "to be used for its original purpose, as a premier home for African American arts and culture programs."

"In addition, the foundations were proposing a structure that would have provided for responsible governance overseen by a board of representatives from the African-American community. The foundations are disappointed by the receiver's characterization to the contrary in her report, as it was a curiously inaccurate and pejorative depiction of our intent and bid."

Mr. Fitzgerald reiterated Monday that neither he nor Mr. Peduto favors the $9.5 million bid for the center. There is not a lot of detail in the bid, he said, and there has been no community input regarding the plan. He also said the August Wilson Center name "goes away."

"This plan the conservator is putting forward, it's not viable. It's not anything I think we're going to be supporting. We need to get all the players working together," he said.

He also had concerns about the name of the developer being kept secret. "If this is such a good plan, you don't hide in the background, you get out and say what it is," he said.

Ms. Fitzgerald was appointed as conservator last year in a bid to save the center after it defaulted on the $7 million mortgage held by Dollar Bank.

When those efforts failed, she got permission from Judge O'Toole to sell the building to pay off the mortgage and other debts totaling about $10 million. The two other bids for the building came from unnamed commercial enterprises that proposed to pay $4.5 million and $3.25 million for it, respectively.

While the foundations said they were withdrawing their bid, they stressed that they were committed to "ensuring the availability of African-American arts and culture programming" in the region and would be sponsoring a study to determine how to best do that in the future.

Mark Belko: and 412-263-1262. First Published April 21, 2014 3:01 PM

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