A New York City company with local ties emerged Monday as the proposed buyer for the August Wilson Center for African American Culture, with plans to top the building with a 200-room hotel while trying to help preserve the venue's mission.
But the proposed sale to 980 Liberty Partners came under attack from the Pittsburgh Urban Redevelopment Authority, which argued that the new use would violate deed covenants related to the center's construction in 2009.
At a status conference Monday, Judith Fitzgerald, the August Wilson Center conservator, asked Orphans' Court Judge Lawrence O'Toole for permission to sell the Downtown property to 980 Liberty Partners for $9.5 million, the highest of four original bids for the building.
In her remarks, Ms. Fitzgerald said the company, which was incorporated in New York in April, is offering to build a $35 million, high-end, 200-room hotel above the center as part of the deal.
The $9.5 million bid to acquire the building, air rights, a liquor license and equipment would be enough to pay off a delinquent $7 million mortgage held by Dollar Bank, a $599,744 URA loan, and money owed to other major creditors as well as back wages, taxes and union dues, the conservator said.
At the same time, 980 Liberty Partners has agreed to provide the center with free gallery, storage and exhibit space and use of the 486-seat theater for at least 120 days of the year for an estimated $1 a ticket per performance.
In court papers, Ms. Fitzgerald said the theater would be called the "August Wilson Theater." She added that she would reserve and retain the building's formal name, The August Wilson Center for African American Culture.
While she has yet to negotiate a long-term license agreement with the buyer that would effectively keep the center intact and operating, she said she expects to do so during a 60-day due diligence period.
The proposed deal, she argued, has the potential to make the center a "destination" by adding a hotel and creating traffic for the venue. It also would generate nearly $2 million a year in taxes on what is now a tax-exempt property and create about 100 jobs.
Matthew Shollar, a Squirrel Hill hospitality developer and consultant who is one of the partners in 980 Liberty Partners, said after the meeting that the company is working with a major hotel chain on its plan. It also is conducting an engineering study to determine if the project is feasible.
The firm also plans to work with a consultant to try to maximize the use of the August Wilson Center and to create "what we hope is a perpetual funding structure so that there would always be dollars there for basic operations," he said.
"We would think that once the burden of carrying this very large real estate project and the maintenance and upgrades required are taken off the center ... they can focus their fundraising efforts on ongoing performances, on rapidly changing public displays of art and other artifacts that will allow the center to become much more of a magnet than it has been in the past," Mr. Shollar said.
The company itself is headquartered in the Big Apple but consists of both New York and Pittsburgh investors. Another partner is Akiva Feinsod, who has a background in the financial services industry. The firm recently acquired Holiday Inn hotels in Clarion, Uniontown, Beaver Falls and Indiana.
Mr. Shollar said 980 Liberty Partners would not be taking over the August Wilson Center.
"We are merely creating an ongoing home for it that we'll be engaged with hand and glove to make sure that that mission continues," he said.
But during the status conference, Shelley Segal, a URA attorney, attacked the proposed sale, saying it was not possible based on the disposition contract and deed covenants between the agency and the center.
She maintained that those agreements restrict the use of the property to an African-American cultural center. In addition, the covenants prohibit exterior changes without the consent of the URA. In a court filing, the URA said it would not agree to either the proposed alterations or the proposed use.
Ms. Segal ridiculed the construction of the hotel above the center, saying it's "like taking the Washington Monument and turning it into a maypole." The URA, she said, prefers that a group of three local foundations takes over the center and urged Judge O'Toole to give the agency 60 days to work with that group to try to craft an agreement.
The Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation submitted a $4 million bid to buy the center but withdrew it last week, saying it was clear that Ms. Fitzgerald favored the 980 Liberty Partners offer.
Mayor Bill Peduto and county Executive Rich Fitzgerald also favor the foundations' bid and oppose the sale to 980 Liberty Partners. They have said that the foundations and taxpayers have put more than $30 million into the building for construction and operations.
However, Eric Schaffer, attorney for Dollar Bank, disputed the URA's contentions. He said whatever agreements were made between the center and the URA are secondary to the bank's mortgage. He added that some of the use restrictions ended, in essence, when the building opened in 2009.
He accused the URA of trying to "chill the sale and take this process hostage," adding the agency's opposition was a "tale full of sound and fury signifying nothing." He noted the alternative to a sale would be a foreclosure.
In the end, Judge O'Toole gave all of the parties involved until Monday to file responses to Ms. Fitzgerald's proposal to sell the building to 980 Liberty Partners.
But he also expressed skepticism about efforts by the foundations and others to save the center, given that no concrete, acceptable plan has emerged. "I've heard a lot of oration, and nothing's happening," he said.
Mark Belko: mbelko@post-gazette and 412-263-1262. First Published April 28, 2014 12:41 PM