August Wilson Center fate could be decided July 1

A New York developer appears to be confident that a 200-room luxury hotel can be built atop the August Wilson Center for African American Culture, Downtown. But will the city stand in the way of the proposed development?

That question could be answered July 1.

That’s when Common Pleas Judge Lawrence O’Toole of Orphans’ Court will decide whether the proposed sale to 980 Liberty Partners can advance or whether deed covenants put in place by the Pittsburgh Urban Redevelopment Authority when the building was erected prevent it from happening.

At a status conference Monday, Judge O’Toole acknowledged that the covenants remain an “open wound” in efforts to sell the building after the August Wilson Center defaulted on its $7 million mortgage last year.

The URA has said the covenants prevent the $40 million building, opened in 2009, from being used for anything but African-American arts and culture and that no improvements can be made without its consent.

That could affect the ability of 980 Liberty Partners to build a 200-room luxury hotel on top of the building. It has signed a purchase agreement with court-appointed conservator Judith Fitzgerald to buy the property for $9.5 million, the highest of four bids.

As part of its due diligence, it is trying to determine whether the building, named after the Pulitzer Prize-winning playwright who grew up in the Hill District, can support such construction. The early results of an engineering study are encouraging, said David Franklin, 980 Liberty Partners attorney.

“All signs point to go right now,” he said.

But Mr. Franklin stressed that if the URA insists on enforcing the covenants and Judge O’Toole agrees, it won’t be able to close on the transaction.

At the same time, Ms. Fitzgerald is trying to reach a “global resolution” with all the parties — the developer, the URA, the state attorney general, local foundations and others — that would advance the sale while preserving the center’s mission as a hub for African-American arts and culture.

Despite bickering between the parties, Michael Shiner, attorney for Ms. Fitzgerald, sees a consensus deal as a “realistic end game,” and Judge O’Toole pressed the parties to continue talking, warning that “we’re running out of time.”

While seeking to preserve the covenants, the URA is open to a settlement that would resolve all the issues, attorney Mark Nowak said.

Mortgage holder Dollar Bank, meanwhile, wants to foreclose if no resolution is reached by July 1.

The bank — which has been funding building insurance, maintenance, and utility costs for more than a year — plans to stop doing so after June 30, attorney Eric Schaffer said.

“I think we’ve done about enough,” he said.

Mr. Shiner is anticipating that a foreclosure won’t be necessary.

“I’m hoping the July 1 hearing will be a great time to announce a deal,” he said.

Mark Belko: or 412-263-1262.

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