New arguments raised in Wilson Center takeover

At­tor­neys for the par­ties fight­ing over the Au­gust Wil­son Center for African Amer­i­can Cul­ture made ar­gu­ments Thurs­day on mo­tions re­lated to the ap­point­ment of a sec­ond re­ceiver for the cen­ter and the Ur­ban Re­de­vel­op­ment Au­thor­ity of Pitts­burgh’s deed cov­enants on the build­ing.

Dol­lar Bank, which fore­closed on the debt-rid­den fa­cil­ity last year, ar­gued in Al­le­gheny County Com­mon Pleas Or­phans’‍ Court in fa­vor of ap­point­ing a sec­ond re­ceiver to work along­side Ju­dith Fitz­ger­ald, who was ap­pointed con­ser­va­tor by the court in No­vem­ber and has since Jan­u­ary been the cen­ter’s re­ceiver.

Given the length of the de­fault and the na­ture of the mort­gage, said Eric Schaf­fer, at­tor­ney for Dol­lar Bank, the bank needs a so-called con­trac­tual re­ceiver to en­sure that “our rights are pre­served.” While a sale of the build­ing to 980 Lib­erty Part­ners would be “a great thing,” there is con­cern about whether that will hap­pen, he said.

“We want to have greater con­trol, as our con­tract — as the law — per­mits,” he said. “We’re look­ing to pro­tect our col­lat­eral; we're look­ing to re­duce ex­penses.”

Dol­lar Bank pro­posed the ap­point­ment of Pitts­burgh real es­tate firm Baker Young Corp. as re­ceiver.

Other par­ties rep­re­sented at the hear­ing thought a dual re­ceiv­er­ship could cre­ate prob­lems.

“It’s an un­prece­dented form of re­lief Dol­lar’s not en­ti­tled to,” said Mi­chael Shiner, coun­sel to Ms. Fitz­ger­ald. “Dol­lar has got­ten the re­lief it’s re­quested al­ready.”

He ar­gued the ap­point­ment of two re­ceiv­ers “cre­ates an in­cred­i­ble amount of con­fu­sion” and that such a re­ceiver would work only in the in­ter­est of Dol­lar Bank.

“You can’t have two CEOs of a com­pany. You can’t have two pres­i­dents of the United States,” he said. “There’s a sales pro­cess go­ing on right now … Dol­lar Bank will be paid fully at clos­ing.”

While the com­mon­wealth would not op­pose the bank’s ap­point­ment of a re­ceiver, said San­dra Ren­wand of the state at­tor­ney gen­eral’s of­fice, “The ques­tion is, where is the money go­ing to come from?” The state’s goal, she said, is to pro­tect the cen­ter’s char­i­ta­ble pur­pose. “It doesn’t make sense” to have two re­ceiv­ers, she said.

Mr. Schaf­fer said Dol­lar Bank would fund the sec­ond con­ser­va­tor.

In ad­di­tion, at­tor­neys on be­half of 980 Lib­erty Part­ners and the URA dis­cussed the deed cov­enants that could pre­vent a sale of the build­ing with­out the URA’s ap­proval.

At­tor­neys for the URA, 980 Lib­erty Part­ners and the re­ceiver agreed that the pur­chase agree­ment for the build­ing is sub­ject to the URA’s cov­enants; whether the cov­enants can be re­moved will take an­other pro­ceed­ing. The at­tor­neys asked the judge to post­pone such a de­ci­sion.

“We wanted to make sure that our cov­enants were part of that sales agree­ment,” said Mark Nowak for the URA.

Shel­ley Segal, in-house at­tor­ney for the URA, be­came con­cerned dur­ing the ar­gu­ments about the na­ture of the URA cov­enants and ap­proached Mr. Nowak as he and the at­tor­ney for the de­vel­oper ad­dressed the judge. She ap­peared to want to clar­ify that the agree­ment about the na­ture of the deed cov­enants did not sig­nal that the URA sup­ported the sale to 980 Lib­erty Part­ners.

“I fear we have a Tro­jan Horse here,” she said. She de­clined to clar­ify her views fol­low­ing the hear­ing.

The par­ties will ne­go­ti­ate a con­sent or­der re­lated to the URA’s mo­tion.

The hear­ing came the day af­ter a re­port filed to the court that out­lined the new terms of a backup bid pro­posed by The Pitts­burgh Foun­da­tion, the Heinz En­dow­ments and the Rich­ard King Mel­lon Foun­da­tion. The bid, now $7.2 mil­lion, would in­clude $5 mil­lion from the foun­da­tions and $2.2 mil­lion from the URA and Al­le­gheny County or a county-af­fil­i­ated en­tity. The URA would give $1.2 mil­lion, and the county or a county-re­lated en­tity would con­trib­ute $1 mil­lion.

County ad­min­is­tra­tors said the county’s con­tri­bu­tion would not come out of the cap­i­tal bud­get.

“As I’ve said over the past few years, county prop­erty tax dol­lars aren’t used for re­gional as­sets. That’s what the [Re­gional As­set Dis­trict] board was set up for,” county Ex­ec­u­tive Rich Fitz­ger­ald said.

The county’‍s in­volve­ment in the bid came as a sur­prise to county Coun­cil­woman Heather Hei­del­baugh. The cen­ter has no man­age­ment struc­ture in place, she said, and pointed out that Mr. Fitz­ger­ald had op­posed a bud­get item pro­vid­ing funds to the Au­gust Wil­son Center last year.

“This is Rich Fitz­ger­ald speak­ing out of both sides of his mouth,” Ms. Hei­del­baugh said. “He can’t have it both ways.”

Elizabeth Bloom: or 412-263-1750. First Published July 3, 2014 12:00 AM

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