Foreclosure date set for August Wilson Center

It’s deal or die for the debt-plagued August Wilson Center for African American Culture.

Mortgage holder Dollar Bank intends to put the Downtown property up for sheriff sale Oct. 6 unless the building is sold before then.

The decision, announced in court Wednesday by Dollar attorney Eric Schaffer, turns up the heat on court-appointed conservator Judith Fitzgerald to complete a deal with New York developer 980 Liberty Partners, which has offered $9.5 million for the building.

Ms. Fitzgerald is hoping to close on the sale by the end of September but is running into opposition from the Pittsburgh Urban Redevelopment Authority, Mayor Bill Peduto, and county Executive Rich Fitzgerald.

They favor a competing $7.2 million bid advanced by the Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation. The offer includes $1.2 million in URA money and $1 million from a county-related entity.

Michael Shiner, Ms. Fitzgerald’s attorney, said after the court hearing Wednesday on deed restrictions relating to the center that he did not know when the conservator would be able to close on the sale.

“I know we’re all trying to beat the Oct. 6 goal,” he said. “I also believe Dollar will be reasonable as long as we’re making progress toward a sale because it’s in their interest to have the building sold as well. They don’t want to own it.”

At the same time, Ms. Fitzgerald, he said, is still trying to work out a “global” agreement that would satisfy URA objections while allowing the sale to 980 Liberty to proceed.

He added he did not feel any additional pressure to seal a deal now that a sheriff sale date has been set.

“We’re trying to get this thing done,” he said. “We feel our mission is to get the property sold, especially here where we think we have a sale that preserves the mission and gets some creditors paid. We will continue working toward that goal.”

Mr. Schaffer informed Judge Lawrence O’Toole of Allegheny County Common Pleas Orphans’ Court of the Oct. 6 date at the end of a hearing during which the URA tried to make the case that deed restrictions prevent the building from being used for anything but an African-American cultural center and don’t allow for exterior alterations without its consent.

If upheld, the covenants, particularly the one relating to the exterior, could cripple the sale to 980 Liberty, which wants to build a 200-room luxury hotel on top of the existing building.

Matthew Shollar, a partner in 980 Liberty, testified that the prohibition against exterior improvements without the URA’s consent would have to be changed or dealt with legally in order for his group to proceed with the sale.

But he added he believes the 980 Liberty bid “conforms” to the covenant regarding the use of the building for African-American culture. He said the relevant documents allow for mixed uses of the property. His group’s bid would provide limited free space for the August Wilson Center plus use of the theater for at least 180 days of the year at a nominal charge as a means of preserving the mission.

Kyra Straussman, URA’s director of real estate, testified that the restrictions were included in a disposition agreement for the sale of the land to the August Wilson Center and in a redevelopment plan related to the property. She said they also apply to the air rights above the property.

The URA, she insisted, would never consent to a transfer of the property without the covenants in place because they protect the public’s investment. The 980 Liberty plan, she said, seems to be “very inconsistent” with the restrictions.

She estimated that at least $18.75 million in funding from taxpayers and local foundations has gone into the August Wilson Center.

However, she conceded in questioning by Mr. Shiner that there’s nothing in the deed itself that says the building must be used exclusively as an African-American culture center. Nor, she said, is there anything that prevents the August Wilson Center organization or a successor from building out the property.

Judge O’Toole did not rule Wednesday and intends to schedule a trial in late September to deal with the various issues relating to the covenants, including whether they would apply in a foreclosure.

If the restrictions are upheld and 980 Liberty drops out, it could open the door for the foundations’ $7.2 million bid to be accepted. They have characterized their latest offer, up from $4 million initially, as a “back-up” in the event the 980 Liberty bid fails. The foundations have said their intent is to preserve the center’s mission as a hub for African-American arts and culture.

Dollar Bank moved to foreclose on the building after the August Wilson Center organization defaulted on its $7 million mortgage.

One potential problem with the foundations’ bid is that it would not be enough to fully pay off Dollar Bank, which is now owed $7.9 million, plus interest and costs, or any of the other creditors.

Mark Belko: or 412-263-1262. First Published July 16, 2014 12:00 AM

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