Deal means foundations can move forward to buy August Wilson Center

The politicians, foundations and passionate patrons backing the financially embattled August Wilson Center for African American Culture won out with a courtroom compromise that jilted a developer whose bid was higher.

Dollar Bank and the August Wilson Center's court-appointed receiver struck a deal Monday to sell the property and the rights to the space above it for $8.85 million to a soon-to-be-formed nonprofit under the Pittsburgh Foundation, a deal that includes public money from an unclear source.

“It's the best resolution that we can come to under the current conditions,” said Judith K. Fitzgerald, the receiver charged with resolving the center's $10 million in debts. “This preserves the mission of the August Wilson Center, which was really our primary motivation.”

The agreement supplants the proposed $9.5 million sale of the center to 980 Liberty Partners, which wanted to build a 200-room luxury hotel atop the existing two stories and share space with the center. It ends months of jockeying and bickering over the fate of the gleaming Downtown marvel.

“We think this could've been a great project,” said 980 partner Matthew Shollar, who lives in Squirrel Hill. “It's been an interesting process. It's a civics lesson, and we're moving forward.”

He agreed to withdraw the bid as part of the deal.

The developer pursued the prime slab of Downtown real estate since early spring and racked up several hundred thousand dollars in costs, including engineering work, consulting fees and legal bills. The court agreement included a confidential side settlement of an undisclosed amount to compensate 980 for those expenses.

The surprise announcement shortly before noon in Allegheny County Common Pleas Court halted what was supposed to be a three-day trial over deed terms before it began.

“We are a bit stunned because we expected this to last several days,” said Janera Solomon, who led the foundation-funded August Wilson Center Recovery Committee, which opposed the sale to 980. “We have to thank the mayor and the county executive for their support of this, along with the many concerned citizens who believed in the vision for the center all along.”

The bank, to which the center owes about $8.6 million, will get $7.9 million. The receiver, who had billed the court for more than $700,000, will get $590,000 for work completed by her, her consultants and her attorneys.

None of the remaining unsecured creditors owed an estimated $1 million will be repaid, said Michael Shiner, attorney for Fitzgerald. That includes a slew of smaller vendors ranging from security firms to dry cleaners. A local union sued the center for $40,000 owed to 59 stagehands for work completed last year.

“There's just something morally wrong here when people go to work in good faith and they don't get paid,” said Shawn Foyle, secretary-treasurer for the International Alliance of Theatrical Stage Employees Local No. 3. “We're not surprised that the foundations got in control of it, but we're very disappointed that we're left out.”

Under the deal, a coalition of the Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation will contribute $5.2 million and the city's Urban Redevelopment Authority has come up with the remaining $3.6 million through a combination of public and private funding sources that they did not disclose.

“The terms of the settlement are confidential at this point,” said Tim McNulty, spokesman for Mayor Bill Peduto.

The foundations plan to contribute more than $4 million during three years to support operations.

“In Pittsburgh, we work together to solve our problems, and that is what we did here to preserve this vitally important asset,” Peduto said in a statement.

At least some of that extra money will be from the Allegheny Regional Asset District, County Executive Rich Fitzgerald said. The RAD board likely will have to hold a public hearing soon to approve setting aside the additional funds, RAD director David Donahoe said.

“It's always a challenge to try to come up with the funds and come up with the resources to put these kinds of things together,” Rich Fitzgerald said, “but this is something that's really been worked on for a number of months.”

At least $17.4 million in taxpayer money and another $20 million from foundations funded the construction of the August Wilson Center, named for the Pulitzer Prize-winning playwright from the Hill District. The center opened in 2009 and flopped in less than five years amid mounting debts.

Dollar Bank secured a $7.96 million mortgage default on the property in June. The center hadn't made a payment to the bank since February 2013.

Monday's courtroom compromise marked a shift in course for both the bank and receiver, who had previously urged the judge to approve the sale to 980.

“It wasn't so much a change of heart as it was coming up with what we felt was a deal that everybody could agree on,” Shiner said. “Obviously, we'd like to get a larger return for everyone.”

The last-minute deal occurs 10 months after the center fell into conservatorship amid dire financial straits and a week before a scheduled sheriff's sale.

The court set an Oct. 31 closing for the $8.85 million sale of the center. Dollar Bank did not cancel its sheriff's sale but instead postponed it until Nov. 3 in case the deal announced Monday falls through.

Terrance Hayes, a recovery committee member, said he left the courthouse Monday and immediately took a walk past the August Wilson Center, which sat dark and empty at its triangular lot at Liberty Avenue and William Penn Place.

“We all know there's more work to be done, but I felt like today is a victory.” Hayes said. “I hope everybody sees this as a second chance to make it stronger than it was before.”

Natasha Lindstrom is a staff writer for Trib Total Media. She can be reached at 412-380-8514 or nlindstrom@tribweb.com.