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Pack Place to City: ‘Back off or get sued!’

Pack Place springRS

Taxpayer-funded Center counterattacks ‘hostile takeover’ attempt

By Roger McCredie- Pack Place, Asheville’s integrated science and cultural center, has notified the City of Asheville that it “will take all legal actions necessary to defend its right and the rights of its member corporations” against what has been described as a “hostile takeover attempt” by city government.
The move came even as the board of Pack Place’s smallest tenant, the sixty-year-old Colburn Earth Sciences Museum, adopted a resolution to leave Pack Place altogether, provided the city  pays it $580,000 in relocation expenses, rather than allow itself to be “squeezed out” by the city’s maneuvering.

pdf Pack Place Letter to Fred Barbour re_ Lease

 In a letter to Atty. Fred Barbour, who has been acting for the city in its recent dealings with Pack Place, Atty. Mary Robinson categorically rejected allegations of maintenance neglect set forth by City Manager Gary Jackson in a January 27 letter to the Pack Place Board.  Jackson demanded that Pack Place pay more than $800,000 — $419,000 of it within 60 days – or be considered in default, in which case, he said, the city would exercise an alleged right to assume control of the facility.  Jackson said the money represented the cost of repairs and maintenance which Pack Place had failed to perform “for years.”
Robinson’s letter called Jackson’s neglect claim “completely groundless,” noting that he “does not provide notice of any failure to perform any provision of the lease.”  Furthermore, Robinson said, the existing lease “does not indicate any requirement to pay any sum of money to the City of Asheville.”  Pack Place has, as it is supposed to do, made all repairs in a timely manner and with its own funds.  As for Jackson’s list of neglected repairs. Robinson said they were no such thing; they were, in fact, a suggested capital improvements “wish list” compiled by architect and Pack Place board member Barbara Field.

  In a February 18 special joint meeting Field, who served as project manager for construction of the Pack Place building,  angrily told city officials, “You have basically stolen that [list] from me and attached it to a document you are using to blackmail Pack Place … Make your own damn list … Find another excuse to put us in default. That [the demand letter] doesn’t count and doesn’t matter and is complete fantasy on the part of City Council,” Field told Jackson, Mayor Esther Manheimer and Councilor Marc Hunt, who is also the city’s Pack Place liaison. Undeterred, the city further demanded that the Pack Place building’s three tenants  — Colburn, Diana Wortham Theater and the Asheville Art Museum, sign direct leases with the city as landlord.
Those two actions would effectively strip Pack Place of its autonomy and reduce its board to figurehead status.

The city has shrugged off repeated assertions that it has no standing to make any such demands or threats: it owns the ground on which the Pack Place building stands, but the building itself is owned by the Pack Place corporation, at least until 2037, when the agreement would be up for review, or in the event of a default situation such as the city claims now exists.
On Friday, March 28, the Tribune asked Jackson (1) where, within the existing lease, the city was empowered to make its demands, and (2) whether it intends to do so now that the deadline imposed by the demand letter has passed.  Jackson’s response:
“1. We are relying on competent legal counsel to interpret lease terms, statutes, case law, etc.  It would be inappropriate for me to attempt to guide your legal research. 2. Yes, Pack Place is an important city asset.  Our intention is indeed to move forward until an acceptable action plan for the capital maintenance is achieved.”

  Two days earlier Jackson said essentially the same thing at a meeting of the newly created county Cultural and Recreation Authority. CRA chairman and county commission head David Gantt called the Pack Place situation “complicated … with a lot of moving parts” and noted that the CRA as a whole had been out of the loop of the Pack Place controversy.  He asked Jackson, “Where does the city want to go with this?”
In a tone of overtaxed forbearance, Jackson replied, “The city’s position is that they want all the [Pack Place ] partners to be successful.  They want the building to be well maintained … they devised an opportunity for Pack Place to mediate these issues, but we reached the point in January where it was apparent that the discussions were not fruitful and that we were running out of time [the existing lease comes up for renewal May 1] … [the city] reached the position that it would like to do direct leases with each of the three tenants” in order to assure proper maintenance.  “You’d think that after 22 years’ experience, they could determine who’s going to clean the bathrooms,” Jackson added.
“That would allow the art museum to move forward with its renovation program,” Jackson said.

 The Art Museum Factor
The art museum has pushed hard for adoption of the direct-lease arrangement for some time.  When Jackson submitted his demand letter in January, a direct lease had already been drafted for the art museum and only needs signatures.  The art museum has announced that it intends to deal independently with the city regardless of what the other tenants do, and has complained that the other partners, who received no leases for review until March 7, have been dragging their feet.
Earlier in the meeting, art museum executive director Pam Myers put in a request for $2.6 million in CRA funds.  This is more money than CRA presently has in its entire kitty to fund newly proposed projects as well as pending ones, such as a community aquatic center that has been on the planning agenda for 15 years. The art museum has also asked for $219,000 of the $490,000 the county has budgeted for its annual allocation to Pack Place for utilities.
The city already holds in escrow $2 million in Tourism Product Development Funds which were awarded to the art museum by performance grants in 2007 and again in 2009.  The actual transfer of the money is contingent on the art museum’s own satisfactory fundraising progress in connection with an ambitious $24 million expansion plan it introduced in 2006, the year it moved into the building, replacing an original tenant, the Health Adventure.  The museum has twice defaulted on these contracts; nevertheless, the city granted the museum a third extension – at about the same time Jackson’s demand letter went out.

 A number of observers who have followed the Pack Place developments over time have charged that city council and the art museum have in effect colluded to dismantle Pack Place’s corporate structure so as to give free rein to the art museum’s plans and award it de facto control of the Pack Place building.  One such critic has been former Asheville mayor and city manager Ken Michalove, who last year resigned his position as a consultant to Pack Place in order to be able to air his concerns.
What about the other tenants?
According to Field and others who oversaw its original construction, Pack Place was designed and always intended to be a single-use building that would house three complementary entities of roughly the same size and scope.
The Diana Wortham, a 500-seat theater with sloping floor and boxes, could not be repurposed without fundamentally altering the building and sources say it will likely remain as is, although the art museum’s preliminary expansion work has forced the theater’s entrance from what used to be a common lobby facing Pack Square to a door around the corner on Biltmore Avenue.

At the opposite end of the Pack Place food chain, the Colburn says it has suffered from the same situation particularly by losing access for school bus parking.  Students make up the majority of the Colburn’s visitors and the inability to accommodate them properly, Colburn officials say, has contributed significantly to its decision to leave the Pack Place building.  “Pack Place has been incredibly important to our organization,” Colburn executive director Vicky Ballard told the CRA.  “The children that we serve, the families that we serve, what we bring to the community – that would not have happened without Pack Place … we are in a great real estate situation because of taxpayer money … taxpayers are my family and my friends and a lot of them work at very low-paying jobs.  That money [to fund Pack Place] comes from them, and not from some big county money tree.”
Would the Colburn reconsider and elect to stay at Pack Place if the city were to amend its position now that Pack Place has asserted itself?  Colburn officials declined to speculate.
Does the art museum’s private negotiations with the city violate the museum’s tenant covenant with Pack Place, Inc., and if so, would Pack Place be within its rights to evict it?  Pack Place officials had not responded to that question by press time.
“To ensure that everyone can continue to focus on the negotiations … which we hope will result in new [lease] agreements by the end of May, we request that the City retract Mr. Jackson’s letter dated January 27, 2014,” Robinson’s letter concludes.

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