Home Locations Asheville Pack Place accepts city’s secretly-prepared extension

Pack Place accepts city’s secretly-prepared extension

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Marc HuntRS

Vice Mayor Marc Hunt, The Enforcer

Document shows city may have been planning takeover since last summer

            By Roger McCredie-  The latest move in the seesaw battle over the fate of Pack Place Arts and Cultural Center is a 60-day extension, of the city’s our-way-or-the-highway deadline for the nonprofit’s member organizations to accept direct leases voluntarily or be considered in default of lessee obligations.

            The Pack Place board eventually accepted the deadline extension – with reservations – after having previously told the city 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.

City councilman Marc Hunt, who is the city’s liaison member of the Pack Place board, said the stay-of-execution proposal came out of a closed session discussion held after Council’s regular meeting the previous evening.  He said no formal vote on the extension had been taken during the secret session and no minutes had been kept.  The lack of a formal proposal drew expressions of concern from some board members, but Hunt said that City Manager Gary Jackson was empowered to sign off on the agreement as soon as Pack Place voted to accept it.  “The city manager’s signature on something is pretty good evidence” of good faith, Hunt said.

The extra time for Pack Place to comply with the city’s demands, as set forth in a January letter from Jackson, does not change the demands themselves, “The letter still stands,” Hunt said, except for its deadline, which has now been bumped to July 21.

In his letter, Jackson demanded that Pack Place pay the city nearly $800,000 in compensation for repairs and maintenance it claimed Pack Place had failed to make.  Architect Barbara Field, a Pack Place board member, said the nonprofit has exercised due diligence at all times in maintaining its building.  She identified the “repairs” set forth in Jackson’s letter as a “wish list” of suggested physical plant improvements which the city had “stolen,” distorted, and was using “to blackmail Pack Place” and create a bogus default situation.  Such a default would allow the city to acquire the Pack Place building without paying any compensation at all to the tenants individually or to the Pack Place corporation. Critics have called the default accusation a ruse by the city to gain control of the building for its own purposes and say that the city has no standing to be issuing an ultimatum to Pack Place.

Last month Pack Place’s attorney, Mary Robinson, sent a pointed letter to atty. Fred Barbour, who is acting as special counsel for the city in the Pack Place matter, calling Jackson’s claims of maintenance default “completely groundless,” noting that he “does not provide notice of any failure to perform any provision of the lease.”  Robinson, who was present at the meeting, stressed that until May 31, when the original 10-year Pack Place lease will expire, the city’s relationship with Pack Place continues exactly as it has since 2004, with the city owning the land on which the Pack Place building sits and Pack Place owning the physical plant itself.  During discussion of the mechanics of a new lease arrangement, board member David Brown asked whether it would be possible to pass two motions, one adopting the city’s offer to extend the deadline and another offering the option of renewing the present lease arrangement, exactly as is, for another 10 years. Frown’s idea was echoed by Pack Place board chairman Ed Hay.

Absolutely not, said Hunt.  The city’s offer was a take-it-or-leave it proposition.  “It’s what we [council] discussed and decided last night,” he said.  And, he countered, the city has plenty of standing on which to base its insistence.  Hunt said the city had donated the old Pack Library building to be an integral part of the Pack Place project,  He also claimed that $3 million in taxpayer-funded bonds raised for Pack Place construction also counted as a city contribution.  “So,” he said, “the relative values invested by the city of Asheville and all other parties – there’s a ratio that has developed there and the interest in improvement are divided in that way

Hunt did not elaborate as to how taxpayer-funded bond money constituted a contribution from the city, and Robinson interrupted to remark, “the Pack Library building existed previously, so it is not a part of this.”

“Every time you peel back a layer, it gets more and more complicated,” Hunt said.  “It’s oversimplifying to say that Pack Place, Inc., owns the building and the city owns the land … people go away with mistaken impressions,” he added, apparently referring again to allegations from many quarters – including Pack Place itself – that the city has no power, under the terms of the present lease, to threaten Pack Place about anything.  Hunt, as the city’s point man, had shrugged off that argument until his exchange with Robinson.

The art museum speaketh

            Lin Andrews, board chairman of the Asheville Art Museum, objected to taking up any further time attempting to modify the lease arrangement, on grounds that to do so would jeopardize the museum’s standing with large-scale donors whose pledges are apparently contingent on the museum’s moving forward with the ambitious expansion program, for which it has been raising funds since 2006.  The art museum has already in effect seceded from the Pack Place board and has already negotiated its own direct lease with the city.

Pack Place minutes show that the art museum was pressing Pack Place for a separate lease from the city at least as far back as January, 2013.  At that time Hay proposed the formation of a committee, comprised of then board member Jeff Richardson, city atty. Bob Oast, and former mayor and city manager Ken Michalove, to devise a plan for resolving the art museum’s demand.  Meanwhile, he advanced a compromise plan: let the board enact a long-term sublease with the AAM that would include, at Oast’s suggestion, a non-disturbances and attornment agreement, which, Hay said,  should satisfy the museum’.s potential donors.  Attorney and former mayor Lou Bissette, acting for the art museum, flatly rejected that idea, calling it a “roadblock” and “an impediment to progress.”

 

In June of 2013, Michalove, who had been retained as a consultant to Pack Place, abruptly resigned in order, he said, top speak his mind.  He made a presentation to city council in which he accused the art museum and city government of acting in collusion to “destroy Pack Place” [the corporation] in order to insure domination of the physical plant by the art museum.   In support of his position he introduced several dozen pages of records, e-mails and financial analyses, as well as evidence of business and personal ties between city and art museum staff.  Michalove’s investigation results yielded little interest and no comment downtown.

The Hunt Memorandum

            In September of 2013, Hunt prepared a memorandum entitled “An Overview of Interest and Authority in Pack Place,” a copy of which he furnished to the Tribune last week.  In it, Hunt stands by his assertion that the city’s donation of the old library building and the $3 million bond money – the factors dismissed by Robinson — give the city a vested interest in the building.

“ In simple terms” Hunt’s memo states,,”” the City has the substantially greater controlling and durable property ownership interest, and PPEASC has a more limited leasehold interest.”  In other words, Hunt’s memo claims, the city, far from having no standing, has even more standing that Pack Place, Inc. and therefore would have every right to dictate terms and conditions to Pack Place.

However, until recently the city has not referred to, let alone tried to invoke, this alleged supremacy.  And Paragraph 14 of the existing lease agreement states, “The lessee improvements … shall be owned by the lessee.”

Hunt told the Tribune he had prepared his memo “in consultation with Ed Hay and Bob Oast.”  Later he said both attorneys had reviewed his draft.  Hunt did not mention who had received copies of his memo, or why he was researching that particular topic at that particular time.  Hay was unavailable for comment and Oast has since moved out of town.

And back at the meeting …

            In the end, the Pack Place board voted to accept the city’s 60-day extension as presented, although Hay said,, “I am a little put off  by the city’s reluctance to see us exercise our right to renew the lease [as is].  I feel very uncomfortable with that.”

But Hunt continued to stand his ground.  “The reasons for issuing [Jackson’s] letter have not changed,” he said.  Then, addressing the elephant in the room, he said, “the city is not eager to see this go to litigation.  We do not want to evict anybody.”

Meanwhile, Michalove weighted in with his own assessment of the situation.  “My guess is that the issue of ownership can be argued for some time.  However, it is clear that the control of the building is in the hands of the Pack Place Board under the lease agreement.  And, that all the Pack Place Board has to do is give notice to continue leasing the real estate for another 10 years.  If the lease is broken by the City, the City owes Pack Place several million dollars,” he said.

Pack Place’s smallest tenant, the Colburn Earth Sciences museum, served notice last week that its position has become untenable and tat it intends to leave Pack Place.  However, Colburn officials appeared to be holding that move in abeyance pending developments during the 60-day extension period.

And Hay, when asked how the Pack Place board intends to use its 60-day breather, particularly after having rattled its saber back at the city by means of Robinson’s letter, said only, “It gives us our first line of defense.”

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