Paid in Full

by Jeff Sykes

Documents shed light on Boston settlement

Two weeks before the city of Greensboro voted last August to buy up a handful of properties in a one-block area slated to become the site of the Tanger Performing Arts Center, Walker Sanders was worried.

As head of the Community Foundation of Greater Greensboro, Sanders was on the hook to clear the way for the purchase of several properties on the north side of downtown. He was, after all, the de facto head of the drive to raise millions of dollars in the private sector in order to entice city council members to see the light and vote to spend upwards of $35 million on what boosters were calling “a game changer.”

Sanders, a reserved, soft-spoken man with a serious acumen for asset management, had shepherded the PAC concept from a dream first established in the late 1990s to the cusp of reality by late last summer. After city council asked CFGG in 2012 to spearhead a community task force, and then an initial $20 million private capital campaign, Sanders had always delivered the goods.

In fact, the sky seemed to be the limit for the PAC, especially after the initial success of their fundraising effort surpassed that $20 million mark so quickly.

Sanders had been here once before in late 2012. The momentum had seemed right. A location had been identified and nearly an entire city block’s worth of land was under contract to make the vision a reality. But the project stalled, and the options on the land expired, because boosters were uncertain about the level of participation to which the city council would commit.

That all changed in Feb. 2013 when council voted to commit $20 million to make the PAC a reality. Sanders again embarked on an effort to get the properties – bounded by Elm Street, Lindsay Street and Summit Avenue – under contract in order that the city would have rights to purchase.

But about two weeks before the city would vote to spend $7.6 million to buy the land, project leaders discovered that one of the parcels – 125 Summit Ave. – had recently been the subject of a new three-year lease. If the city bought the property, would they have to honor the lease? Could this throw the project’s timeline off?

The answers were uncertain. Sanders sent an urgent email to David Hagan, the veteran real estate broker who would ultimately represent the city in the property transaction.

“David – serious concern was raised tonight about the lease on 125 Summit,” Sanders wrote on Aug. 5. “I wasn’t able to answer their questions, but I assured them it was something that could be resolved (actually I guaranteed it.) When you return this needs to be addressed immediately and resolved prior to the 20 th . Otherwise, I’ll be looking for a job in Siberia.”

Hagan replied two days later that the only way around the lease was to seal an early termination agreement with the tenant. Since he had not yet been contracted officially by the city to negotiate the larger property assemblage, Hagan noted that it would be inappropriate for him to contact the tenant, Mike Boston, owner of Boston’s House of Jazz.

Instead, Hagan outlined his view of a general strategy. “If the seller has not notified the tenant of the pending sale of the premises, the seller may be reluctant to approach the tenant until our due diligence period expires on Sept. 15, which would be too late to help us,” Hagan wrote. He went on to note that, whenever the landlord requests an early termination, the tenant usually perceives an economic benefit.

“I am very concerned that, if we broach the subject now, the seller will try to take advantage of the situation due to the urgency of the timing and our obvious need for this property,” Hagan wrote. “I believe the city can negotiate much more favorable terms by dealing directly with the tenant after the City closes on the purchase of the property.”

Hagan advised that by waiting the city might be able to help Boston find a replacement location “and simply relocate the tenant at a much lower cost.”

This period of limbo didn’t sit well with Boston, who attended the city council meeting on Aug. 20, when council voted to make the land purchase.

Boston had moved his popular live music venue from a smaller space on Edgeworth Street just that April. In speaking before city council, Boston expressed a sense of frustration at being forced out of his location.

Boston said he had been instrumental in bringing 25 jobs to downtown Greensboro, in addition to the 3,000 or so patrons to his establishment each week.

“I’m getting kind of emotional because this is my baby and you guys are treating it like it doesn’t even exist, like I’m invisible,” Boston said.

He asked council to allow him to stay in his location and for the city to use the revenue from his rents to finance work related to the performing arts center.

Boston mentioned that he couldn’t be forced out of the spot because of his lease.

“But I’m certainly being encouraged to leave,” Boston said. “The encouragement has been rather degrading and almost embarrassing that people would think my business is worth so little.”

Boston said he was not against the PAC, but opposed to being put out of business.

“There is nothing comparable downtown and I just don’t feel like I should be pushed out in the name of progress,” Boston said.

At-large council member Yvonne Johnson, herself a former Greensboro mayor, told Boston that she had spoken to CFGG’s Sanders specifically about Boston’s House of Jazz and asked Boston to let her know if he wasn’t being offered the help he needed to relocate.

After council voted to buy up the lots to assemble to PAC property, local politics took precedence, as elections were held in late 2013 and a new council was elected.

The 125 Summit Ave. property sold in Sept. 2013 for $1.2 million and Boston continued to operate his club. According to a public record’s request submitted to the City of Greensboro there was little documented conversation about moving Boston, or buying out his lease, until March 3, when Boston submitted a one-page settlement proposal to Assistant City Manager David Parrish.

Boston said that Parrish and Hagan had helped him conduct an “exhausting search for a new location” but that no comparable location could be found in downtown Greensboro. The mix of acceptable square footage, a sizable kitchen and an outdoor patio could not be replicated.

“It is with great disappointment and anxiety that I find myself in this position of displacement,” Boston wrote.

He said that several months earlier, Hagan had approached him with a buyout offer of $85,000, a figure Boston labeled “an insult regarding the current and future economic losses sustained by the displacement of my business.”

Boston identified the former Alexander Devereux location on High Point Road as a possible relocation spot. He calculated an acceptable financial settlement at $201,000. This figure included $151,000 in relocation expenses and reimbursement for $50,000 he spent upgrading 125 Summit Ave. The other $50,000 was for expected losses.

“I am asking for compensatory damages in the amount of $50,000 resulting from the loss of a downtown presence and the foot traffic afforded by that presence,” Boston wrote.

City Council spoke briefly about the costs to relocate Boston’s House of Jazz at its meeting on March 4. But it was March 18 before the negotiations took final shape.

Boston took to his Facecbook page to ask for prayer from his supporters. The next day he seemed pleased.

“Blessed Assurance! The Settlement is mine or what a foretaste of glory divine!” Boston wrote, alluding to an old gospel hymn. “Actually never made it to the meeting “¦ we got everything we wanted before the meeting took place!” A flurry of emails between Boston’s lawyer, Charles Blackmon, and interim city attorney, Tom Carruthers, shows that the city decided to move forward early on the afternoon of March 18.

Carruthers notified Blackmon about 4 pm that he was “ready to move forward.”

Blackmon confirmed his representation of Boston in an email about 30 minutes later.

“This will also confirm our settlement of the matter wherein we agreed to $175,000 in compensation with a waiver of future rents at the current location and application of the rental deposit as credit towards any past due amounts,” Blackmon wrote.

Just after 6 pm, Carruthers notified Blackmon the deal was on, with one caveat.

“Council has directed the Manager accept this offer of settlement with one modification,’ Carruthers wrote. “The community foundation must fund 85k of the 175k payment to your client, we anticipate confirmation soon from the community foundation.”

In an interview this week, Sanders confirmed that, after Boston rejected the CFGG’s initial offer of $81,000, the money was taken off the table for a period of time. The initial offer from the private sector had been structured along standard business practices, and would have compensated Boston for his up fit expenses at the current location, and for the higher rents at a new location.

“It kept him whole,” Sanders said of the first offer. ” He wouldn’t have lost money from that location.”

The private sector money was limited in scope and would only have reimbursed Boston for his actual damages.

Sanders said the private sector offer was made with the clear indication that if it was turned down it wouldn’t be reconsidered.

The back and forth negotiations between the parties are not outlined in the documents received, but Sanders said that after numerous conversations with City Manager Jim Westmoreland, he agreed that it was best for the project for the private sector money to go back into the settlement offer.

Sanders said his primary hurdle was getting the approval necessary to offer the money a second time.

“The community foundation never said no to the city,” Sanders said. “We said it would take some time for us to do that.”

City finance records show that the check was cut for Boston on April 11.

The final agreement was signed on April 14. The agreement gives Boston 60 days to vacate the location at 125 Summit Ave. !