City officials mulling options on Mahogany's at The Banks

Owner: I am being singled out

CINCINNATI -- City officials were given a range of options Thursday from their attorney for recouping Cincinnati's nearly $1 million investment in a financially troubled riverfront restaurant.

The options range from helping Mahogany’s at The Banks pay its past due rent and letting it continue operating to finding another tenant for the site.

WCPO obtained a copy of a confidential memo that outlined the options. The Feb. 27 document, written by City Solicitor Terrance Nestor, was given to the mayor and city council.

“The city can take a number of actions under its agreements, including curing defaults,” Nestor wrote.

“In all events, the city can hold Mahogany’s liable for all costs and damages suffered by the city as a result of its default under the funding agreements,” the memo added.

Mahogany’s is potentially facing eviction by March 2, and also has a loan payment due to the city on March 1. It’s unlikely, however, that any legal action would be taken over a weekend.

Liz Rogers, Mahogany's owner, said Friday night she is making payment arrangements to get caught up on her rent and loan payments. Despite the memo listing it as an option, Rogers doesn't want any further financial assistance from the city, she added.

"We're not interested in that," Rogers said. "We're working to get it up-to-date ourselves. We appreciate the help we've been given so far."

Managers of The Banks riverfront development project have threatened eviction because the eatery is $50,658 behind on its rent and other lease fees. The amount increases to about $600,000 on March 1.

Also, the state of Ohio secured judgment liens in December against Mahogany’s. The judgments indicated the restaurant was more than $22,000 behind on sales tax payments and workers compensation premiums.

Additionally, Mahogany’s is $14,611 delinquent in loan payments to the city of Cincinnati. The amount increases to $17,684 on March 1.

Because Rogers is in negotiations with the site’s property management firm, Jeffrey R. Anderson Real Estate, the city won’t take any immediate action, said Interim City Manager Scott Stiles.

“As the tenant and landlord are still in active discussions, the city will await the resolution of their agreements before asserting any options we may have,” Stiles said.

Rogers said she is being unfairly singled out by some politicians and the media.

Other restaurants in The Banks district also are struggling, Rogers said. Those eateries have more resources to fall back on because they are corporate-owned, while she is a small business owner.

"This is the worst winter in 35 years and business is off," Rogers said. "I'm just trying to do business. I'm a small business owner and business owners have debt. There are some unrealistic expectations."

She added, "There are other restaurants down here that are bigger and having rent trouble, but you don't hear about them. I do feel singled out. I have tried to make payment arrangements with my creditors."

WCPO hasn't found any current legal proceedings against other Banks restaurants, but there have been in the past.

In February 2013, Toby Keith’s I Love This Bar & Grill was sued for not paying its rent. At the time, the suit alleged Toby Keith’s hadn't paid rent since November 2012. The matter was settled in a private agreement in August 2013.

Carter Dawson, developers of The Banks, got a $5.5 million loan from Cincinnati and Hamilton County several years ago to help pay for customizing some tenant spaces. The loan was never in default.

The owner of another eatery, Johnny Rockets, has said there's little business in The Banks district unless an event is being held at a nearby stadium or arena.

The city’s loan was part of a controversial financing package to help the restaurant open at The Banks in 2012. The package consisted of a $300,000 loan and a $684,000 grant.

The grant was given to pay for furniture, fixtures and equipment, as well as create a $115,000 working capital fund.

The loan has a 10-year term, payable monthly, with interest fixed at 4.25 percent.

Then-Mayor Mark Mallory pushed for the deal in March 2012, and Cincinnati City Council approved the financial incentives in a 6-3 vote.

Voting to OK the deal were Laure Quinlivan, Yvette Simpson, P.G. Sittenfeld, Cecil Thomas, Charlie Winburn and Wendell Young.

Opposed were Roxanne Qualls, Chris Seelbach and Christopher Smitherman.

Critics questioned whether the city of Cincinnati should approve taxpayer subsidies while Rogers owed back taxes from a restaurant in Hamilton. That location has since closed.

The city solicitor’s memo outlines several possible options about what actions the city may take. They are:

  • The city can demand immediate repayment of the loan and grant from Mahogany’s and its guarantors;
  • The city can chose to “cure” Mahogany’s default under its lease by March 2, to prevent the lease’s termination. The city could then either permit Mahogany’s to continue operating or find a new tenant to take over the restaurant;
  • The city can chose not to
    • “cure” Mahogany’s default under its lease and allow the landlord to terminate. The city then could begin foreclosing on its security interest, and sale the furniture, fixtures and equipment; or
    • The city can foreclose its mortgage and security interest in the furniture, fixtures and equipment at the closed Hamilton eatery. But the city is in second position on the mortgage, and it’s unclear whether it would receive any money.

    As collateral for the loan and grant, the city has a personal guaranty from Liz Rogers and her husband, Trent.

    Other collateral includes a leasehold mortgage on The Banks site; a security interest in the furniture and equipment there; and a second mortgage and security interest in the Hamilton restaurant.

    Further, the city is named as a beneficiary under the restaurant owners’ life insurance policies, up to the balance of the loan.

    Before City Council approved the deal in 2012, the African American Chamber of Commerce of Greater Cincinnati and Northern Kentucky lobbied on Rogers’ behalf.

    “Business owners Liz and Trent Rogers were invited to explore expanding their successful business from Hamilton, Ohio, into the city of Cincinnati,” Chamber President Sean Rugless wrote to City Council.

    His letter continued, “In light of recent events that are working to derail this long awaited effort, it should be known that we, and members of our business community, stand firm in our commitment to Liz, Trent and their team, and we pledge our continued support of their efforts.”

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