CINCINNATI -- Apparently avoiding another eviction deadline, Mahogany's on the Banks said Thursday it will remain open as it continues debt payment negotiations with its landlord.
Liz Rogers, owner of the troubled restaurant, had agreed to pay $37,000 to NIC Riverbanks by 5 p.m. Wednesday or be evicted at noon Thursday.
A statement from the restaurant Thursday morning said:
"Mahogany’s at the Banks will remain open past noon today. Mahogany’s is in continued discussions with NIC Riverbanks, community leaders, and key stakeholders to put in place a long-term solution that will allow Mahogany’s to thrive and grow.
"Many thanks to NIC Riverbanks for continuing to work with Mahogany’s and allowing us to remain open during this process so that we can continue to serve our customers," says Owner Liz Rogers. "We thank the community for their support and look forward to Opening Day and a bright future."
The city is not involved in the negotiations, has not offered to bail out Rogers, and has no plans to get involved, a city spokesperson said Thursday.
The Mahogany's issue came to a head two weeks ago when NIC ordered Rogers to cure her default in two scheduled payments. She made the first payment of $26,422.25 on March 3.
Mahogany's failed to make its demanded March 10 payment but NIC gave her another 48-hour extension, saying she "has continued to make a good faith effort."
NIC also gave the city the opportunity to cure the default, should the city wish to come to the rescue and protect its nearly $1 million investment in the restaurant.
Two weeks ago, the city solicitor gave city officials a range of options for recouping their investment, from helping Rogers pay her past due rent and letting her continue operating, to finding another tenant for the site.
But Rogers told WCPO she didn't want more help from the city.
Rogers blamed an $80,000 embezzlement by a financial manager and the harsh winter for the restaurant's troubles.
She told WCPO that business the past four months has been cut 60 percent by bad weather. She said the restaurant took in $1 million in its first year.
Rogers said she reported the embezzlement to police but she didn't talk about it publicly because it was her business to take care of. She would not name the person she accused.
NIC said Monday that it and Mahogany's "continue to work together in order to make a mutually agreeable arrangement whereby Mahogany's can cure the event of default and remain in the Premises."
But in a Feb. 28 letter to Rogers, NIC expressed skepticism.
"NIC understands that Mahogany's believes it can turn things around and that things will get better once the weather improves and baseball season begins," NIC wrote.
"However, Mahogany's payment delinquencies go back to September of 2013, when the weather was fine and the Cincinnati Reds were playing baseball at Great American Ball Park and in the hunt for the post-season."
NIC said Mahogany's "has a poor track record in complying with agreements."
NIC claimed that Rogers has issued three bad checks to NIC and the original developer, Carter Dawson, since last fall, when NIC bought the property. Mahogany's had not made good on those bad checks, NIC said.
After Rogers told NIC about the embezzlement last November, NIC said it agreed to allow Mahogany's to make weekly payments to catch up on past due amounts.
"That arrangement lasted three weeks," NIC said in the letter. "In less than a month after entering into an agreement with NIC to catch up on past due amounts, Mahogany's wrote NIC a second bad check."
Additionally, NIC told Mahogany's owners the site must be maintained in a safe manner.
"Recently, Mahogany's failed to clean its hood system, resulting in an unsafe situation," NIC's letter stated. "Mahogany's was asked many times to address its hood system and failed to do so until the situation became dire. Hood maintenance is very important in the food service industry as hood grease is a leading cause of fire."
Rogers said she reported the embezzlement to police but she didn't talk about it publicly because it was a personal matter. She would not name the person she accused.
"It's not anybody’s business unless they were going to give me $80,000," Rogers said.
"I dont blame it on one particular thing," she added. "When you're a new business, you cant afford to lose that kind of money. I just cant focus on that, I have to focus on staying in business, moving our company forward regardless of whatever obstacles we may have and this was an unfortunate situation."
Rogers said her business has had some growing pains.
"We're only a year-and-a-half old, so we're not going to do everything right," Rogers said. "We try, but we're not going to do everything right and with any small business you have peaks and valleys, and the most important thing to do is to learn from it."
WCPO obtained a copy of a confidential city solicitor's memo that outlined the city's options with Mahogany's. 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.
Rogers said she didn't want any further financial assistance from the city.
"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."
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 increased to $17,684 on March 1.
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.
READ MORE: Q&A with Banks developer
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 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.
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.
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.