Mahogany's landlord files eviction notice - Cincinnati News, FOX19-WXIX TV

Mahogany's landlord files eviction notice

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The state closed the restaurant from Aug. 26 to 29 due to unpaid sales tax. (Photo: FOX19 NOW) The state closed the restaurant from Aug. 26 to 29 due to unpaid sales tax. (Photo: FOX19 NOW)
Mahogany's owner Liz Rogers stands outside of the restaurant during an interview with FOX19 NOW earlier this summer. (Photo: FOX19 NOW/Jody Barr) Mahogany's owner Liz Rogers stands outside of the restaurant during an interview with FOX19 NOW earlier this summer. (Photo: FOX19 NOW/Jody Barr)
CINCINNATI, OH (FOX19) -

The downtown Cincinnati restaurant that used nearly $1 million in tax payer loans and grants to open in 2012 is days away from closing its doors.

A letter sent Sept. 2 to the city from landlord NIC Riverbanks One, LLC. said it "will not accept future rent from Mahogany's and will return any payment electronically deposited."

The total rent, taxes and fees owed to NIC Riverbanks One, LLC is $22,620.98.

The letter was sent to Cincinnati Trade and Development Interim Director Jeff McElravy, interim city manager Scott Stiles and city solicitor Markiea Carter. It was sent from Tracy Schwegmann, the agent for the owner of the property.

The letter shows Liz Rogers, Mahogany's owner, failed to pay rent on Sept. 2. This is the fifth default on the lease with The Banks, according to the letter.

READ: Mahogany's eviction notice to City of Cincinnati

The reason the landlord plans to terminate the lease is over a violation of the terms that require Rogers to open under business hours spelled out in the lease agreement.

Since the state closed the restaurant last week, the landlord found Rogers in default after the business was closed between August 26 and 29.

Rogers has been in default on the lease for the restaurant over the last year, Schwegmann wrote. Rogers told the landlord in August "that money was going to be deposited, but payment never materialized," according to the letter.

Rogers also "failed to communicate with landlord regarding its intentions, plans, and ability to make its future or past payment obligations under the lease," the letter states.

"Mahogany's has been in default of its Lease obligations many more months than it has been in compliance," Schwegmann wrote, "Landlord has worked diligently with Mahogany's, concerned citizens, and the City of Cincinnati to do everything reasonably possible to make this Lease a success, but the time has come to turn the page on this matter."

The city has 10 days to pay the $22,620.89 owed to the landlord, but the landlord will not allow the Rogers to return to operate the business, the letter shows. The city has not responded to NIC Riverbanks One, LLC on whether the city plans to pay Rogers' past due rent.

Rogers' attorney Rob Croskery issued a statement claiming the eviction notice contains numerous misstatements, including saying the lease was not breached by failing to pay last month's rent.

"In spite of enormous, damaging, adverse publicity, the rent was paid, last month, in full. There are some other charges that are in dispute, and some inflated late charges with which we disagree," Croskery said.

Read the entire statement from Rogers' attorney here.

FOX19 emailed McElravy asking for the city's plans. McElravy has not responded to that request as of this report.

On August 28, we reported Rogers was $35,000 past due on the loan from the city. Mahogany's at The Banks was closed last week after state revenuers temporarily stripped the restaurant's vendor permit for unpaid sales taxes.

Related: FOX19 Investigates: Mahogany's behind in city loan payments

The Ohio Tax Commissioner's office posted a public notice on the door of the Freedom Way restaurant Tuesday, one week after filing liens in the Hamilton County courthouse. Court records show Mahogany's owners owe $39,183.94 in unpaid state sales taxes. Rogers paid that balance off less than a week ago.

In an interview with McElravy last week, he would not tell FOX19 how much longer the city intended to allow Rogers to remain in default on the loan or whether the city planned to hold Rogers to the term of the loan agreement.

MAHOGANY'S LOAN TROUBLE

In February and March of 2012, the city of Cincinnati awarded Mahogany's owner Liz Rogers a $674,000 grant to open her soul food restaurant at The Banks development. Rogers was to use the grant to pay for the design and construction of the restaurant. The city used $300,000 more tax dollars to lend Rogers so she could purchase furniture, fixtures and equipment. The city allowed Rogers to use $115,000 of the loan for "working capital."

Rogers' monthly payment is $3,073.13 and is due on the first of every month.

The city granted Rogers a deferment for the balance of 2012, requiring her to begin making payments on the $300,000 loan in January of 2013. City records show Rogers paid monthly until she missed her first payment in August 2013. In September of that year, Rogers made up the August payment and kept her loan current through October 2013.

City records show Rogers did not pay anything in November or December. Rogers didn't make a payment until Jan. 15, 2014 when she sent the city a $500 check.

Rogers ran into trouble with her landlord at The Banks when she got a fourth notice of default on her lease for the restaurant. The notice was sent to the city from the landlord, informing the city Rogers had a few days to pay $26,425 in back rent before she would be evicted. Rogers paid the entire $26,425 to the landlord on March 3, 2014, city records show.

FOX19 could not obtain payment records from the city for the months of February, March, April, May, July or August. We do have an email from the city manager's office showing Rogers made a $1,000 payment on her loan on June 23, 2014.

The city's interim director of Trade and Development, Jeff McElravy, told FOX19 following an interview Wednesday that he would supply the payment information on the Mahogany's loan if we emailed him requesting it. As of this report, McElravy has not responded to our email request for the months outlined above.

Rogers declined an on camera interview with FOX19 regarding this report, but did talk with us over the phone. Rogers blamed her delinquency on what she called "media attacks" on her loan troubles over the last year, as well as, winter weather that kept customers away from The Banks.

Rogers told FOX19 she would be meeting with the city next week "to get my (Rogers) situation resolved." "My loan was not done fair," Rogers said. There could be a plan to pay the loan off, Rogers said, as she's lined up "investors" to help her pay the $300,000 loan off. That's something Rogers said would happen in July, but has not happened as of this report.

CITY FAILING TO UPHOLD LOAN TERMS

The loan agreement between the city of Cincinnati and Mahogany's owner Liz Rogers required Rogers to make on time monthly payments. City's finance records show Rogers hasn't made an on time payment in the last 10 months. FOX19 spoke with Rogers by phone Tuesday when she told us she'd put her August payment in the mail that day—the payment was $500 and was 25 days late at that point.

The agreements the city and Rogers entered into allow the city to go after the $684,000 grant if Rogers defaults on the loan. Although the loan is 10 months in default, the city has never formally notified Rogers of the default, which technically means she hasn't defaulted on the loan. By not holding Rogers in default, the city can get away from going after the grant, which went to pay for design and construction of Mahogany's.

"Why has the city not enforced the terms of the agreement," FOX19 reporter Jody Barr asked Trade and Development's McElravy. "Our goal is to have a thriving collection of restaurants down at the Banks. And, that's part of why we did the loan in the first place and if it were to work out that there isn't a viable path forward, then we'd have to reevaluate where we are," McElravy said.

McElravy said the city's position is to allow Rogers to catch the loan up instead of enforcing the terms of the loan agreement, which would essentially shut Mahogany's doors.

"At what point does the city go, enough is enough," Barr asked, "That's going to be a judgment call," McElravy said. "That is going to depend on the current situation and I think it's premature to speculate as to when that point may come," McElravy told FOX19.

This isn't the first time the city of Cincinnati's failed in the loan business. A FOX19 investigation in July found of the 59 currently active city business loans, 27 are past due. That past due amount to just under $1 million. Our analysis of city loan records also found since 2005, the city's forgiven 38 business loans totaling $13.5 million tax payer dollars.

"Is it fair to tax payers to use their money this way," Barr asked. "I think it's fair to tax payers to try to do the best we can to ensure that it's a; The Banks and the tenants at The Banks are operating viable, successful businesses," McElravy explained.

In July, Rogers told FOX19 she'd accept a loan forgiveness deal if the city would agree to one. It's an option Rogers told us she plans to present to the city next week.

"Have there been any discussions about extinguishing this loan," Barr asked McElravy. "No," the interim director of Trade and Development answered. "Is that an option," Barr asked, "In a wide range of possibilities—theoretically—yes," McElravy said.

"Is anything short of full payment going to be accepted," Barr asked, "Our goal is to be fully repaid," McElravy said, "And we're going to continue to work toward that goal."

"This is a matter between Mahogany's and their landlord.  We are monitoring the situation and assessing our options," McElravy said on Thursday. 

Mahogany's remains open today and can remain open until the city responds to the Sept. 2 letter from the landlord, terminating the lease agreement.

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