Nonprofit's Mount Airy venture fizzles

When the Ogontz Avenue Revitalization Corp., a tax-exempt, taxpayer-supported nonprofit group, bought a Mount Airy nightclub in March, the goal was to provide an economic boost to Northwest Philadelphia, according to its president.

So far, however, the only benefits seem to have gone to the club's former owners, a collection of prominent partners with past and present ties to the nonprofit group and its founder, State Rep. Dwight Evans (D., Phila.).

The partners, who include Convention Center president Ahmeenah Young, unloaded a struggling business that had run up $400,000 in debt, including $169,000 in back city taxes.

For its end of the bargain, the Ogontz Avenue Revitalization Corp. (OARC) now owns a shuttered club, bar, and restaurant called North by Northwest and is embroiled in a legal dispute with its landlord.

The business, by OARC's own estimation, has lost $160,000 since the purchase. The organization's total cost amounts to more than $760,000. Jack Kitchen, OARC's president and chief executive officer, says that at this point he has no intention of reopening the business, on Germantown Avenue near Mount Airy Avenue.

Nothing prevents nonprofit organizations from involving themselves in for-profit ventures.

Although Kitchen defends the acquisition, it seems a rare misstep for the ambitious community-development corporation, which has earned a reputation for success and effectiveness since it was launched in 1983 to revitalize West Oak Lane.

The deal also stands out for the tangled relationships of many of the participants. Players in this drama have such interwoven histories it is difficult to determine where their independence from one another and Evans begins and ends.

Evans, for instance, created OARC. Though he does not have a formal tie to the nonprofit group now, OARC counts on his continued patronage to secure state grants. Since 2000, it has received $23 million in state funding.

OARC's fealty in return was on display last year when it established the Dwight Evans Leadership Award.

Among the first honorees? Young, who once worked for OARC and who is widely viewed as a protege of Evans'.

Evans was one of Young's chief boosters when she was named to lead the Convention Center, a job that paid $245,000 in 2008. As president and CEO of the center, she supervises the region's premier convention facility. She is also overseeing its $700 million expansion, a project funded, in part, by Evans' efforts.

Not long after Young received the Evans award, OARC paid $47,000 to settle unpaid rent on her club. The money was ultimately part of the final purchase price of the business.

Kitchen says there was no intrigue, only a desire by a savvy community-development organization to buy a property it saw as a good investment and one that could add to the cultural attractions of Northwest Philadelphia.

Who owned North by Northwest at the time was of little consequence, he said, as were any connections, real or imagined, with Evans.

"Did Dwight call me up and tell me to buy North by Northwest?" Kitchen asked rhetorically. "No."

Evans, asked his opinion of the purchase, said OARC had its own board of directors that made its own decisions.

"The bottom line is that they are trying to do community development and grow communities," he said. "And if they can help grow and develop communities, then I'm supportive."

OARC bought North by Northwest from a partnership whose principals were listed as Young; Rose Singley, wife of lawyer Carl Singley; and Ina Walker, chief executive officer of the New Media Technology Charter School, which over three years received about $500,000 in state money through OARC.

Carl Singley, in an interview, said he and fellow lawyer Hugh Clark, board president of the New Media school, also were investors. Singley said he and his wife had not been actively involved in North by Northwest for several years and directed questions to Young. Walker and Clark did not return calls.

Young, reached at home, declined to address questions about North by Northwest.

She said she was recovering from a broken foot and needed "to get back in the whirlpool."

"Thank you for letting me know what your story is about, but my primary concern right now is my foot," she said.

Even at first glance, OARC's buying North by Northwest is remarkable in a number of ways.

For one, a nightclub is not necessarily an obvious tool for a community-development corporation, which more typically devotes money to such activities as rehabbing housing or providing low-interest business loans in a targeted area.

For another, North by Northwest is beyond OARC's traditional turf - West Oak Lane - and part of a rebounding commercial strip that hardly seems a logical target for help from a distant patron.

Finally, as an investment property, North by Northwest would seem a questionable bet, given its record and OARC's own admission that the business cannot succeed with its existing parking.

Kitchen offers counters to all of those points.

OARC, for instance, has a history of engaging in nontraditional community-development projects. That includes owning a restaurant (Relish, in West Oak Lane) and running an annual jazz festival in West Oak Lane.

North by Northwest had not been successful, Kitchen agreed, but that was because it was poorly run. As for parking, Kitchen said he had been assured by his landlord that more could be made available. That claim is the subject of a suit OARC has brought against the landlord.

As for investing in a Mount Airy business, Kitchen says that fits with his mission to expand OARC's boundaries to include the entire Northwest corner of the city.

"I don't believe West Oak Lane and East Oak Lane can survive without a successful Chestnut Hill or Mount Airy, anymore than they can survive without us," Kitchen said. "I see an opportunity here to strengthen East and West Oak Lane, Nicetown, Mount Airy, and Chestnut Hill on the back of tourism."

He gets no complaints from Ken Weinstein, owner of the Trolley Car Diner and chairman of the Mount Airy Business Improvement District.

"I'm very glad OARC is coming into Mount Airy," he said. "Yes, it is a little strange when a nonprofit buys a restaurant, but OARC brings a lot of resources to the table and a can-do attitude."

Indeed, OARC has significant resources.

The nonprofit group has grown to include 10 subsidiary operations, including the West Oak Lane Charter School and several for-profit management companies that oversee OARC's real estate holdings. According to OARC, those various entities have operating budgets of $25 million and development projects valued at more than $24 million.

Kitchen said OARC had substantial income from its real estate operations.

Under Kitchen, OARC has teamed up with groups throughout the Northwest, to do such things as tree plantings along Germantown Avenue into Chestnut Hill and to promote historic sites throughout Germantown.

OARC's efforts have won praise from its partners.

"In terms of urban revitalization, they are doing a heck of job," said Gerald Kaufman, executive director of Awbury Arboretum in East Mount Airy. "Jack has a vision that goes beyond the reach of normal folks."

It is that vision that Kitchen says led him to North by Northwest.

He said he had been interested in the club for about two years. He said he saw it as a natural extension of OARC's effort to use live music as a regional tourism draw.

"North by Northwest has a professional stage area," he said. "We have been trying to find ways to produce weekly ticketed shows in West Oak Lane or within our bailiwick of enterprises. This fits the bill."

Late last year, before OARC bought the club, it paid $47,843.07 to the restaurant's landlord, David Fellner, to settle back rent owed by Young and her partners.

Kitchen, in explaining the payment, said OARC was actively negotiating to buy North by Northwest when Fellner took the partnership to court over the back rent.

"He had them over a barrel and was going to put them out on the street," Kitchen said, "which would not have given me a business to buy."

He said the money was paid directly to Fellner as opposed to the partnership, because he wanted to be sure the money went to cover the debt.

Kitchen said the money represented a loan toward the ultimate purchase of the restaurant. He declined to make public the loan documents or terms.

OARC bought North by Northwest's name, assets, and liquor license in March. Kitchen said the full price was $402,446.22, which included the loan toward the rent and money to pay off a $185,103.15 loan the partnership originally used to buy the club, as well as $169,500 in back city taxes.

To run North by Northwest, Kitchen has brought in Benjamin and Robert Bynum, well-regarded club owners who developed Warmdaddy's and Zanzibar Blue.

The only thing standing in his way now, Kitchen said, is access to more parking. He acknowledged that even before buying North by Northwest it was clear it could not be successful as a music venue with its existing parking.

In pursuit of that, he is in a dispute with Fellner over a nearby lot that the landlord owns.

Efforts to negotiate a deal faltered, and OARC has sued, contending that Fellner reneged on an oral pledge to free up the lot.

"Absent the promised parking, the restaurant is a failure with no prospect of making a profit," OARC's suit contends. The business has lost $160,000 since the purchase as a result, according to the suit.

Fellner denies he committed to the parking.

The club suffered another setback last month when its drains backed up in a storm. According to Kitchen, raw sewage spilled into the club and has created an unsanitary situation.

In its suit against Fellner, OARC blames the problems on the landlord.

All in all, between the sale prices and money spent to upgrade North by Northwest, OARC has spent $608,966.87 on the business. With the loss of $160,000, North by Northwest has cost OARC $768,966.87, according to Kitchen.

On Thursday, the club was locked, darkened, and empty of all furnishings.

"Attention: Due to flooding North by Northwest will be closed until further notice," signs on its front window declared.

Kitchen said the closure was permanent.

"I'm not going to reopen," he said. "It is a hazard. I am not going to do it."