Home Real Estate The Factory, St. Pete at risk of foreclosure, but it remains open

The Factory, St. Pete at risk of foreclosure, but it remains open

by Ozva Admin

Trouble has been brewing at The Factory, St. Pete for a few months now. In September, a post appeared on social media accounts belonging to the “creative hub” saying it was closing. The Factory quickly removed the post and issued a statement saying the first post was a mistake and the result of a miscommunication.

Related: The Factory, St. Pete isn’t closing after all.

On Monday, co-owner Kara Behar released a statement notifying the media that the Dimmitts had filed a foreclosure action on the property. Behar said Liz Dimmitt, co-owner of The Factory and CEO of its primary tenant, Fairgrounds St. Pete, “secretly purchased the first mortgage on the property from Bank OZK rather than extend the bank loan for another year.”

When contacted by email, Dimmitt said that she is not personally involved in filing on behalf of the Lawrence H. Dimmitt, III Revocable Trust. She referred the Tampa Bay Times to attorney Gerald Davis of Trenam Law, who provided a copy of the foreclosure lawsuit filed by Dimmitt Trust on Nov. 3. The lawsuit is against Guru & Gaia, LLC, The Factory St. Pete, LLC; Kara Behar; Jordan Behar and five other defendants.

Guru & Gaia is the Behar limited liability company that owns The Factory property. Dimmitt is co-administrator of the entity.

As of now, The Factory, St. Pete remains open and operating as usual.

The lawsuit’s action summary says that in 2018, Guru & Gaia entered into a $3.15 million mortgage agreement with Bank OZK. It says that in 2022, the loan went into default and was purchased by the Dimmitt Trust “to relieve financial pressure on The Factory.”

It also says that in 2021, the Dimmitt Trust provided a $5 million loan to Guru & Gaia for improvements to the property, which Behar confirmed, and that the Dimmitt Trust has been the main provider of financing for The Factory.

According to the lawsuit, Guru & Gaia is now in default on the loans and Dimmitt Trust has requested repayment of the loans. In the absence of payment, the trust is “seeking the court’s assistance in protecting its position in The Factory and ensuring payment of what is due.” He says The Factory’s management has been unable to meet its financial obligations and has not responded.

The lawsuit seeks to recover damages and “appoint a trustee to oversee the Property.”

The summary ends with: “Dimmitt Trust provided primary funding for The Factory to support the arts community in St. Petersburg. It is the Dimmitt Trust’s intent that The Factory will continue to support local arts and community accommodation, and anticipates that existing lease agreements with current tenants will continue to be honored.”

In her statement, Behar said the foreclosures are an attempt to force her and her husband, Jordan, out of the ownership group and “avoid significant debt from the struggling Fairgrounds.”

When contacted by phone, Behar said there is a small amount left on the first loan, which she and her husband can repay. She said that a check she sent to Dimmitt Trust for the mortgage payment in October was returned by the trust.

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Behar said in his initial statement that the Dimmitts failed to meet their financial obligations to the property or pay for the construction of the Fairgrounds, which she alleges created financial hardship for The Factory and resulted in liens that broke the terms of the mortgage, allowing foreclosure.

He mentioned that Fairgrounds received $100,000 from the South St. Petersburg Community Redevelopment Area fund in 2019 and a $3 million investment from Jeff and Penny Vinik in 2020.

In an emailed statement, Dimmitt said Behar’s claims about her and Fairgrounds St. Pete are “wildly inaccurate.” She said that there are no liens on The Factory as a result of Fairgrounds. According to the lawsuit, there are liens on the property related to the construction and that “under the terms of these loans, Dimmitt Trust will be in the primary position to receive payment.”

“I plan to continue operating Fairgrounds St. Pete,” Dimmitt wrote. “As co-director of Guru & Gaia…I look forward to working with the Behars to bring this dispute to an amicable conclusion. As the largest tenant of The Factory, I am deeply invested in its success and mission to build and support the arts community in St. Petersburg.”

Behar said they are fighting foreclosure with a new legal team and working with a new investor, Metro Development Group. She said they are looking for a “fair resolution that keeps The Factory moving forward with its cultural goals.”

“I’m so disappointed that they didn’t handle it amicably and brought it out publicly,” Behar said.

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