The Factory faces foreclosure

Update (3:26 p.m.) – Statement from Liz Dimmitt: “I am the CEO/Co-Founder of Fairgrounds St. Pete which is a tenant of The Factory St. Pete and I plan to continue operating Fairgrounds St. Pete. There are no liens on The Factory as a result of Fairgrounds St. Pete and the other claims in the press release are untrue. As a co-manager of Guru & Gaia, the entity that owns The Factory property, I hope to work with the Behars to bring this dispute to an amicable conclusion. As the largest tenant at The Factory, I am deeply invested in its success and the mission of building and supporting the arts community in St. Petersburg.” 

Original story:

More controversy and uncertainty looms for The Factory St. Pete, as one half of its ownership group accuses the other of foreclosing on the property to “cut their losses.”

The Dimmitt family and Jordan and Kara Behar of Behar + Peteranecz Architecture jointly own The Factory, while Liz Dimmitt serves as CEO of Fairgrounds. The expansive facility houses Fairgrounds, a 12,000-foot immersive art experience, alongside Daddy Kool Records, several artist studios and a concert venue.

Kara Behar is now publicly airing her grievances with the other half of the ownership group. She claims Dimmitt surreptitiously acquired the property mortgage in September and subsequently filed a foreclosure action Nov. 3. In a Monday morning press release, Behar stated that the foreclosure is an attempt to force her out of the ownership group and avoid paying off “significant debt” accrued by the “struggling Fairgrounds.”

“It is so disappointing that the Dimmitts would file a foreclosure right before the holidays,” Behar told the Catalyst. “The Factory is home to over 28 artists and entrepreneurs. We will be fighting this, just on principle.”

Liz Dimmitt declined to comment for this story, and said in an email she “was not personally involved in the filing.” She referred the Catalyst to attorney Gerld Davis at Trenam Law.

According to the foreclosure complaint, dated Sept. 8 and filed last week, the plaintiff is Lawrence H. Dimmitt III, serving as the trustee for Dimmitt Trust. Lawrence H. Dimmitt III is Liz Dimmitt’s father.

The complaint states that Guru & Gaia, LLC, The Factory’s owner, entered into a $3.15 million mortgage agreement with Bank OZK in 2018. It also named The Factory, LLC, the Behars, and several other companies, defendants.

According to the document, Guru & Gaia defaulted on the loan this year, and the Dimmitt Trust purchased it “to relieve financial pressure on The Factory.”

Furthermore, it states that the Dimmitt Trust entered into a $5 million loan with Guru & Gaia for property improvements and served as the primary financing provider for The Factory. The complaint alleges that Guru & Gaia also defaulted on that loan.

“The Dimmitt Trust has requested payment of these loans, and in the absence of payment, is seeking the aid of the court to protect its position in The Factory and to secure payment of what is owed,” read the complaint. “This unfortunate step was necessary because current management of The Factory has been unable to meet … financial obligations and has been unresponsive.”

This mural by Chad Mize is part of Fairgrounds’ entrance. Photo: Bob Croslin.

Behar explained that the mortgage through Bank OZK was nearing its term in September. She said the bank told her the Dimmitts exercised an inter-creditor agreement to purchase the mortgage before she could secure the one-year extension it offered.

Behar said she also attempted to buy that mortgage, but the Dimmitts had first rights due to a separate construction loan. “Otherwise, we would have bought it,” added Behar.

The Dimmitts, noted Behar, can foreclose due to the liens against the property.

“And we have liens on the property – in a large part – because of Fairgrounds not paying their tradesmen,” said Behar. “We have a million-dollar lien for construction, and we have a dispute with Fairgrounds to pay their portion of construction.”

According to Behar, Fairgrounds is responsible for nearly $900,000 of the $1 million lien.

The foreclosure complaint acknowledges the disputed construction loans and states that “per the terms of these loans, the Dimmitt Trust will be in the primary position to receive payment.”

The Dimmitts and Behars bought the former Madico Window Films facility, which encompasses 91,000 square feet, in 2019. That spring, the City of St. Petersburg awarded Fairgrounds a $100,000 South St. Pete Community Redevelopment Area (CRA) grant.

Later that year, Tampa Bay Lightning owner and philanthropists Jeff and Penny Vinik invested $3 million into Fairgrounds. Behar blamed financial mismanagement for its owner’s failing to honor their financial obligations despite the funding.

In the press release, she stated that the “unpaid debt has created significant financial hardship for The Factory, leading to the current situation.”

“They (the Dimmitts) want to sell it on the open market,” said Behar. “We want an investor, and we brought two forward before – and now we’ve got a third.”

Behar relayed that the Dimmitts “didn’t like the numbers” presented by the first two investors and said the latest, Metro Development Group, is “very invested” in The Factory and known for building communities. She said they would make a long-term commitment to the facility.

The community arts destination, insisted Behar, is an ongoing project and not a “flip.” She believes the Dimmitts are unwilling to continue investing their time and money into The Factory.

“The Dimmitts want to sell the property and cut their losses,” read the release. “This is an underhanded move to take our investment of time, energy and money as a means to fund the struggling Fairgrounds and an unwillingness to invest in the success of the entire property.”

However, the complaint states that the Dimmitt Trust and family hope the group can reach an amicable resolution. It also relayed the continued dedication to The Factory’s success and said the Trust plans to honor existing lease agreements with current tenants.

Behar said she would continue working to grow The Factory as it welcomes new tenants and expands its programming, even if that means putting more money into the project to ensure its success.

“Lawyer bills are not cheap,” she said. “Which is why people usually try and manage things directly through open communication. And that, unfortunately, is not happening.”

Read the full foreclosure complaint here.

This is a developing story, and will be updated as events warrant.