Disqus

Wednesday, June 08, 2011

First AME Church "Sold" MLK Building

Yes, it's true.  

Within a week after First AME Church purchased the MLK, Jr. building from the district, they turned around and did a quit claim (for "10.00 cash in hand paid and other good and valuable consideration, conveys and quit claims") to - wait for it - the MLK Family Arts Mentoring Enrichment Community Center (MLK FAME CC).  So FAME sold to FAME.  

According to the Washington Secretary of State, FAME CC was incorporated as a non-profit on 1/25/11.  The agent name is "National Registered Agents, Inc." which is a national registry group.  The address is in Tumwater.

What's interesting is if you Google "MLK Family Arts Mentoring Enrichment Community Center", it pulls up a new business listing for a group in Tumwater that handles auto sales and repair.  Very strange.  It has the same address as the address for the incorporation. 

Okay, let me first say that the MLK building sale has been troubling from the start.  I was told recently that actually right after the building closed in 2007, the Bush School had made an offer to the district that the district was considering.  What happened to that offer, I'm not sure.  I'll have to check with Mr. English.  

First AME also printed a "statement of facts" at their website.   They don't mention the sale of the building to another entity.

In March 2011, when this came up on the radar again, I missed this comment entirely which should have tipped me off:

How's this for a quick swap-a-rooney on the MLK property. FAME has already filed a quit claim on the property and passed it to the possession of, get this, the MLK Family Arts Mentoring Enrichment Community Center". Ron English signed the the Statutory Warantee Deed on 2/14/2011 (Recording # 20110217001529), and Reverend Carey G. Anderson signed the Quit Claim Deed on 2/17/2011 (recording # 20110218000653) with MLK FAMECC as the Grantee. Hmmm...Just as I typed the acronym I realized FAME...FAME. MLKFAME has a non-profit corporation filing date of 1/25/2011 according to the Secretary of State web site.

So some smart cookie out there had looked this up.  I didn't.  The Seattle Times didn't.  
To answer the question of undoing the sale, I'd say I guess not. 

So the question is, who really owns the MLK, Jr. Building and what are they going to do with it?

38 comments:

Anonymous said...

So does that mean all of the terms and conditions of the agreement with SPS are now null and void? Any lawyers out there who can decipher this? I can say that Ron English seems hip-deep in this crap now.....

-WTH?

TechyMom said...

My kid brought home a flyer in kid mail for a summer program at FAME MLK. It is a very low-cost program at $150 a week for 7am to 6pm, including breakfast, lunch and snack. This is supposed to start June 22, but the building really doesn't look ready (boards on some windows, overgrown grass, etc.).

Anyone else at Lowell or nearby schools get this flyer?

The Real Arnold said...

@WTH: what does Ron English have to do with the quit claim? I looked this up and the deed he signed was from the district to fame. The other item, the quit claim, doesn't have his signature at all. So how can you legitimately pin that on him? Sounds more like fame planned all along to transfer the property. Very sneaky.

RosieReader said...

This is not at all sneaky. Happens all the time. Moving property into a subsidiary is a way to limit liability to that subsidiary for anything that happens in the future to that subsidiary. Sometimes you move it to change the nature of the corporate form that owns the property -- from a C Corp to an LLC or something like that. Those moves generally happen for tax reasons.

The only reason that this might pose a problem is that sometimes a future "good faith purchaser for value" can keep the property even if an earlier transaction involving the property was dodgy. I think, however, that this rule does not apply with the entities are related.

Anyone out there with a bit more property law knowledge feel free to correct me.

someone said...

Rosie's right - the transfer to a different type of corporation isn't terribly unusual. And probably tax-related in this instance. You'd have to buy the incorporation docs from the Sect. of State to see who is behind this new entity, but I suspect there isn't any smoking gun here - that its an offshoot of the church designed to limit their liability. What it means for the original contract is another story. There was a clause in one of the docs about how Seattle DPD required a certain percentage of the bldg to be occupied by X date or else the entire facility had to be retrofitted to code. Wonder if that happened?

Maureen said...

Moving property into a subsidiary is a way to limit liability to that subsidiary for anything that happens in the future to that subsidiary.

So Rosie, would you say that means if SPS wants to recover damages because the property is not being used as contracted (>50% programs for youth or whatever), then they would be limited to whatever assets MLKFAME has and couldn't recover from First AME?

Melissa Westbrook said...

Who said anything about a smoking gun? I'm just reporting what happened to the property. That it was done soon after the original sale and not much has been done to start up the youth programs promised seems troubling.

Dorothy Neville said...

King County website shows a remodeling permit but I do not know how to interpret the permit. What does it mean for a permit to be closed?

Anonymous said...

A closed permit means that DPD was satisfied with the question at hand - in this case, this was for a new certificate of occupancy to allow the change in use from a public school to a community center.

-- a reader--

Anonymous said...

Disclaimer: Not legal advice. Armchair opinions only. If you need a lawyer, hire one.

Folks, don't panic. Rosie's right about transferring to subs, LLC's, etc. The main purpose is not only to limit liability, but to detach it from the principal in tort or contract context, for acts occurring after the transfer. It won't limit actions for fraud, etc., against the principal, which could result in the undoing of transfers, including purchases & transfers amongst "insiders." The legal term of art that may "clean" the title, making recovery of property unavailable, would be if a "Good Faith Purchaser for Value," having no knowledge of any hanky-panky, laid out a fair market-price amount to acquire the property. That didn't happen here. Not by several million longshots. If the "title" wasn't "clean" and was "clouded" by defects upon transfer, the transfer can be rescinded by the courts.

But I think the primary purpose is not to limit liability, but to separate the activities of a church from non-church activities to preserve AME's tax exempt status from scrutiny, by laundering the title.

From the get-go, this deal stank as an unconstitutional gift of public assets (the school property) and funds (state tax dollars) to a church, violating separations of church and state and giving taxpayer funds to a private, non tax-paying entity.

This was likely done post hoc in order to keep the church's tax exempt status intact and free from questions about intermingling church purposes and assets with non-church related (i.e. taxable) activities. The intended effect might be to quiet critics of under-the-table handouts to churches or "faith-based" organizations by fixing it so they can say it wasn't a gift to a church, but to a separate non-church-related community center. (Don't laugh. Attorneys have made these arguments with a straight face many times, and prevailed.)

But I think this is a lot more about keeping church and state separate by spraying perfume on the pig.

If the entity was created after AME closed on the property, and it was out of the district's or English's hands, which appears to be the case, then this is a classic insider or successor case, in which case the attempt to "launder" the title might not succeed.

WSEADAWG

mirmac1 said...

Sounds like another RSBDP to me. FAME to FAME CC. By the time the alterations completed under the permit were approved FAME was no longer owner of the property. It applied for the permit five days before signing it away.

Based on the draft sales agreement posted on the district's website, FAME was on the hook for 40 years.

THIS RESTRICTIVE COVENANT AGREEMENT (the “Agreement”) is made this ____ day of ___________________, 201__ (the “Effective Date”) by and between the Seattle School District Number 1, of King County, Washington (“Grantee”), and First African Methodist Episcopal Church [GRANTOR MAY BE A SEPARATE ENTITY], a Washington nonprofit corporation (“Grantor”)....

a. Entire Agreement - No Oral Modifications. This Agreement and the exhibits to this Agreement constitute the final and complete agreement, and supersede all prior correspondence, memoranda or agreements between the parties relating to the subject matter hereof. This Agreement cannot be changed or modified other than by a written agreement executed by both parties.
b. Successors Bound. Subject to the restrictions on assignment contained in Section 20(c), the provisions of this Agreement shall extend to, bind and inure to the benefit of the parties to this Agreement and their respective personal representatives, heirs, successors, and assigns.

Anonymous said...
This comment has been removed by a blog administrator.
Michael H said...

mirmac1: You conveniently keep referring to a DRAFT agreement. Why aren't you quoting from a FINAL agreement?

mirmac1 said...

Michael H.,

Uh, well that's what's posted on the SPS website. Why, do you got one? Do share. I would guess SPS has one they could put up for all to see.

It would appear SPS would have to agree to any assignment to FAME CC. So, Real Arnold, Ron Enlish can answer these questions.

SPSLeaks said...

Here is the Quit Claim Deed

SPSLeaks said...

Yeah c'mon mirmac1, get with the program...

MLK Restrictive Covenant

Melissa Westbrook said...

From Peter Maier:

"There is a Covenant, recorded and running with the land, that binds any owner of the property to the terms that First AME agreed. This is a fairly common method used in real estate transactions to ensure purchaser's promises are enforceable against any party who may acquire the property in the future."

Michael DeBell:
"The Covenant Document with all of the District's requirements for community use and access is attached to the deed. According to Ron English and my own experience, those requirements are enforceable for the 40 year life of the Covenants regardless of a change in ownership. I learned of the sale yesterday, it would appear to be an internal transaction within the FAME organization. We will enforce the terms of sale regardless."

This is great. But here's what Ron English said in the Times' article:

"The sales agreement requires the owner to use half the property to support youth education for 40 years or risk financial penalties. English said the district does not keep tabs on property owners, such as First AME, to see if they use the buildings as promised."

So who, Board members, will be the enforcer?

mirmac1 said...

WTH! FAME quit claimed to FAME CC the same day Ron English signed the Deed of Trust? I guess he CAN answer some questions.... I also think the notaries who signed and dated for the parties, days before the actual sale should also answer some questions.

I agree with Rosie. This is common however the similarity of the names are no accident and add to the confusion (deliberately?) The restrictive convenant still applies.

One more question for a real estate attorney: the quit claim deed has a legal description that does not include reference to binding covenants. It this deed still valid?

mirmac1 said...

Ron English, why go to the trouble writing a covenant which says "hey, we wouldn't be selling to you without these restrictions and want damages if you don't comply" and then look the other way? Why not mention this transfer to ST? You were aware because you signed the sale the same day they transferred the property. Being slippery or obtuse?

Anonymous said...

Thanks SPSLeaks for the document - interesting reading, especially under condition 2.b. of the restrictions which indicates that it is the "Grantee" which is responsible for making the gym, playground and classrooms available. Take a look at the cover of the document - Seattle School District #1 is the Grantee...Did Ron not proofread this document??

Oompah

mirmac1 said...

Doesn't make sense for a lawyer to screw up like this. Maybe Fred Stephens wrote the agreement.

But Grantee (wrong word, duh) is used appropriately throughout in representing SPS' position in the sale.

ArchStanton said...
This comment has been removed by the author.
Jan said...

someone else said:

Rosie and someone said are correct: there is nothing unusual or nefarious about the transfer to an LLC; it would not be unusual at all for the LLC to have a related name; and there is nothing suspicious in the timing (if they were doing their jobs, I would have expected a fairly quick move into an LLC, applications for remodeling, etc., etc. etc.

Here is how I think the District may have/should have protected itself:
If the document with the restrictions was recorded before the new transferee (who certainly had notice of everything anyway), the transferee took with notice of the use restrictions. (Whether they are binding on the new owner is a slightly different question, and one for an attorney who practices in the area.

The District should have required consent for transfer. IF they did, they should have required, as a condition for consent, that the LLC agree to be bound by all the conditions, and agree to be responsible (WITH the church, not instead of it) for the use provisions and the damage clauses.

The real issues here are NOT the transfer into the LLC (unless the District botched that by failing to create clear liability/responsibility trails to the LLC). The real problems are:
1. The terms of the original transfer;
2. The "set up" before the bidding, where the District, guided by Stephens, it seems, changed District policy to allow sales to low bidders who do nothing but "make promises" as to future use for youth education;
3. The conflicts of interest by having Stephens remain "involved" -- because he was English's supervisor, was getting copied on emails, etc.
4. Irregularities in the bid process, including reopening the process after Bush's original bid, allowing competitors to see, and copy, evidently, parts of other bidders' offers to "sweeten" their own, and the short shrift given to the CCC's objections, and
5. English's statement after the fact that the District had no intention to follow up on compliance with the conditions. In my opinion, that rendered that "consideration" illusory -- and may pitch this entire thing into the "unconstitutional gift" area. It doesn't really matter what the docs say, if the parties' intent all along was to sell free of any restrictions, because the District had no intent to enforce them. Was this the case? Who knows (maybe there is other indicia out there that the District WOULD have taken a look at the deal at year end, though I am certainly not convinced of that on the current facts), but I hope the SAO is tracking ALL this stuff down, and I hope the CCC is pursuing its remedies (Bush may have lost its rights, by not complaining soon enough -- who knows. In any case, they don't seem to relish the mudslinging that will come their way if they ask for a fair and transparent process.

mirmac1 said...

Jan,

A court of law will say the matter is moot. CCC's appeal was denied because it was not within the time frame in the bid documents.

I believe there is a documents out there that has Ron English's signature agreeing to the assignment to FAME CC. The latter now must abide by the 40 yr covenant requirement. Alternatively, it can sue the Title company under its title insurance I suppose, but I'm sure the title company would sue those parties that tried to withhold this information (by timing the sale to be coincident with the transfer).

English's statement regarding compliance is either incredibly stupid or disingenuous. That is a gift of public funds, to not collect what is due.

Michael H said...

@mirmac1: What is your belief based on?

mirmac1 said...

Provision 19 b. and c. Michael. The seller (grantor, or in this FU doc grantee) must provide prior written consent for the transfer or assignment of the agreement. The agreement, including the restrictive use covenant anticipates a "successor-in-interest".

Where's that final sales agreement? Can you pass it along if you have better information?

Michael H said...

@mirmac1: I didn't say that I had a final copy. I asked you if you had one.

And I don't think the covenant document is messed up since FAME is agreeing to the covenant, they would be the grantor.

Jan said...

Dang, mirmac. I hadn't realized that CCC had missed appeal deadlines. That is really too bad.

If there is a way, I would much rather see recission than damages. If there is not a way to unring the bell, we had darn well better see either compliance or damage payments!

Anonymous said...

mirmac1 - I believe the wording about transferring or assigning the agreement applies before it is agreed to. In some real estate transactions, one party may make the original offer and get most of the way through the deal, and then assign their rights in the agreement to another party (family member, for a fee, adding additional buyers to help with financing - etc.). It only applies to the agreement before it is a "done deal." After it's done, then the new owner can do whatever they want - as long as it meets any covenants that are traveling with the property. Hope this is helpful -

Not an attorney

Melissa Westbrook said...

"...CCC had missed appeal deadlines."

You sure this is true? I've never heard this before and I actually just went over the timeline with someone in a position to know and it wasn't mentioned. What seemed to be the issue is that both First AME and CCC did not satisfy the requirement of fully fleshing out their proposals.

Again, who is enforcing the covenant?

Also, latest update - the Times is refusing to allow English to listen to the audiotape of the interview.

Jan said...

Melissa: I had never heard about the late issue either. Maybe that one won't turn out to be the deal ender, because historically, the wronged "other bidders" have been viewed more sympathetically by courts than anyone else. It would be great if CCC still has the ability (and the desire) to pursue this.

Jan said...

If the issue turns out to be the "fleshing out of proposals," it seems to me that the CCC stuff was at LEAST as good as FAME's (actually, it seemed much better to me) -- but even if they were equally flawed, they can't give one a pass, if they don't give it to the other.

someone said...

There is a letter from Robert Westgaard, dated 9/24/2010 that discusses some of the timeframe for CCC@MLK to appeal - probably not the total answer, and only as it applied to appealing it with SPS

denial of appeal

mirmac1 said...

Well Michael H., you are full of questions for me, but you don't seem to have a whole lotta answers yourself. I refer to available documents on, either the SPS website (re: protest or "draft" agreement) or the KC recorder's site (recorded documents).

Real Estate lawyer, I know what a Grantor and Grantee is. Apparently whoever wrote the sales and covenant agreement did not. In the covenant agreement recorded with KC, the "grantee" is SPS(!?) and the "grantor" is FAME(?!) That's neither here nor there (unless they were shooting for a judge to say that this covenant is so FU that it's unenforceable. Is that what Ron English would want? He'd have to subordinate his humongous ego to do that).

Like I said MH, cough up better info before trying to make my suppositions look half-baked. At least I read the documents that are out there. I'd much rather have bonafide, transparent transactions out there for everyone to tout or slam.

Michael H said...

Well, mirmac1, I never claimed to have any of the answers. And, you are doing a good job on your own making your suppositions look half-baked. So, I don't have to "put up or shut up" as you would have me do. I know that you are not a lawyer (and neither am I), but I do know that your reading of the documents is fundamentally flawed. You are so bound and determined to find something to hang English that you have lost the ability to be objective. You would rather see him flying those black helicopters you always complain about than even for once consider that you might be wrong. English could very well be a rotten, cold-blooded crook (or maybe a Sith Lord), but what you have presented doesn't prove that one bit.

I think they should have gone for the money. As a taxpayer in this district it really angers me that the board chose to go with some meely-mouthed, politically-correct decision to sell the property for, essentially, "the children", or "the community.". Where have we heard "the community" before?? That's right, during the small works/business fiasco. But even if they had sold to Bush, it would have been one-time money. In the long run it really wouldn't have helped. And, I'm certain that there would have been an article in the Times or a post on this blog on the evils of selling to a "rich, white, private school," with the same calls for resignations or firings.

mirmac1 said...

What's the flaw Michael H.? And how is it Ron English's name keeps coming up in these matters? It must be a grand conspiracy against him. I'm personally swift-boating him with the Seattle Times. Or the UN is out to get him.

I'm sure he's glad you're out there to defend the rich and white.

Michael H said...

@mirmac1: "I'm sure he's glad you're out there to defend the rich and white."

So, your true racist nature comes out. It's about time you were honest.

Melissa Westbrook said...

Kids, don't make me pull this car over.

I can only say (again) that when I was on closure and consolidation, people wanted to know what would happen to the closed buildings. There were two distinct groups.

One, sell for the most money.

Two, preserve buildings for affordable use by communities.

(Or, a lesser voice, just lease and never sell school buildings.)

I am fine with less money for community use. BUT I want to know that there will be oversight that communities do have access to the buildings.