Sharon Coolidge

scoolidge@enquirer.com

Mahogany's owner Liz Rogers -- who was forced to close her restaurant on The Banks Friday -- wants to make a deal with the city.

Rogers, in a letter from her attorney to the city dated Sunday, proposed that city officials forgive her loan and sell the restaurant's furnishings for $12,000. In exchange, she'll move elsewhere in the city and won't participate in any public protests.

If the city doesn't accept the deal, Rogers suggests she would sue the city.

The city has until Sept. 18 to accept this deal, the letter said.

The letter comes after weeks of problems: She's fallen behind on her $300,000 taxpayer loan; was briefly shut down by the state for failure to pay sales tax; and her landlord, NIC Riverbanks One, accused her of defaulting on her lease.

The latter is the most troublesome. NIC asked her to vacate the premises Friday. A letter notifying Rogers that she must vacate the premises was given to The Enquirer and other media outlets under Ohio public records laws.

Rogers, in Sunday's letter, said she is, indeed, closed.

Rogers' lawyer, Robert Croskery, said the notice to vacate contained "false statements and omissions."

The letter,Croskery said, "was a self-fulfilling prophecy."

He wrote in Sunday's letter to the city: "Employees quit. Customers, believing that the restaurant was closed, simply stopped coming. Liz Rogers attempted to rectify this injustice by holding a press conference to explore relocation while staying open, but the damage has been done. Mahogany's is closed and will not reopen at The Banks.

"In hindsight, it is easy to see that Liz Rogers was brought into a very bad deal, albeit perhaps with the best of intentions of certain parties representing the city," Croskery wrote. "Contrary to what was promised, there is no theater on The Banks. Contrary to what was promised, there is no hotel there. Contrary to what was promised, there is no office building and no foot traffic apart from game days; in other words, the location lacks fundamentals need(ed) for success."

Rogers, Croskery said, has several options. She could:

Fight the city and landlord on fraud, defamation, intentional infliction of emotional distress, breach of contract and discrimination claims.

File for bankruptcy, which would allow her to walk away from the city loan.

"However, Liz Rogers loves this city and this region and would like to come to an agreement that would benefit the region and help bring it forward," Croskery wrote.

The proposal:

All parties waive liability. Rogers will vacate The Banks on Oct. 15, using at only as storage until then. Rogers will take the furnishings and equipment and use them at her new restaurant, which would have a different name. Rogers would pay the "salvage" rate for the furnishings: $12,000. The city would forgive "any and all current" debt. The restaurant's closing would include an attractive covering. "Rogers and her agents will not participate in any public protests over this relocation, and, in fact, publicly discourage any such protests," the letter said.

"Upon reflection, you will see the obvious benefits of this proposal to the City of Cincinnati," Croskery wrote.

Here is the letter in full:

Dear Mr. Black, Mr. McElravy, and Mr. Nestor:

I represent Mahogany's at the Banks and Liz and Trent Rogers. On September 4, 2014, I sent a letter to the City disputing the allegations of the Landlord of Mahogany's at the Banks in its letter dated August 26, 2014 had made a default on the lease.

Unfortunately, this letter, containing factual refutations of the specific points of the Landlord's letter, arrived only AFTER a City of Cincinnati improperly leaked the Landlord's letter, in its entirety, to the media. The immediate result of the leaking of the letter (containing, as it did, false statements and material omissions) was disastrous. A media frenzy ensued. The media's reporting that Mahogany's at the Banks "had been closed by the Landlord" became a self-fulfilling prophecy. Employees quit. Customers, believing that the Restaurant was closed, simply stopped coming. Liz Rogers attempted to rectify this injustice by holding a press conference to explore relocation while staying open, but the damage had been done. Mahogany's is closed, and will not reopen at the Banks.

In hindsight, it is easy to see that Liz Rogers was brought into a very bad deal, albeit perhaps with the best of intentions of certain parties representing the City. Contrary to what she was promised, there is no theater on the Banks. Contrary to what she was promised, there is no hotel there. Contrary to what she was promised, there is no office building, and no foot traffic (apart from game days); in other words, the location lacks fundamentals need for success.

Perhaps this situation is why no upscale restaurant has yet succeeded in the Banks location, although some are marginally surviving. Hopefully, this situation will improve as the Banks continues to develop. What does succeed? Bars, that mainly trade off the sports crowd, succeed. This is not surprising in a location between two stadiums, with very expensive parking, that is not considered a dining destination. Even if Liz Rogers had run her business perfectly, though, there were actors that appeared to be working strenuously to keep her from having a chance of success. It is my understanding that the City has had to use hundreds of hours in responding to "Freedom of Information" requests regarding Liz Rogers' loan, far more than it expended responding to questions about other City loans and grants loan. The information from these requests was taken, often spun negatively, and used to attack her business. These attacks helped eat away the margin of what is undoubtedly a very tough business to begin with, even absent the opposition of persons with adverse agendas. This story is a great illustration of why it is not a good idea to be in business with the City; the politics distorts the efforts of private enterprise.

Some say that the blame for the failure falls completely on the shoulders of Liz Rogers. Indeed, some representatives of the City have claimed that Liz Rogers "has been given a million dollars in public money". Of course, we know that claim to be false. The $684,000.00 grant for build-out was a grant that went to the SPACE to make the building habitable. Unless she stayed in the space, which is now longer remotely practical, she derives no benefit from that money.

As for the loan that Liz Rogers received of $300,000.00, that did not directly go into her pocket (again, contrary to what some have represented). It was largely used to buy furniture and equipment, in which the City currently maintains a security interest. The salvage value of the furniture is a few thousand dollars, if the City has finds a buyer for it, and it is unlikely that it can stay where it is, as anyone leasing the space will probably want their own new equipment and furniture.

The current situation is that Liz Rogers was lured out of a successful small business in Hamilton, Ohio, in Butler County, to a much larger space in Cincinnati. (Any thought that she could run both locations was soon smothered by the enormous demand of the Banks to try to make it viable). The promises made to her turned out to be false. While Liz did receive support and cooperation from some parts of the City, she also received fierce obstructionism from others.

As it happens, Liz Rogers is confronted with several options. One, of course, is to fight the City and the Landlord in Court and claim fraud in the inducement; defamation; intentional infliction of emotional distress; breach of contract; bad faith, discrimination, and such other causes of action as seem meritorious. Some have counseled her to do exactly that. If she succeeds, the City would be on the hook for her damages and costs (from being transformed from a successful situation in Hamilton to a near-bankrupt situation in Cincinnati). If she fails (because of political immunity that many use to shield meritricious conduct), she could simply declare bankruptcy and start over again. Obviously, bankruptcy would enable her to walk away from all City debt, free and clear.

However, Liz Rogers loves this City and this region and would like to come to an agreement that would benefit the region and help bring it forward, rather than serve as further embarrassment and distraction. Enough collateral damage has already been done. After much negotiation with the Landlord, we have reached a proposal that, if the City will accept, will resolve this matter and provide an opportunity for the taxpayers to recoup some funds from what turned out to be a bad investment. Here is the proposal, in principle.

1) The parties waive all liability between them to date.

2) Liz Rogers and Mahogany's will vacate the premises on or before midnight, October 15, 2014, using it, in the interim, only for storage until she can move out equipment.

3) Liz Rogers agrees to remove the furnishings and equipment at Mahogany's, and use it to open a new restaurant, under another entity and name, within the City of Cincinnati city limits, within 120 days of October 15, 2014.

4) Liz Rogers agrees to pay the salvage value of the furniture and equipment (for purposes of this proposal, valued at $12,000.00) within 36 months of the new restaurant opening, plus legal interest, in a SINGLE PAYMENT at the end of term. If the payment is not made, the City shall be entitled to retrieve the furniture and equipment at its cost.

5) The City agrees to forgive any and all current debt from Mahogany's and Liz Rogers and her husband, including any claim on the furniture and equipment except as noted.

6) During the storage of the equipment at Mahogany's current location, Liz Rogers and Mahogany's consent to removal of signage, attractive covering of the exterior as the Landlord chooses, and the turning off of the gas by a qualified contractor (immediately, for safety reasons.) The premises will be turned over without damage other than that incidental to normal wear and tear and equipment//furniture removal.

7) Liz Rogers and her agents will not participate in any public protests over this relocation, and, in fact, publically discourage any such protests.

There are other conditions relevant only to the Landlord. I am in possession of a letter from the Landlord's agent containing these terms. I am authorized to SHOW, but not provide a copy of, this letter, given the penchant of City employees to leak such information to the media. Upon reflection, you will see the obvious benefits of this proposal to the City of Cincinnati. On the one hand: Litigation in which the City is forced to defend the manner in which Liz Rogers was lured into a bad business deal; the best result simply that the City expends taxpayer resources defending the suit and still winds up with Liz Rogers and Mahogany's declaring bankruptcy. At that point, the City winds up with some furniture and equipment that has to be sold at auction and may not benefit Cincinnati Worst result; an outlay of all the money Liz herself put into this bad cause (approximating $200,000) and possible attorney fees and, under the statutory maximum for a public entity, an additional $200,000 and attorney fees, and further waste of taxpayer money.

On the other hand, by accepting this proposal, the City ends up with another restaurant in a more viable location. That provides restaurant employment, income tax money, and (for the County) sales taxes. It improves a building, providing more property taxes. It turns a disaster into a possible success. And, worst case, the City ends up with what it has now: a claim on some furniture and equipment. I am happy to discuss this further, but time is running out, as you know. This proposal is currently open until September 18, 2014, for the City's acceptance. I can be reached at (513)232-5297 should you wish to discuss the matter further.