City may evict studio, institute from complex

Photo by Sue Suchyta

Photo by Sue Suchyta

Jimmy Lifton (left) and Allen Park Mayor Gary Burtka (right) shared the stage with Fifty Amp Fuse at the Unity Studios groundbreaking celebration Aug. 27, 2009.

Sunday Times Newspapers

ALLEN PARK – Officials of Unity Holdings LLC say they have not defaulted on a lease contract with the city for space at the Allen Park Studio Complex, but have not yet said how they will deal with a May 6 warning based on that allegation.

The warning, officially called a notice to quit termination of tenancy, was issued to Jimmy Lifton and Unity Holdings, which operates Unity Studios and the Lifton Institute for Media Skills, a training facility at the 104-acre complex south of I-94 and northeast of Southfield Road, could result in eviction if it goes unheeded.

Mayor Gary Burtka said Tuesday that the notice was issued because Unity was late on rent and other payments to the city and has “defaulted on the lease contract by failing to timely file with the city documents (balance sheets, profit and loss statements and payroll records) that demonstrate the financial condition of the company, information that is fundamental to protecting taxpayers and the city’s interests.”

Those interests include $25.3 million in long-term general obligation bonds and $3 million in Wayne County-issued recovery zone bonds issued in October. The A-rated bonds offered by PNC Financial Services Group sold in less than a minute.

City officials say Unity and Lifton have failed to provide the city with required documentation that they are providing jobs for city residents, that they are actively pursuing capital improvements — such as sound stages critical to attracting additional movie production — and other financial documents promised in their lease agreement detailing their solvency and documenting that sound financial accounting practices are being followed.

Lifton issued a response to news reports on Tuesday on the studios’ Web site, unitystudiosmichigan/com, saying Unity Studios is current on all lease payments and is not in default in its lease with the city. He also denied missing rent payments or being unable to pay the lease.

“We have made all payments, (including) a disputed amount, in good faith,” Lifton said. “We have provided documentation (canceled checks and bank statements) to (the media) … proving our payments have been made.”

Lifton also said company officials hope to work out any differences with the city to remain in their current lease and to “continue to build Unity Studios, bring movie projects to Allen Park and put Michigan residents back to work.” His statement did not address the issue of the city-requested documentation; Lifton also did not issue a public statement as of press time indicating whether he would produce the documents sought by the city.

The warning from city officials earlier this month was preceded by an April 25 letter to Lifton from Kenneth Till of Real Estate Development and Investment Corp., or REDICO, of Southfield, project executive for the Allen Park Studio Complex. The firm manages the site for the city.

Till wrote that Unity Holdings was in default on its lease agreement dated Oct. 16, 2009, with the city of Allen Park because Unity and Lifton had failed to provide a list of the Lifton Institute for Media Skills complete curriculum, a list of all full- and part-time instructors, administrative staff and registered students at least two weeks prior to the start of each semester.

The letter also said “Unity Holdings LLC failed to provide, on a quarterly basis, on behalf of itself and each affiliate entity, a balance sheet, profit and loss statement, and payroll report for all persons for whom any Unity entity generates a W-2 and or 1099 statement.”

If the conflict is not resolved, Unity would have to vacate its office and classroom space by June 7 or face court action.

DDA loan untouched
In October the Downtown Development Authority board voted to approve a $2 million unsecured loan to the Lifton Institute for capital improvements, subject to a local independent accountant’s review and approval before any cash is disbursed. The money was intended in part to facilitate the building of the sound stages.

Authority officials indicated that the promissory note would read that all requests for draws would be submitted to Mike Bawol, a local accountant utilized by the authority, for prior review and approval before loan funds were disbursed.

Bawol suggested the following loan conditions be met prior to any draw of cash:

• Require three years of personal financials/tax returns from Jimmy Lifton and Oracle Post, which comprises two independent post-production studios in California.

• Require a schedule of how and when the money is spent.

• Require that there be no personal gain by Lifton from any suppliers.

• Require liens on all personal assets regardless of “upside down” status.

• Create a definition in the document of “proof” regarding expenditures.

• Require original contract documents of proposed movies to be produced.

• Require that any and all equipment purchased be located in Allen Park.

The DDA board was told at its March 25 meeting by a city official that Lifton has not drawn on the $2 million loan.

Several months prior to receiving the DDA loan, on Aug. 23, 2009, Lifton told DDA board members publicly he would not allow liens on his personal assets.

Studio needed to build sound stages
In November 2009 Allen Park used the bond money to take control of the 104-acre property south of I-94 and east of Southfield Road.

While Burtka said that the studio complex “has evolved into a project that is more significant than just Unity,” Unity remains the most immediate means of building sound stages there. Without the stages, he said, the hoped-for influx of movies in preproduction will not come to town for location filming.

Burtka told the Downriver Sunday Times in January that “sound stages are being built as we speak.”

“More sound stages would bring more movies,” he said in that interview. “I foresee that this spring additional sound stages will be built (in Allen Park) which are comparable to the sound stages in L.A.

“The whole philosophy of bringing Unity Studios on board was to bring jobs to our residents and our area first and foremost.”

One of the conditions, Burtka said, was that when Lifton started the school here he would only bring people temporarily to train local residents, who then would get those jobs.