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

Maggie Duffy, Tampa Bay Times
Updated 4 min read
0

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” stating that it was going out of business. The Factory quickly removed the post and made a statement saying the first post was a mistake and a result of miscommunication.

Now, co-owner Kara Behar has issued a statement notifying the media that foreclosure action on the Factory has been filed by an entity called the Dimmitt Trust.

When reached by email, Liz Dimmitt — CEO of The Factory’s anchor tenant, Fairgrounds St. Pete — said she is not personally involved in the filing on behalf of the Lawrence H. Dimmitt, III Revocable Trust. She referred the Tampa Bay Times to lawyer Gerald Davis from Trenam Law, who provided a copy of the foreclosure complaint filed by the 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, a limited liability company co-owned by the Behars and Double LD, LLC, owns The Factory property.

As of now, the arts destination at 2622 Fairfield Ave. S in St. Petersburg remains open and is operating as usual.

The complaint’s summary of action says that in 2018, Guru & Gaia entered into a mortgage agreement for $3.15 million 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 gave a $5 million loan to Guru & Gaia for improvements on the property, which Behar confirmed, and that the Dimmitt Trust has been the primary provider of financing for The Factory.

According to the lawsuit, Guru & Gaia is now in default of the loans and the Dimmitt Trust has requested payment of them. In the absence of the payment, the trust is “seeking the aid of the court to protect its position in The Factory and to secure repayment of what is owed.” It says that management of The Factory has been unable to meet its financial obligations and has been unresponsive.

The lawsuit aims to to recover damages and “appoint a receiver to oversee the Property.”

The summary ends with, “the Dimmitt Trust provided the primary funding for The Factory in order to support the arts community in St. Petersburg. It is the intent of the Dimmitt Trust that The Factory continue to support hosting the arts and local community, 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 she and her husband Jordan out of the ownership group and “avoid the significant debt of the struggling Fairgrounds.”

Behar said in her initial statement that the Dimmitts have not fulfilled their financial obligations to the property or paid for the construction of Fairgrounds, which she said created financial hardships to The Factory and resulted in liens that broke the terms of the mortgage, allowing foreclosure.

She referenced Fairgrounds receiving $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 herself and Fairgrounds St. Pete are “wildly inaccurate.” She said there are no liens on The Factory as a result of Fairgrounds. According to the lawsuit, there are liens on the property related to construction and that “per the terms of these loans, the Dimmitt Trust will be in the primary position to receive payment.”

“I plan to continue operating Fairgrounds St. Pete,” Dimmitt wrote. “As co-manager of Guru & Gaia ... 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.”

Behar said they are fighting the foreclosure with a new legal team and working with a new investor, the Metro Development Group. She said they are seeking a “fair resolution that keeps The Factory moving ahead with its cultural objectives.”

“I’m so disappointed that they did not handle it amicably and filed publicly,” Behar said.

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