CHARLESTON — State agencies produced new letters meant to cancel a lease at Fairmont’s Middletown Mall, where rent payments amounting to almost $1 million have been made for years after office suites were vacated.
But the new owner of the property says he doesn’t have copies of those letters and that the state should honor its lease until he does.
“To date, we’ve not gotten anything,” said David Biafora, one of the owners of General Acquisitions, which just bought Middletown Mall out of bankruptcy. “Maybe they don’t know where to send it.”
The fresh letters from the state Real Estate Division are dated June 8 and were provided Thursday to MetroNews by request.
“To the extent that there is any misunderstanding about the current validity of the leases, please consider this letter as notice that the leases were appropriately terminated in 2015,” Real Estate Division Director Jon Amores wrote.
Copies are addressed to General Acquisitions, to the old owner, Pin Oak Properties, and to BB&T.
The state auditor, in a report released this week, concluded that each of those has received hundreds of thousands of dollars in state rent that never should have been sent.
That amounted to $432,702.76 for BB&T, $185,444.04 for General Acquisitions and $247,258.72 for Pin Oak.
The Legislative auditor recommended the state take every legal means to recoup the payments.
Biafora, of Morgantown, isn’t on the same page.
As far as Biafora knows, he said, the State Department of Health and Human Resources still has a valid lease and should be paying rent.
“I haven’t seen any notice and there’s nothing in the files of bankruptcy and nothing in any file that we got through Pin Oak that says they moved out.”
State government was paying a combined total of $30,907.34 a month for use of multiple properties at Middletown Mall. The lease agreement initially was with Pin Oak Properties, owned by Steve Fansler, also of Morgantown. Fansler has not returned messages left with his business.
DHHR’s Fairmont offices were moved to a new state office building in 2015.
The payments for space at Middletown Mall continued after that.
Biafora thinks that’s weird.
“What’s kind of odd is why the state kept paying,” Biafora said.
Middletown Mall went into bankruptcy in June 2017 and into receivership this past January. General Acquisitions, owned by David Biafora and his brother Rick, bought the mall out of bankruptcy on May 8.
The landlords received payments from the state even before the bankruptcy closed. In a March 1 letter to the Real Estate Division, General Acquisitions gave notice that it was exercising provisions allowing it to receive monthly rental payments on behalf of Pin Oak.
“We said all the rents come to us, all the leases, all the assets,” Biafora said.
The letter, which sought payments to be made to General Acquisitions on behalf of Pin Oak, should have drawn major questions and flags, the Auditor’s Office wrote.
But the agency made the requested payment change, despite its own position that DHHR had vacated the property.
The Auditor’s Office, as a result of its investigation, stopped any payments on the property this past February.
As Middletown Mall was sold during bankruptcy, Biafora said he only received one item of paperwork related to DHHR.
“In my file, I have a lease,” Biafora said. “That’s all that was given to me during bankruptcy.”
He has, however, seen an unsigned, undated memo on Real Estate Division letterhead that described moving out of the property in 2015.
He thinks that’s strange too.
“There’s no date on it, no signature, nothing. That’s pretty baffling,” he said. “It sounds like they have a draft letter. Or maybe they made this letter up and don’t want to sign it and date it. We’ve read this thing like 10 times.”
Until he sees something official, Biafora said, his business has to assume the lease is still good through its 2019 expiration date.
Otherwise, he said, he can’t just assume the state’s intentions.
“People vacate places all the time and pay until their lease is up,” he said. “Sometimes they just pay the lease out, sometimes they make a deal.
“When we bought the mall, before we bought the note, we were told DHHR was not occupying the space, it was empty but they were still paying the rent and it was on the rent roll.”
He said the state could leave by providing a 30-day notice.
“They would owe us some rent,” he said. “June, July and they’d be out in August.”
Each of the agencies involved issued statements acknowledging they had addressed this issue poorly. They vowed to do better.
DHHR stated, “It is clear that past practices and policies have been insufficient, and the Department is committed to making the necessary changes to ensure such incidents do not happen again.”
The office is working with the Attorney General’s Office to explore legal options to recoup money from the landlord, saying he received improper payments.
The Real Estate Division commented, “We do take these issues seriously and have and will continue make any adjustments to our processes as necessary to ensure situations such as this will not reoccur.”