Dive Brief:

• Pennsylvania’s attorney general objected to the $6.5 million sale in bankruptcy of one of University of the Arts’ most valuable properties to a Philadelphia real estate developer.
• In a Monday filing, Attorney General Michelle Henry noted that Temple University offered a competing bid of $6.2 million for the Arts Alliance building and argued that state law and restrictions in the building's deed should give the public institution’s bid priority. 
• As it looks to help fill part of the void left by UArts, Temple also bid $18 million for UArts’ Terra Hall, one of the shuttered institution’s key properties in downtown Philadelphia, according to court papers filed Friday. 

Dive Insight:

The sudden failure of UArts this summer sent shock waves through Philadelphia and left a massive hole — both cultural and physical — in its downtown arts scene. 

UArts played a unique role as a private university operating in the city’s downtown arts district. Since the institution closed, its buildings have sat vacant, waiting for the next occupant amid the bankruptcy process.

Soon after UArts closed, Temple became involved in the fraught process of figuring out what’s next for UArts’ legacy — and its property. 

Temple, about three miles from UArts, has taken in over 300 of the shuttered institution’s former and prospective students, adapting its own programs and operations to make that happen, leaders told Higher Ed Dive this summer. 

The public university also reportedly considered a merger or acquisition with UArts before ruling out that possibility in August. But officials noted at the time that they would “continue to explore opportunities with other non-profit organizations that might allow us to revitalize and activate UArts’ facilities.”

Now, nearly half a year later, Temple has bid on at least two of UArts’ buildings. 

One of those bids came to light with Henry’s filing, days after the bankruptcy trustee overseeing the liquidation of UArts filed a motion that would hand the Arts Alliance building to real estate investor Allan Domb for $6.5 million, barring a better bid. 

Henry argued the building should be sold to Temple instead. 

“Supporting Temple University’s bid is its financial stability and ability to use the historic Arts Alliance Building consistent with the mission of the UArts in perpetuity,” the attorney general said in the objection. “Indeed, Temple has an immediate need for space in center city for its visual and performing arts programs. A more closely aligned use cannot likely be found.”

Henry pointed to a restrictive deed covenant tied to the Arts Alliance building that requires it be used for education, exhibition and other public benefits consistent with UArts’ mission. The covenant stemmed from UArts’ 2018 merger with the organization Philadelphia Art Alliance that brought the building into its fold. 

Henry also cited Pennsylvania law requiring nonprofits to obtain a court order when transferring assets dedicated to charitable purposes. Courts must ensure new uses for those assets remain close to their original intent. 

She also argued that UArts’ creditors are unlikely to be hurt by a sale to Temple, noting that the public university's lower bid is still “competitive” and that UArts listed its assets as $20 million above its liabilities when it filed for Chapter 7 bankruptcy. 

A hearing on the Arts Alliance sale is scheduled for Wednesday.

As for Terra Hall, the bankruptcy trustee, Alfred Giuliano, said in court papers that Temple offered the highest bid for the property. The building was originally built in 1911 as a Ritz Carlton hotel and of late was known around campus for maintenance issues. 

Giuliano has asked that competing offers for Terra Hall be in by Jan. 27.