Florence Condo Meltdown

Bank and Developer

Forced to Bail Out

                                   By Edward Shanahan

       It’s big news around the country, and it’s also happening right here in River City, folks, plummeting housing prices and mortgage foreclosures.

       In Florence it has all come together in one particularly troubled piece of property, the large brick structure at 89-93 Main St. called the Davis Block, right next to the Florence Savings Bank, and once the home of Everybody’s Market.

       For many months four very expensive brand-new condominiums occupying the second, third, and fourth floors of the building have been vacant despite successively large reductions in the original price of $499,000 per unit.

       Meanwhile, the neighboring Florence Savings Bank moved ever closer toward foreclosing on its $1.424 million commercial mortgage agreed to on Oct. 6, 2006, which financed the more than two-year renovation project that created the upscale condos.

        At the 11th hour, two days before final mortgage foreclosure with an auction looming, the developer, certainly with the bank’s okay, finally was able to unload the units at bargain basement prices, according to documents filed on Nov. 27 at the Hampshire County Registry of Deeds.

       The two front units have been purchased by one Meredyth Anne Klotz of Westerly. R.I.  She bought unit 6 for $250,000 and unit 4 for $240,000. Apparently, she plans to live in one of the units.

       Meanwhile, according to papers on file at the registry, a couple from Bolton, MA  – Syed Jafry and Brynn Jaffry (sic)  - have purchased the two units that face the parking lot to the rear of the building  – unit 3 for $210,00 and unit 5 for $205,000.  It is not known if these units were bought as an investment or for personal use.

       So the total sales amounted to $905,000—a steep discount, it is clear, from the original prices and certainly not nearly enough to pay off the original $1.4 24 million mortgage or the additional money that the developer had to commit to the project.

       There is speculation, according to one knowledgeable source we spoke to, that the total cost of the condominium renovation might have reached as much as $2 million.

       Thus, a good deal of money was lost on this particular enterprise, and the pain seems to be a shared one, with both the developer and bank taking a financial bath.

       Asked in a telephone interview to discuss the bank’s role, Joseph Traczynski, senior vice president of the bank, said: “There is so much more involved than what you are describing.” But, he said he could not go into more detail than that which is on the public record.

       The bank’s involvement with 89-93 Main Street LLC has ended, he said. “It’s over, it’s done, the units are gone, there’s nothing left. The LLC has no more assets.”

        Out of the picture finally is William A. Roberts of Wellesley   who bought the building in March, 2003, from Charles and Lisa Jasinski for $312,400.

        Doing business as 89-93 Main Street LLC, Roberts along with his associate Andrew Dallin of Wayland, probably thought they were going to make a killing by buying and reconfiguring such a large, handsome and historic brick structure for such a modest sum.

       But as I can testify, as a former tenant at the 95 Main St. address for eight years as proprietor of Bookends used bookstore, there were problems with the building that the local “rubes” knew about, but out-of-towners did not.

       I recall conversations with builder and former City Councilor  Alex Ghiselin, and local developer Floyd Andrus in which they both expressed serious reservations about the building’s  structural integrity given the huge balloon-like bulge in its rear wall. They also speculated that the costs associated with the renovation of the building could be staggering, which is why it was on the market for so long before it was purchased.

       By the time that Roberts and his out-of-town partner got through absorbing the costs of shoring up and stabilizing the structure by installing new steel supports – a new steel skeleton really – the project was vastly over budget.

       According to David Murphy, whose real estate firm was involved in the building’s original purchase by Roberts and later as the agent trying to sell the condos, meeting modern earthquake proof building code standards for a very old, masonry building is both an engineering and financial challenge. Perhaps, Roberts and his crew did not fully appreciate the size of the challenge, Murphy said.

       Additionally, Murphy said it would have aided in marketing the completed condos if an elevator had been installed in the four-story structure. “We expressed our desire for an elevator,” he said, but apparently cost considerations would not allow it.

        I recall going to an open house at the first showing of the condos,  and concluding that it would take the stamina of a mountain goat  equipped with a canister of oxygen to comfortably navigate the endless vertical stairway from the ground floor entry to the second floor access to the units.

        Meanwhile, earlier this summer Roberts, responding to growing financial pressures, sold the commercial condominium first floor space occupied by Subway, the former Look Bakery and Florence Soft Serve for $400,000 to the Bauhimia LLC, formed by the owners of the Great Wall Restaurant in Florence. Much earlier, even before Roberts came into the picture, Collective Copies purchased the condo space at 93 Main St. from Jasinski.

        An attempt to reach Roberts to discuss his experience in trying to make the Main Street project work was unsuccessful.

        Some observers believe the bank may have been overly optimistic about the potential for selling $500,000 condos in downtown Florence when it loaned Robert $1.424 million for the project against the value of the property.

        I remember a much earlier conversation I had with Ed Morin, then president of the bank, who said at one time the bank wanted to buy the Davis Block and tear it down, thus making way for an addition to the bank. That plan never materialized and eventually new space was added on the north side of the bank instead.