News

Lender buys final piece of Pond View at auction

By Richard Gaines
Staff Writer
Published: August 20, 2008

The bankrupt, locally based company that built two-thirds — 80 units — of a mixed income development in West Gloucester that attracted private and public investors before running out of time and money yesterday had the last piece of developable property auctioned off.

The prime lender, the Massachusetts Housing Investment Corp., which is owed about $1.4 million, was the only bidder for the land, where the last 40 units were planned but never built. Cape Ann Housing Opportunity was left with common grounds, the pond and the debt, more than $1 million to the general contractor and his subcontractors plus government liens.

The city gave Cape Ann Housing Opportunity more than $500,000; the state Department of Housing and Community Development put more than $5 million into Pond View Village.

"CAHO is not functioning," said Sandra Blackman, a vice president of thee Massachusetts Housing Investment Corp., which took the first two phases of the project last year and in a paper transaction yesterday claimed the land on which the city authorized a 40-unit, mixed-price high rise.

Nancy Schwoyer, the longtime leader of Wellspring House who also headed Cape Ann Housing Opportunity, which grew out of its altruistic impulses to buy and build on the former LePage's glue factory, was again unavailable to discuss the partial success and financial failure of the project.

At the auction on the site by the Paul E. Saperstein Co., Massachusetts Housing Investment Corp. was the lone bidder, starting at $300,000, and after the other interests that were present remained mute, ended with a $950,000 offer.

The auction was a paper transaction by Massachusetts Housing Investment Corp., a private for-profit investor for a consortium of banks headed by Bank of America, which lost most of more than $10 million in loans to Cape Ann Housing Opportunity.

Blackman said the investment corporation bid on property on which it had foreclosed because the investor "found it necessary to gain control of the asset" so that the property could be developed as Cape Ann Housing Opportunity planned or in a different way at some future time.

Two or three interested parties stood by as the auction proceeded, along with a police office hired by the investment corporation after a subcontractor with a lien against Cape Ann Housing Opportunity, appeared at an earlier, aborted auction.

Jim and Tim Brady, a father and son from Manchester who were looking for a site for a self-storage facility, asked a few questions about the two-story former warehouse near the back of Pond View Village, but bowed out. "I'm good, I don't want to touch it," said Tim Brady.

Not 20 yards away, the 11:19 from North Station roared past, drowning out the legally required recitation of the auctioned property's dimensions and legal history, including numerous permits granted by the Zoning Board of Appeals and the City Council from the recent bygone era of upwardly climbing real estate prices, fast sales and easy credit.

For now, the auction ends more than two years of legal maneuvering, borrowing and harried construction after the project was halted temporarily by a suit from the buyer of the Heights of Cape Ann with which Pond View Village shares a long property line and a view of the Annisquam River just as the good real estate times began crumbling.

Massachusetts Housing Investment Corp. officials have said Cape Ann Housing Opportunity intends to dissolve but it remains responsible for the unpaid fees, court findings of debt to contractors and liens. Blackman also said the investment corporation would make the necessary payments required to produce required 2006 and 2007 financial reports on Cape Ann Housing Opportunity, a 501(c)(3) non-profit corporation, to the state Attorney General's Charity Division.

Richard Gaines can be reached at rgaines@gloucestertimes.com.