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The saga of a defunct Framingham development will continue next week when a stretch of commercial properties in the heart of downtown is scheduled to be sold at a foreclosure auction.
The properties are the remnants of The Arcade, which in the mid-2000s was heralded as a linchpin to economic revival in the town's center.
However, the project - which was to include 50,000 square feet of commercial and residential space - fell victim to the economy and never broke ground.
Now the properties where The Arcade was supposed to be built are being auctioned off. A stretch of residential homes on Frederick Street sold at auction this fall. Next week, the commercial properties once associated with the development along Concord Street will also go on the auction block.
"Hopefully with both of the properties having an owner it will spur some action," said Dennis Giombetti, chairman of the Framingham Board of Selectmen.
Highest Bidder
The Arcade received approval for a Tax Increment Financing (TIF) plan when the development was first proposed, which would have given the developers a break on taxes if the project had been completed. But financing for the project's owners, Framingham Acquisition LLC of Wellesley, fell through and eventually foreclosure proceedings began.
Framingham Acquisition took out mortgages on the properties with two separate banks, Framingham Co-operative Bank for the residential properties and Boston-based First Union Trade Bank for the commercial properties along Concord Street.
Earlier this fall, Framingham Co-operative Bank President Mark Haranas outbid at least one other potential suitor of the residential properties along Frederick Street for a reported $705,000.
The Concord Street commercial properties at 107, 109 and 117 Concord St., are scheduled to be sold at a foreclosure auction on Dec. 13 outside of 107 Concord St. at 2 p.m. after First Union Trade Bank foreclosed on them.
Banks buying up properties they have foreclosed is not uncommon, according to Matthew Sosik, president of Hometown Bank in Oxford.
"Banks protect their investments," said Sosik. "It's all about maximizing the return, and auctions rarely are the best way to get the most out of a property."
Sosik said Framingham Co-operative must have felt it could get a higher price by selling the property outside of an auction, so they bought it back and will likely try to flip it.
Haranas nor his lawyer returned calls for comment.
There is another wrinkle to the situation, however: The Frederick Street properties, and the accompanying Concord Street ones that will be auctioned next week, have significant back taxes.
The Frederick Street properties have about $91,000 in taxes owed to the town of Framingham, while the Concord Street lots have another $560,000 in back taxes owed on them, according to town records.
Sosik said it is likely the bank will pay off those taxes and roll those costs into a final sale price for the properties. Framingham Co-op has an incentive to pay the balance too: Each of the properties is accruing a daily interest on the unpaid taxes.
Boston auction firm Daniel P. McLaughlin & Co. LLC will handle the Concord Street auction on Monday. That is the same firm that managed the Frederick Street auction. A $60,000 cash or check deposit amount is required at next week's auction to purchase the properties.
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Worcester Business Journal presents a special commemorative edition celebrating the 300th anniversary of the city of Worcester. This landmark publication covers the city and region’s rich history of growth and innovation.
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