WOONSOCKET â€“ Rhode Island Housing, the owner of Glenark Landing, is taking the 67-unit, subsidized housing complex into foreclosure.
But Mayor Leo T. Fontaine says the state agency owes the city over $200,000, money lent to the original developers of the mill-to-apartment conversion project in 1988.
Fontaine said foreclosure would wipe out the debt, but the city might not give up so easily. The mayor wants the City Council to explore its options at a briefing session Monday night, including the possibility of legal action.
â€śRhode Island Housing has already asked me to forgive that loan, but I refused,â€ť Fontaine told The Call Friday. â€śThey later asked the Budget Commission to do the same, but commission also rejected the request.â€ť
Listed on the National Register of Historic Places, the onetime textile mill overlooking the picturesque Woonsocket Falls Dam was originally developed by a group of investors known as Glenark Associates Limited Partnership. More than a decade ago, the investors relinquished their interests in the property to RI Housing.
RI Housing recently found a private buyer for the property, identified in Trinity Financial, a Boston company. RI Housingâ€™s governing board of directors approved the sale during a meeting in June, according to public records, but the sale hasnâ€™t been consummated yet. RI Housing places a value of about $2.7 million on the four-story, stone mill that abuts the Blackstone River.
Fontaine said a foreclosure on the building would provide a clear title for the intended buyers without any legal encumbrances, including a possible claim initiated by the city to recoup its loan.
RI Housing has already scheduled a foreclosure auction at the property, located at 104 Sayles St., for Nov. 30 at 11 a.m. RI Housing is seeking a minimum bid of $50,000.
Though the mayor said that both he and the Budget Commission have rejected RI Housingâ€™s entreaties to waive the debt, he said the agency has since returned to the city with â€śan alternative proposal.â€ť Fontaine declined to elaborate, however, saying members of the City Council deserve to be briefed on the details before they are made public.
Fontaine said the funds at issue were extended to Glenark Associates Limited Partnership as a â€śpromissory noteâ€ť that the city viewed a small business development loan. The city obtained the money from the Community Development Block Grant program, a pool of federal funds the city receives annually for a variety of civic and non-profit endeavors.
The Glenark partnership made one payment toward the principal shortly after the city issued the promissory note in December 1988, Fontaine said.
â€śThere was some early attempt to pay but very, very little in comparison to the whole loan,â€ť said Fontaine.
Despite the payment, the debt now exceeds the original principal amount after the application of interest and penalties, the mayor said.
The council is scheduled to convene at 7 p.m. in the second floor conference room to consider the issue. There is a chance the panel could vote to gather behind closed doors if discussion veers in the direction of potential litigation.
Efforts to reach RI Housing for comment on this story Friday were not successful.