The owner of two prominent downtown Ansonia buildings will lose them this week unless he comes up with more than $2 million to pay off mortgage debt on the properties.
Meanwhile, the city is weighing whether to file an eminent domain lawsuit to take possession of one of the buildings — a blighted former industrial lab that has amassed millions of dollars in blight fines.
Moustapha Diakhate’s Washington Management bought roughly 10 acres of former Farrel Corp. properties on both sides of Main Street in January 2013, amid much fanfare and promises of redevelopment.
But no redevelopment plans were ever submitted.
Parts of the properties were occupied with tenants when Washington Management took ownership. But one — 501 E. Main St., the Farrel Corp.’s former “process lab” — has been vacant for years, and was appraised at $210,000 this year.
In late 2014, the city issued a blight citations against the building because of graffiti, overgrowth, more than 200 broken windows, and other problems.
Those liens, now totaling millions of dollars, remain pending — and $20,000 is added every day.
The other property is 65 Main St., an office building with a 108-spot parking garage underneath appraised at $820,000.
Last May, Shaw Growth Ventures, a Jericho, NY-based mortgage lender, sued Washington Management, saying Diakhate has defaulted on a $2 million loan he signed when he bought 501 E. Main St. and 65 Main St.
Shaw was due to take possession of the properties in March, but days before that happened, Washington Management sought bankruptcy protection in federal court. The bankruptcy filing stayed, or delayed, the foreclosure case automatically.
The company alleged Diakhate’s bankruptcy petition was just a stall tactic.
In September, a federal judge agreed.
Julie Manning, the chief United States bankruptcy judge for the District of Connecticut, granted a motion from Shaw to go forward with the foreclosure, ruling that the bankruptcy filing “was part of a scheme to delay, hinder, or defraud creditors.”
Last month, a judge in state court ordered the two properties turned over to Shaw unless Diakhate comes up with $2.6 million by Nov. 21.
In an email Tuesday (Nov. 22), Diakhate said “(the) town wanted me out and I didn’t get (any) cooperation at all, just unbelievable fines for windows that were damaged years before I was born.”
“I am not into politics,” Diakhate’s email went on. “I am a developer and the first who saw potential in this town. My purchase of those heavily blighted buildings was what triggered other developers to think about investing in downtown Ansonia. I am happy for the residents of Ansonia. They deserve a booming downtown.”
The Valley Indy left a message Thursday for the lawyer representing Shaw Growth Ventures.
Meanwhile, the city hopes to take possession of 501 E. Main St. as soon as possible — and by eminent domain, if need be.
In a motion filed last month in the bankruptcy case, the city said the property is “essential to the redevelopment of downtown Ansonia” while asking Judge Manning to lift the stay in the case.
“At present, the Property stands vacant, deteriorating, and unmaintained, which harms the downtown area by deterring people from visiting and retail and other businesses from opening or staying in the downtown area,” the city argued.
“Taking the Property would remove that impediment to redevelopment, and more importantly, it would allow (the city) to use the Property proactively to serve its revitalization efforts.”
The judge granted the motion this month, but John Marini, the city’s lawyer, said Thursday officials will try to acquire the property through an agreement with Shaw rather than a time-consuming eminent domain action.
“We’re having discussions with them,” Marini said. “We’re going to see if there’s a better way to go. Obviously you look to avoid eminent domain wherever possible.”
Next door to the property sit two aging industrial buildings the city already owns — the Palmer Building at 153 Main St. and adjoining “Ansonia Technology Park” building at 497 E. Main St.
The city has been in talks to sell those buildings to developer Jerry Nocerino since 2015. He plans to turn them into a mixed-use development with around 90 apartments.
Aldermen voted months ago to have Marini draw up a contract to sell the properties and schedule a public hearing on the deal, but that hasn’t happened.
Mayor David Cassetti said he’d like to see 501 E. Main St. ultimately redeveloped similarly — with retail space on lower floors and about 70 to 80 apartments on its upper floors.
The mayor said the city is now exploring ideas on how to create more parking to accommodate future residential development in the area. Ideas floated so far include dead-ending East Main Street and/or excavating part of the hill overlooking it.