The renovation of one of downtown Waterville’s landmark buildings is in danger of being derailed by a dispute between the prospective developer and city officials.
The former home of Levine’s clothing shop was sold to a developer who said he wanted to create upgraded retail space on the first floor and turn the upper stories into apartments.
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LEvine'S TIMELINE
1896 — William Levine and Sons founded at Main and Ticonic streets
1909 — Store, now Levine’s, moved to 19 Main St. building
1929, 1937, 1961 — Additional adjacent structures acquired
1996 — Levine’s went out of business
But the Connecticut man who bought the Levine’s building last year said he won’t do business “in a city where I can’t trust people to be honest,” after trying to work with city officials for nearly a year on a $25,000 loan as seed money for improvements.
City Manager Mike Roy, meanwhile, said Friday that Michael Soracchi, who bought the Levine’s building for $70,000 last year, failed to provide the city with all the paperwork, and his loan application is considered closed.
“He’s missed a number of deadlines,” Roy said.
Soracchi said he had received confirmation from the Kennebec Valley Council of Governments that it was going to recommend the city approve the loan last September, but because of turnover at KVCOG, the loan processing got delayed and problems began.
“If they approved (the) loan last September, as (KVCOG revolving loan fund director) Cole Palmer recommended, this project would have started at the beginning of spring and would be close to done,” Soracchi said in a telephone interview Friday. “What the city has done is killed any case for doing a project there by delaying it over a year. I’d like to do the project in the future if the city changes. Unfortunately it will require a change in city management.”
KVCOG officials said they couldn’t comment on Sorracchi’s claims, because they subcontracted for Waterville and any comment would have to come from Waterville city government.
Soracchi’s plan was to rent the first floor to several businesses, possibly including a department store and a night club, while creating 18 apartments on the second, third and fourth floors.
A staple in downtown Waterville since 1904, Levine’s closed in 1996. A Manchester man bought the building in 1998 and rented out apartments and space for flea market vendors. A bank took over the property in 2012, then Soracchi bought it in 2013.
Roy said the city has been asking Soracchi for the financial information needed to complete the application process for the $25,000 loan, which is city-funded through a downtown tax-increment finance district.
Roy said it’s the city’s responsibility to be thorough when approving a loan funded by city money.
“This is the same information we require of every applicant,” Roy said. “What we’re talking about is $25,000 of taxpayer funds. We have to do our due diligence that he has the financial wherewithal to pay the money back if the project doesn’t go according to plan and to make sure he has the financial capacity to complete the project.”
One of the main delays in the continued application process is Soracchi’s decision not to file his 2013 IRS tax return and an updated personal financial statement, according to Roy; but Soracchi said he hasn’t filed last year’s tax return because he applied for more time to file, which he said he does most years because of the complexities of his return.
“The only reason we got to the point that the city needed my 2013 tax returns is because Waterville didn’t get their act together,” Soracchi said. “I’m also not sure what my 2013 returns would tell them what my past years don’t.”
Soracchi said he met with city officials in November and again in May and showed proof of funds, and was told a letter of approval for the loan would be forthcoming, which never came.
Roy said that once 2014 began, Soracchi had to provide the city with updated financial figures, and that previous maintenance of the property wasn’t enough to ensure Soracchi was financially capable of paying the loan back.
Roy said the roughly $170,000 Soracchi said he spent buying and rehabilitating the building was not enough.
“We recognize the money he put into the project and we’re very much supportive of that building being fixed. It all comes down to, as keepers of tax money, that we’ve done our due diligence with the financial analysis. Until he completes that, we can’t complete our work.
“We sent Mr. Soracchi a letter on July 15, requesting that financial information and a response by Aug. 1,” Roy said. “He failed to do so. This has been characteristic of Mr. Soracchi’s work with the city all along. He’s missed a number of deadlines.”
In February 2014, before a May meeting with city officials, Soracchi emailed Roy outlining the various funding sources for the project, including existing savings, credit accounts, sales proceeds or loans from other property, personal loans from related investors or hard money lenders.
On Tuesday, Waterville’s tax collector, Linda Cote, filed a tax lien for $4,305.49 in unpaid property taxes on the property, listed with a 9 Main St. address, with the Kennebec County Registry of Deeds, records show.
From the city’s perspective, it’s possible that Soracchi can reapply for the $25,000 forgivable loan, which calls for the recipient to make only interest payments during the first year and, as long as certain employment and business metrics are met, the city then would eliminate 25 percent of the principal, but Soracchi said he’s in no hurry to continue the project.
“I was happy when I bought it. I love the city and everyone I met there, but dealing with city officials has been totally untrustworthy,” Soracchi said, adding that he has thought about putting the property back on the market. “Until that changes, I’ve got other projects to put money into.”
Jesse Scardina — 861-9239
jscardina@centralmaine.com
Twitter: @jessescardina
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