Greater Lockport Development Corp. is free to foreclose on Commerce Square, a state Supreme Court judge ruled Wednesday.

Judge Ralph Boniello III granted GLDC a summary judgment of foreclosure, meaning the city’s development arm can proceed with takeback of the old Harrison Radiator factory downtown. The building’s owner of record, Lockport International Partners/Frank Spezio of Mendon, was more than $950,000 in arrears to GLDC when the agency began foreclosure a year ago, according to special counsel Morgan Jones.

Summary judgment by Boniello dismissed Spezio’s objections to foreclosure and empowered GLDC to seek a signed foreclosure order from the court. That should be in hand within 60 days, city attorney John Ottaviano said.

In the meantime, GLDC also will seek court appointment of a referee to handle auction of Commerce Square and city officials will work to assure tenants their businesses can continue as usual, he added.

“There is no reason for tenants to panic or be alarmed,” Ottaviano said. “From today until it’s sold, the mayor has directed that all of the tenants’ leases will be honored. We will be sitting down with (facilities manager) Matthew Hashem to discuss keeping all businesses normal.”

Commerce Square, a sprawling facility that nearly covers two city blocks, is home to 18 small businesses including artisans, distributors and small manufacturers. They occupy a relative fraction of total available space; more is rented for warehousing and storage, Hashem said recently.

Spezio’s attorney, Arthur Bailey of Jamestown, declined to comment about Spezio’s intentions in light of the judgment. Bailey did not attend the court hearing Wednesday.

Whether GLDC will recover all of the money it’s owed is not certain. It will be up to the court-appointed referee to determine how much Spezio and three associated companies — Lockport International Partners, Washburn Buildings Inc. and U.S. Commercial Lessors Ltd. — owe the agency to date; GLDC then has to determine how much it wants to list as the asking price for the building. If GLDC can’t recover all of the debt from the auction, it may not get the balance from Spezio himself either.

“From the outset there were never any personal guarantees (by Spezio),” Jones said. “I don’t know if a deficiency judgment would be collectible.”

Pressing foreclosure was a tough but necessary choice by GLDC because of the money owed and the property’s dominant presence downtown, Mayor Michael Tucker said. GLDC’s goal will be to find someone to buy or lease the complex so that it’s not stuck being a landlord.

An outright sale is a pretty ambitious goal, according to Ottaviano.

“Stranger things have happened,” he said, “but at this point I think we should plan on having to figure out what we’re going to do with it.”

Current tenants will have to be maintained by the city not just because leases are involved but because the rents are paying monthly utility bills, which were known to run as high as about $40,000 per month in late 2004.

Spezio/Lockport International Partners acquired Commerce Square by lease from the Niagara County Industrial Development Agency in 1988. GLDC loaned the company $872,000 for the purchase.

In 2000, Spezio arranged a master lease with U.S. Commercial Lessors Ltd., which was supposed to manage and maintain the property and make loan payments. According to court papers, debt payments were made infrequently between August 2001 and September 2003.

GLDC commenced foreclosure proceedings in 2004, then put a hold on action when Spezio agreed to take back his interest and formulate a repayment plan.

Spezio missed several GLDC-set deadlines for submitting a plan and foreclosure action was restarted in March 2005.

Contact Joyce Miles at 439-9222, Ext. 6245.

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