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History museum's future jeopardized by foreclosure suit

NORTH TONAWANDA - The North Tonawanda History Museum has been in the historic former G.C. Murphy five-and-dime store on Webster Street for over a decade, but its future is up in the air because the property’s former owner has filed suit to foreclose on the museum’s mortgage.

Attorneys for the museum and California realtor Vadim Gorobets, who holds the museum’s mortgage on the building, appeared Dec. 8 in State Supreme Court in Lockport before Judge Richard C. Kloch Sr., who reserved judgement on the issue. His decision may determine what’s next for the museum.

The 1888-era building at 54 Webster St. is filled with memories of the Lumber City’s past, most of which were donated by area residents who wanted a place preserve their families and their city’s history.

The museum’s founding executive director, Donna Zellner Neal, who died on March 23, said in past years that both the museum and Gorobets were victims of fraud, paying an inflated price for the building.

Gorobets paid $575,000 for the building in 2006 and sold it to the museum for $675,000 in 2009, according to Niagara County property records. He said the museum paid a $50,000 down payment to buy the building, but six months later stopped paying both him and the bank.

There were two mortgages on the property. One was a $352,386 mortgage between the museum and HSBC, which Gorobets said he would co-sign and guarantee to pay if the museum didn’t. The other was a second mortgage – a business loan of $289,252 which Gorobets said he personally loaned the museum to help it “pay down” the full mortgage to HSBC.

Neal was able to negotiate with HSBC to get the bank to forgive its loan in 2014, claiming the appraisal of the property was incorrect, but Gorobets is still seeking over $289,000 on the second mortgage, according to board member Audrey Monkiewicz, who spoke to the Buffalo News following the court appearance.

"Donna passed away in March and the museum was served with papers in April," said Monkiewicz. "He is trying to foreclose on the museum."

Attorney Steven Long, of Grashow Long of Williamsville, who represents the museum, said the museum has put work into upgrading the building and its effort prompted HSBC to forgive the  nearly $300,000 lien on the property.

"We continue to work in good faith with all the parties to find an amicable resolution that is good for the community and that (Gorobets) finds acceptable also," said Long. "The property has got a certain value and the (North Tonawanda History Museum) has made a significant contribution to reducing the overall obligations for all the parties. We are just trying to find something that is fair to both parties that reflects that."

Monkiewicz said Gorobets gave the museum several options, including paying the total amount outright or giving him the deed and paying rent of $6,000 a month. Monkiewicz said they just don't have that kind of money.

According to the museum's 2014 federal tax return the museum received that year a total of $2,832 in membership dues, earned $600 from its book sales and raised $74,098 in contributions, gifts or grants. At the end of 2014, the museum had $2,395 in cash and $36,904 in savings.

After Neal's death her son, John Neal, took the helm, also as a volunteer with a volunteer staff. The museum is open three days a week, from 11 a.m. to 3 p.m. on Mondays, Wednesdays and Saturdays.

Monkiewicz said the museum board has put out a call to ask for support from the public at https://www.gofundme.com/nthistory, noting that Neal and her family and a small group of supporters have put their heart and soul into the North Tonawanda History Museum. The online donation site has raised about $625 of their $200,000 goal in the past four months. Donations may also be made in person at the museum.

John Neal said in his gofundme plea, "We only have a short time to negotiate and pay off the mortgage on our building, or the history of North Tonawanda could be in permanent danger."

"We are currently located in the perfect spot, on the path of foot traffic down Webster Street and close enough for visiting boaters to walk to from along the Canal. There is a large public parking lot behind the Museum and enough square footage to house even our largest displays, which include a collection of locally-produced Wurlitzer organs and jukeboxes, and a full-size Richardson boat. We do not have manpower to move our extensive collections, and another building would not offer the same level of safety, accessibility, or protection to many of our fragile collections items and photographs," added Neal on the pledge site.

Monkiewicz said if the museum is forced to move it wouldn't be able to offer the public displays in the central location the community has enjoyed.

"It wouldn't cease to exist, but it would exist in a different form. It would have to be much smaller. We are thinking about it, but we don't want to," said Monkiewicz.

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