Frankford Associates walk
away from Art Holiday deal

By Diane Prokop
Times Staff Writer

Frankford Associates, a development group that hoped to convert the Art Holiday theater to an arts center, backed out of a deal to purchase the building for $250,000 last month.
The signed agreement of sale for the property at 4204 Kensington Ave. had afforded the development group an option to walk away should its research of prospective costs make the acquisition ill-advised.
According to Jim McCarthy, one of the development group’s more visible partners, the potential investors needed more time to assess the scope of the work that needed to be done at the 87-year-old theater, whose last incarnation was as a porn movie venue.
"What we were doing was getting a cost of what the improvements would be — roofing, mechanical systems and environmental. There’s a significant amount of environmental issues (including) soil contamination in a funky basement, where there were oil tanks at one time," McCarthy said.
The group had submitted an offer to put up a little more money to buy more time for the assessment.
"We submitted them our new offer — if you don’t accept we’re terminating the agreement," McCarthy said of the message conveyed by his partners and him, adding they had hoped that swift submission of paperwork as to whether they would move forward with the sale could have helped to continue negotiations.
The theater owners, however, rejected the development group’s offer and wanted a significant amount of money to keep the deal on the table, money that the partners were not prepared to put up at this time, McCarthy explained.
The Frankford community has taken the development group to task of late for its sale of the Third Federal Bank building to Northeast Treatment Centers. Residents have been concerned about the agency’s plans to provide behavioral health care and social services at the facility for adults and youths. The bank branch remains as a tenant.
Frankford Associates had purchased the building for $275,000 in April from the Frankford Community Development Corp. The developers in turn sold it to Northeast Treatment Centers for $635,000.
The net profit, however, was about $220,000 because of extensive legal and title-issue expenses. Those proceeds are being held in an account known as a 1031 Exchange, in which a property transaction is structured so that taxes on a seller’s profits or gains are deferred to a future date. The profits are held in escrow until the sold property is replaced with another like property. McCarthy said the money will be used to purchase several properties on the Frankford Avenue commercial corridor. ••
Reporter Diane Prokop can be reached at 215-354-3036 or dprokop@phillynews.com