The Signature Center, 4 E. Third St., Jamestown, is pictured. The building has been placed into a receivership. P-J photo by John Whittaker

A downtown building has been placed into a court-approved receivership.

M&T Bank filed a case in state Supreme Court in Mayville in October asking the court to appoint a receiver for the Signature Center at 4 E. Third St., Jamestown, while the bank pursues foreclosure actions against GPatti Development LLC. In addition to GPatti Development LLC and George Patti III, the lawsuit names the state Department of Taxation and Finance, County IDA, state Housing Trust Fund Corporation and the Jamestown Renaissance Corporation. The local and state agencies are listed as defendants because each has mechanics’ liens on the property.

The receivership was negotiated to and agreed upon by bank officials and Patti, with state Supreme Court Justice Grace Hanlon giving her approval in early February.

“Obligors are in default on their obligations due and owing to lender under the stipulation and, therefore, the appointment of a temporary receiver over the mortgaged premises, as agreed to by obligors, is warranted,” the court decision states. “Obligors hereby acknowledge and agree that they are in default on their obligations and owing to lender under the stipulation and obligors hereby authorize lender to file this Stipulation and Order Appointing A Temporary Receiver in the instant action.”

Bank officials allege the bank is owed $1,209,115.72 on the mortgage. The original principal loaned by the bank was $1.56 million loaned on Aug. 1, 2016. The property has been listed on commercial real estate brokerage sites as available for $1.4 million as of early January. The Signature Center houses Digitell Inc., the Chautauqua Workforce Investment Board and a small M&T Bank office. Digitell was acquired by Conexiant in 2022 The conversion of the property from a large bank branch into the Signature Center cost $3.5 million in public and private funding.

M&T officials said part of the financing for the project was an assignment of rents that were supposed to make sure the loan to M&T Bank was paid. Kenneth W. Paulin, a senior vice president for M&T, wrote in an affidavit in support of the appointment of a receiver, that bank officials are concerned that since August 2023, when the loan matured, rents of more than $245,000 have been collected with $29,237.61 paid to M&T Bank. Bank officials want a receiver put in place to collect rent and then make independent decisions on how best to protect creditors.

The receivership allows the bank to sweep $25,000 a month from Patti’s business accounts, with Patti also required to deliver an updated rent roll including the name, address and telephone number for each tenant. The bank will receive monthly updates on a sale or refinancing of the property. The receiver is also entitled to collect $25,000 for retainage to pay for the receiver’s duties, with any proceeds above and beyond the $25,000 retainage forwarded to the bank with the receiver’s monthly account.

“The receiver is authorized to conduct investigations of, and analyses concerning, the operation, maintenance, improvement and management of the mortgaged premises and to assume responsibility, in accordance with all legal requirements, for all leasing, management and operational functions at the mortgage premises including, but not limited to, the letting or re-letting of the space or equipment and/or the making of disbursements as may be appropriate, and in accordance with the loan documents, of any monies generated by the mortgaged premises with authority to undertake repairs (subject, in certain instances) to the prior approval of the plaintiff as set forth above) and to hire and/or dismiss personnel as may be required in order to efficiently operate the mortgaged premises and to maintain its value,” the agreement states.