Norwich - The city has received court approval for tax foreclosure auctions on two prominent downtown buildings formerly owned by developer Janny Lam, as well as a rundown former shopping center on Sturtevant Street that lies in the Yantic River flood plain.

The vacant Thames Plaza office building at 101 Water St., formerly owned by Norwich Harborview Corp., will be sold at auction Nov. 30. The four-story Lerou Building at 287-291 Main St., formerly owned by Boswell Properties LLC, which houses an Asian restaurant, laundromat and apartments on upper floors, will be sold at auction Dec. 7.

The Sturtevant Street plaza, at 57-61, 68 and 204 Sturtevant St., formerly owned by Zabro Properties LLC, will be sold Jan. 18.

Although the two downtown buildings could be attractive to potential developers - and would qualify for three downtown revitalization programs and downtown enterprise zone tax breaks - the city does not have the option to advertise for development proposals rather than hold an auction.

All three of the buildings must be sold at auction, said attorney Aimee Wickless, who handled the foreclosure, because there are large debts owed to mortgage holders in addition to the city's tax debt.

The city's debt on Thames Plaza now totals $185,000, including taxes, interest and attorney fees. The Mashantucket Pequot tribe has a $1.4 million mortgage on the building, which has a market value of $700,000, Wickless said.

The city's debt on the Lerou Building was $50,250 at the time of the court judgment, while HSBC Bank holds a mortgage of $750,000. The building is valued at $632,500.

And the city's debt on the shopping plaza totaled $261,500, while the law firm Cohn-Birnbaum & Shea has a mortgage of $50,040. The market value on that building is $800,000, Wickless said.

Even with the auction scenario, City Manager Alan Bergren said the city would welcome interested developers to bid on the buildings at the auction and would work with them on the incentive programs. The Norwich Community Development Corp. recently had worked with a private college, Stone Academy, to bring a downtown campus to Norwich, but the deal fell through.

"We had some ideas for Thames Plaza, and I don't want to dismiss that (as) an educational use," Bergren said. "It's not going to be a shopping mall."

NCDC President Robert Mills said the auctions bring more development opportunities to downtown, and he would welcome developers willing to invest in the Thames Plaza, which overlooks Norwich Harbor, renovate it and reoccupy it.

"What concerns me is the traditional flippers, who buy low and don't do anything," Mills said. "I would discourage that."

Mayor Peter Nystrom said he will meet with Mills and Alderwoman Sofee Noblick to discuss ways to market the upcoming Thames Plaza auction, starting with developers who had recently expressed interest in it. Nystrom also will contact Mashantucket Pequot tribal officials to see if they are interested in taking ownership of the Thames Plaza building.

Director of Planning and Development Peter Davis said the Lerou Building might be the most attractive of the three properties, because it is in good condition and has been occupied by viable businesses and tenants.

The former shopping plaza, which in the past housed the Big Y grocery store, a gymnasium and several small businesses, presents the biggest challenge. Nearly the entire property lies in the Yantic River 100-year flood plain. Any developer who proposes renovations equal or greater than 50 percent of the building's current assessed value would have to flood-proof the entire building.

"So even if someone was interested in part of the building, you'd come up against (the 50 percent mark)," Davis said.

c.bessette@theday.com