Zahavi reneges on $1 million mortgage
BY PETER B. BRACE INDEPENDENT WRITER
Dreamland Theater owner Haim Zahavi has reneged on a $1 million mortgage agreement with Parker and Bonnie Gray of Nantucket.

The Grays are one of the four families, including the Anastos, Flanagan and Ruben families, who sold the Dreamland Theater to

Zahavi for $6 million on March 14, 2005. The

Grays filed suit against Zahavi in Nantucket Superior Court for Breach of Contract on Aug. 10.

The Grays also requested of the court, and received approval for, a $1 million attachment on Zahavi's holdings.

Parker Gray declined to comment on his suit against Zahavi, deferring all inquiries to his attorney Bruce P. Gilmore, Esq., of Yarmouthport, Mass.

According to court records, on March 11, 2005, the Grays and Zahavi entered into a Mortgage Note for $1 million, with interest at a rate of six percent. Zahavi agreed to make monthly payments of interest only in the amount of $5,000 for the first year, which he did. All principal, any unpaid interest and other charges were to be paid in full by March 11, 2006.

The Grays did, however, grant Zahavi the option of an additional period of 12 months to pay off the loan, during which the interest rate would increase to 7.5 percent with monthly payments of interest only in the amount of $6,250.

Zahavi then exercised his option to extend the repayment period and made two payments, but made no more payments after that, according to the Grays' Nantucket Superior Court filing.

"The Defendants made two (2) payments as required by the extension to the Agreement, however, both checks were returned by the financial institution for insufficient funds," said the Grays in their filing.

The lawsuit also states that Zahavi has failed to pay the balance in spite of repeated demands.

Zahavi could not be reached for comment.

On June 14, Rose & Crown and Foood for Here and There owner Rick Ulmer announced he was working on an agreement to purchase the Dreamland. Zahavi never revealed his reasons for wanting to sell the 177-year-old building at 17 South Water St. valued at $3,840,500 and the .14- of-an-acre parking lot behind the theater at 18 Easy St. assessed at $1,960,300. However, Zahavi's repeated and failed attempts at getting building permits to renovate the theater, and his inability to open for the 2006 and 2007 seasons garnered him no love among islanders and town review boards.

Ulmer had planned to restore the movie theater on the ground floor, renovate the second floor into a ballroom and stage to be used by the island's performing arts groups, and build a restaurant on the third floor with an outside dining deck overlooking the harbor. But his plan foundered when he could not find enough committed investors to help him purchase the property.

The same week Ulmer made his purchase announcement, Selectman Michael Kopko, Nantucket Film Festival Founder Jonathan Burkhart, Christy Cure, Susan Carey and others collected more than 350 signatures in petitioning the Board of Selectmen to hold a special Town Meeting at which an article written to take the Dreamland by eminent domain could be voted on. That effort failed by a hand count of 255-182 because a two-thirds vote was required.

Since that date, no one has stepped forward to

purchase the Dreamland. I