The Saunders Group also gave city Mayor Thomas M. Menino a deposit of $700,000, which Lisa Pollack, spokesperson for the mayor, tells GlobeSt.com will go to the city's affordable housing fund. The Group has agreed to pay $14 million for the 73,250-sf building and parking lot, the proceeds of which will go to fund mixed-income housing in the city.

Development of this property was originally awarded to Landsmark Ltd., a London-based developer, last January when it offered $15.5 million for the building. The company lost the development rights this past August because of lack of progress. Saunders' $40 million project will involve adding three floors to the seven-story building which is three times the size proposed by Landsmark.

The Saunders Group could not be reached by presstime, but in a released statement the company said it would preserve the 77-year old building's history and flavor. The locally based company owns the Lenox and Copley Square Hotels in the Back Bay and an airport hotel in Revere.