Gloversville waiting to get control of loan fund from agency
GLOVERSVILLE Mayor Dayton King is chafing at delays getting control of a $2.5 million loan fund the Fulton County Center for Regional Growth and its predecessor have administered for years on behalf of the city.
King said local control will help economic development projects take off in Gloversville, thereby expanding the city’s tax base, boosting sales tax revenues and decreasing homeowners’ property taxes.
“This will provide more places for people to dine, shop and work,” he said. “The one thing that stands in the way of all of these businesses is that the CRG continues to hold onto the city’s Urban Development Action Grant loan pool money.”
King said the fund has a balance of approximately $940,000, which can be loaned out. The pool has 14 separate loans totaling more than $1.5 million dollars.
Center President and CEO Mike Reese said the agency’s board of directors has agreed to turn over the loan fund to Gloversville as soon as both sides have signed the necessary agreement. He said the city’s attorney is working on the second draft of the agreement, signalling the holdup was on the city’s side.
“There has been paperwork going back and forth. We are not holding anything up. We want to make sure we have a legal agreement in place that assigns the loan fund to the city,” Reese said.
King said he has been pressing the center for the past six to eight months to transfer the loan pool to the city, with little success. “We have been met with resistance at every stop, with representatives telling us that they need to check with the Buffalo office of [the federal Department of] Housing and Urban Development and their attorney is working on the language to make this happen,” he said.
Reese disagreed with King’s assessment.
Last week, King attended the center’s monthly meeting and voiced his concerns to the board of directors.
“The most recent meeting the city had with a representative from CRG was on Sept. 14 when it appeared we would finally be getting our money back. We expected to hear from the CRG office by at least Sept. 19, but hadn’t heard anything until [Councilman-at-large James] Robinson and I went to the CRG board meeting,” he said.
King was also highly critical with how the center has used the funds through the years.
“The CRG has used part of the loan pool money to cover some of the costs to their staff,” he said.
He also said the center granted its largest loan, $750,000, to its own subsidiary, Crossroads Incubator Corp., for the Estee Commons project, and that that subsidiary has yet to pay anything back on the loan.
“To date, no payments have been made on this loan. The stipulation made from the Fulton County Economic Development Corp. [which formerly administered the loan fund] to the CIC was that they would start paying this back once it became profitable,” King said. “Ideally, we will get the CRG to start paying on the CIC loan.”
Reese admitted the CRG has used some of the loan fund to cover administrative expenses.
“As we continue to administer the fund through 2012, that same process has been used,” he said.
He added the Estee Commons project was a success and that several families are living in the former middle school building.
“They should be very happy with past results, and I hope they are able to make as good a result going forward,” he said.
King said the city will administer the fund using the Community Development Agency’s Board of Directors, along with two existing city employees.
Reese said that prior to turning over the loan pool to the city, the center tried to clarify an ambiguity about how money returned to the fund can be used going forward.
The original grant from 30 years ago did not clearly specify that the money should be used as a revolving loan account, leaving the possibility the city could distribute the money in the form of grants rather than than as loans.
Further, Reese said, cities typically do not operate revolving loans funds like this because politics can enter into award decisions.
“I hope they can have a process in place that allows the nature of the loan fund to go forward and allows business to invest in city and create jobs in city,” he said.