Power Pallet asks Montgomery County for loan forgiveness totaling $309K
MONTGOMERY COUNTY Power Pallet Recycling Center is asking the Montgomery County Industrial Development Agency to forgive a $309,000 loan balance because it hit specific job-creation targets.
IDA Executive Director Ken Rose said the IDA board will discuss the company’s request Thursday. “The board will make a recommendation to the full Board of Supervisors. The supervisors would take it up in October,” he said.
Joseph Emanuele III, treasurer for the IDA, called the request “a considerable amount of money,” adding, “I would need to have more details from [Rose] as to why they want to do it.” He declined further comment, saying, “We may make a decision that night, but at this point it would be premature not knowing the full details as to the reason he is bringing this to our attention.”
Montgomery County loaned Power Pallet $503,500 in 2008 to assist with its expansion on Route 30 in the town of Amsterdam.
The company manufactures and recycles wooden pallets used in transportation and storage.
The money came from the state through the Federal Community Development Block Grant program. The county converted the block grant into a low-interest loan to Power Pallet.
Companies that received the grants were supposed to create jobs. Power Pallet used the loan to add a second production line, resulting in projected creation of 65 new full-time jobs, with 62 made available to low- and moderate-income persons, according to a news release from the governor’s office in 2008.
Power Pallet has created barely half of that total number of jobs, 33, though seven more hires are still projected.
Despite this, Rose said the company has satisfied the job creation requirements of the loan, based on a formula.
“We discussed this a year ago and we were waiting for word [from state officials] that Power Pallet met all conditions. We were told that forgiving the loan is a local decision,” Rose said.
Power Pallet has made payments of approximately $137,000 toward the loan since 2008, remaining in good standing throughout.
“They are in the process of working on another expansion project,” Rose said.
The company is planning a $1.2 million expansion in October. Company officials did not return calls seeking comment for this story.
Rose said the block grant did not come out of Montgomery County’s revolving loan fund, although the company’s loan repayments are being added to the fund.
He said the loan has approximately $1.4 million available, out of a principal balance $2.2 million.
There are 15 loans outstanding, almost all in good standing. The one exception is a $150,000 loan to Crystal Ristorante owner Tony Centi.
Centi paid about $40,000 on the loan before defaulting on it. In addition, he inappropriately used his kitchen equipment as collateral for the 2009 loan while also pledging the same equipment to Ciena Capital, also known as BLX Capital, LLC, in 2004 when he borrowed $1.2 million to add a banquet hall onto the bar and restaurant.
Centi, who faces foreclosure, has announced he will close the restaurant Sept. 17. He was not available for comment Tuesday.