GLOVERSVILLE - The Fulton County Economic Development Corp. says it has negotiated in good faith with the city over the transfer of a $2.5 million loan fund and hopes to settle the dispute outside of court.
The city is trying to get back the loan fund, which the EDC?took over?years ago, in hopes of loaning money to local businesses that want to expand.
Mayor Dayton King this week said the city plans to take legal action against the EDC because the city is unwilling to accept the EDC's terms regarding the transfer of the loan fund, which originated from a federal grant.
The EDC, which is overseen by the Fulton County Center for Regional Growth, said in a news release it forwarded a third revision of a proposed contract for the city's review, and upon signing of the contract, the fund would be transferred.
The second revision was denied by the city during a Common Council meeting Tuesday.
The city attorney said Thursday he had not received the third revision yet.
The city requested the return of the loan fund at the end of April. To make sure all U.S. Department of Housing and Urban Development guidelines were followed, the EDC asked the Buffalo Regional Office to review the grant awards and provide direction on the transfer of the federal dollars back to the city.
According to the news release from the EDC, once this step was completed, the EDC drafted a contract that assigned the loans to the city and provided for the transfer of the loan fund. After meeting with city officials, the EDC agreed to revise the contract.
The city allowed the EDC to manage the loan pool and approve loans for small businesses in Gloversville years ago.
Today, the loan pool has 14 separate loans totaling more than $1.5 million and a cash balance of about $940,000 available for use in bank accounts, Mayor Dayton King said. Almost $2.5 million sits in the hands of the EDC, King said.
The mayor said the city was concerned the EDC - under its terms for turning over the loan fund - made no mention of paying some of the fees or how the Crossroads Incubator Corp. - the real-estate arm of the Center for Regional Growth - would pay back a $750,000 loan for the Estee Commons apartment project.
He also said the EDC wanted the city to pay the CRG's attorney fees.
"We asked as part of the agreement to have part of the loan fund cover administrative cost and the attorney fees to complete this process," said EDC President Mike Reese. "No payments have been made on the Estee Commons loan, but as we move forward, payments will be made. We are certainly not walking away from the responsibilities of that loan. We currently have the building listed for sale by a realtor and when it goes for sale the proceeds will go toward retiring that loan."
Reese said the EDC will continue to operate the Estee Commons building until a buyer is found.
"It is in the best interest of everyone for the EDC and city to come to agreement so that economic development continues in the city of Gloversville," Reese said in the news release.
Reese said the EDC wants to resolve this quickly and hopes to continue to negotiate with the city to have it resolved outside of court.
"We certainly haven't walked away from the negotiating table yet," said Reese.
The city attorney said he would entertain offers by the EDC, but the group would have to proceed immediately.
"Starting this weekend, my attention will be focused on preparing the litigation," Casale said. "The time for EDC to make their deal is right now, they need to stop playing games."
The news release said the EDC is proud of the economic development success. From 2005 to present, the EDC has made 32 loans worth $3,450,000 in the city and has developed more than 470,000 square feet of new buildings in industrial parks, which resulted in property tax receipts of $294,925 in 2011, said the news release.
The EDC says these projects have created and retained hundreds of jobs for the citizens of the county. The group says it's working with a foreign company that has an interest in putting a manufacturing facility in the city that would create new jobs and investment.
In the news release, the EDC said it has contracted with Fulton County for more than 25 years to provide economic development services. This private-public partnership has shown results in new investment, building construction and job growth, said the EDC in the release.
The press release referred to this partnership with the city as being similar in nature to the Fulton County Regional Chamber of Commerce & Industry contract to operate the Fulton County Tourism Program.
Levi Pascher covers Gloversville news. He can be contacted at email@example.com.