GLOVERSVILLE - The city and a local economic development agency are trying to resolve issues related to $750,000 the city wants to recoup from the agency.
The agency used the money to help turn the former Estee school property on Main Street into apartments. The agency now is trying to sell the property and has a possible buyer.
This week, the Common Council passed two interim agreements with the Crossroads Incubator Corp. and Fulton County Economic Development Corp. The two agencies are connected to the Estee Commons apartment property and are under the parent company, the Fulton County Center for Regional Growth.
In 1993, the city contracted with the EDC to handle a federal grant with the expectation the city would get the money back.
Gloversville in March filed a lawsuit against the economic development agencies in an attempt to recover $750,000 related to the Estee Commons development.
The EDC loaned the money to the CIC in the mid-2000s to redevelop the former Estee school on Main Street into the apartment complex.
City Attorney Anthony Casale said the new interim agreements will be in place until a decision is made through a court order or settlement.
However, Casale said, the issue ultimately would be best resolved by the agencies and city working together.
"These two interim agreements signifies a turning point in the relationship between the city, CRG, the CIC and the EDC," Casale said Wednesday. "Hopefully, all the entities will keep working together. The fact of the matter is we can stand on principle and litigate it, but even if we win, it is not going to necessarily fix the problem. The best way for the problem to be fixed is through an agreement reached between the city, CIC and EDC."
CRG President and Chief Executive Officer Michael Reese said the interim agreements are a sign the relationship between the CRG and city is improving and says a final agreement could be reached.
"Our hope is that we can work with the city of Gloversville to resolve all of these issues without having to resort to legal actions," Reese said. "We have been meeting with the Common Council and working with the city to try to bring development into the city and trying to find a developer that would buy the Estee Commons properties."
Potential buyers of the Estee Commons property previously told the city council in August they would tear down an existing building on the Estee site and build a new one for affordable senior citizen housing.
The developer is in discussions with the CRG to buy the Estee Commons property.
Julie Flynn, director of development for Liberty Affordable Housing, and John Varecka, president of CRM Rental Management, said the plans are contingent on reaching a deal with the CRG and obtaining funding for the project.
Reese said Wednesday the developer is trying to obtain funding and he expects to receive a proposal from the company.
"These agreements with the city of Gloversville go along with that," Reese said. "The city would be a part of those discussions, and we want the city to support this project and be a party to what would be a major development in downtown Gloversville."
The agreements unanimously approved by the council Tuesday state several policies, including:
The EDC will not take applications or provide any future loan funds without the written approval of the city.
The CIC agrees to not convey the Estee Commons apartment project to a third party without a court order authorizing it to do so or a written agreement between the city and CIC authorizing it to do so.
The CIC agrees to give notice to the city of any proposed sale of Estee Commons and provide a copy of the contract of sale, which would include provisions for the assumption or payoff of the second mortgage held by the EDC.
Flynn said the proposal for Estee is to develop an additional 40 units on the property to provide affordable housing for seniors. The other existing rental units on the site would remain conventional rental properties.
Flynn said the undeveloped Estee Commons building would have to be demolished because of its deterioration.
The potential buyers said construction of the building would take about 15 months.
Mayor Dayton King and other city officials said the development would be good for the city.
"We want to allow the Estee building to be sold, but we want it to be done on our own terms regarding that $750,000," King said. "We just want to make sure it's not done in a vacuum, and the CIC and EDC are good with that."
King said a private company paying for what could be a $2 million demolition cost also would be good for the city.
Reese said the potential buyers are interested in buying the three parcels that make up the former Estee complex.
The parcels include the 39-apartment Estee Commons building facing Fremont Street, the vacant adjoining main part of the old school at 90 N. Main St. and a three-acre parcel on Littauer Place.
The CIC was asking $3.4 million for the property.
The city obtained a $1.5 million Urban Development Action Grant from the federal Department of Housing and Urban Development in 1993. The same year, the city contracted with the EDC to administer the grant, which later would become a revolving loan fund for economic development projects in the city.
The final contract between the city and EDC ran from January 2005 to Dec. 31, 2010.
Casale previously said the provisions state that upon expiration of the contract, all the assets must be transferred back to the city, and that is what the city is asking for.
The city has filed two lawsuits against the economic development agencies.
One seeks the $750,000 related to the development of Estee Commons. The other seeks to regain control of 13 loans and a cash balance of $940,000 from the EDC, CIC and CRG.