Aug. 21--WATERTOWN -- The Watertown Local Development Corp. is struggling with a couple of poorly performing loans.
A plan to rehabilitate the three-story commercial building at 259 J.B. Wise Place with seven upper-floor apartments appears to have been scrapped by a group of four developers, leaving the WLDC in a financial bind, said Donald W. Rutherford, CEO of the agency at Thursday's meeting. The owner of the building, Thomas E. Horning, hasn't made payments for more than a year on an outstanding loan principal of about $41,000 owed to the agency. That amount is leftover from a 15-year, $100,000 loan made by the agency in December 1999 to buy the building. Board members discussed Thursday whether foreclosure action might be taken to collect the debt.
Mr. Horning owns Golden Image Tanning Salon on the ground floor of the building. He also leases space to Evolution Hair Salon. A former business, Shortsleeve Screening and AVL Signs, relocated about six months ago.
Mr. Horning was sent a letter Aug. 4 requesting him to pay off the full balance on his loan in 30 days, Mr. Rutherford said. Action to collect the debt was taken when it became clear that prospective investors would not follow through with their project. Along with Mr. Horning, the group includes an investor from Oswego and two from New York City, who Mr. Rutherford declined to identify. The agency has held meetings with developers since last winter, but plans for the project kept getting delayed, he said.
"Things kept getting pushed back because of one of the partners from New York City didn't get up here," Mr. Rutherford said. "We let this go on until about three weeks ago, when he failed to show up for a meeting. I'm putting no credence in their ability or willingness to go forward with this project. We only let this go because we really thought we had a party that was taking this over."
The board decided Thursday it will consider taking legal action next month if the loan is not paid off by Sept. 4. The agency has a second position on the mortgage of the building behind Watertown Savings Bank, which is owed about $100,000. The agency also has a second position behind the bank on Mr. Horning's residence.
Mr. Rutherford said the board will need to decide whether it would be worthwhile to pursue foreclosure action on the building. To do so, it would need to pay off the debt owed to the bank, and then attempt to resell the building at a foreclosure auction for a greater amount after acquiring the property.
"We have to decide whether we really want to spend that money, and how much we could resell the building for," he said.
Mr. Horning said Thursday he will be unable to pay off the $41,000 loan. He said that he believes the $1 million rehabilitation project could still come to fruition if developers decide to put up the money.
"It's all up to the investors from New York City at this time," he said, declining to provide further details. "They're supposed to be moving forward, and I won't know much more until they get their paperwork in."
The board also discussed a plan for collecting a $40,000 debt owed by Augustine A. Romeo, owner of the building that recently housed Romalato's Gourmet Delicatessen at Gaffney Drive and Coffeen Street. The deli, which closed this summer, was given matching $50,000 loans in 2010 by the WLDC and North Country Alliance to establish the business. The Alliance also is still owed about $40,000.
The board approved a plan by Mr. Romeo to sell restaurant equipment for $40,000 to an unidentified business that will reportedly lease the 1,500-square-foot space; of that amount, the two agencies will each get $20,000. The remaining balance on loans will be paid off by Mr. Romeo as rent is collected by his tenant, Mr. Rutherford said.
(c)2014 Watertown Daily Times (Watertown, N.Y.)
Visit Watertown Daily Times (Watertown, N.Y.) at www.watertowndailytimes.com
Distributed by MCT Information Services