GLOVERSVILLE - A court has rejected the city's request to obtain records from the Fulton County Economic Development Corp. and the Crossroads Incubator Corp. in the city's effort to recover $750,000 from the agencies.
City Attorney Anthony Casale said the information requested in the petition would have helped the city prepare a possible lawsuit to recover the loan from the EDC to the CIC that was used to redevelop the former Estee Middle School into apartments.
"I respectfully disagree with the court's decision," Casale said today of state Supreme Court Justice Richard Aulisi's ruling, dated Monday. "I will be meeting with the mayor and the members of the council to determine what all of our options are and to pursue the next phase of this."
In an October filing in state Supreme Court in Fulton County, Casale sought records from the EDC and CIC from their creation in 1988 to the present day.
In a Nov. 6 challenge to the city's motion, the EDC, CIC and their new parent corporation, the Fulton County Center for Regional Growth, argued the city lacks a legitimate reason for asking for the information.
The agencies' attorney wrote then that the city is "conducting a fishing expedition" designed to harass the CIC and EDC over the loan for the Estee Commons apartments that was made while administering the City of Gloversville Urban Development Action Program. The agencies' challenge also said the loan for the Estee Commons project was a "prime example of a proper economic development loan" that benefits the city.
Casale said the city is worried the EDC has not been holding the CIC responsible to repay the loan.
EDC officials previously said the CIC would start paying back the loan when the project shows profit. They said if the CIC sells the building, the proceeds would be used to pay back the loan.
"This prevents us from having access to the information that I continue to need to summon a complaint, and without having the pre-action discovery, it is impossible for me to draft that summons complaint right now," Casale said of the court decision. "We will have to determine where to go from here, including potentially appealing Judge Aulisi's decision."
Casale said in the application the city made it clear that because this was a colluded agreement between the EDC and CIC, the board members for the two organizations have liability.
"Right now, I still don't know the names of the individuals that served on those boards and approved this colluded agreement," Casale said. "That's precisely why we filed the application for pre-action discovery, and that's precisely why we continue to believe bringing such an application is warranted."
"The decision by the court fails to address this in any way, shape or form," Casale said. "It doesn't say that it disagrees with our application; it doesn't say that our showing isn't sufficient, it just completely makes no mention of it."
Mayor Dayton King said he and the Common Council will decide how to proceed at the next council meeting.
"Until that happens, I don't really have a comment right now," King said.
In its first lawsuit against the same entities, filed in October, the city is seeking to regain control of 13 other loans and a cash balance of about $940,000 from the economic development agencies. That lawsuit is still pending.
In Monday's decision, Aulisi wrote, "The various items and forms of preaction disclosure which the petitioner has requested from this court are matters that are normally requested during discovery phase of litigation once a formal action has been commenced, not prior to the commencement of the action.
"In light of the foregoing, the court will deny the petition in its entirety," Aulisi wrote.
Michael Reese, president and chief executive officer of the Fulton County Center for Regional Growth, said today he is pleased with the judge's decision.
"From the EDC standpoint, we feel we can work this out and transfer the loan fund back to Gloversville without going through the courts," Reese said. "We want to continue to reach out and negotiate with them to settle this matter as quickly as we can and return the loan fund to them because that is their desire."
Levi Pascher covers Gloversville news. He can be reached by email at firstname.lastname@example.org.