JOHNSTOWN – Gloversville last week filed a lawsuit against local economic development agencies in an attempt to recover $750,000.
The city obtained a $1.5 million federal grant in 1993 and contracted with the Fulton County Economic Development Corp. to administer the money.
In October, the city filed a lawsuit against the Fulton County Economic Development Corp. to regain control of 13 loans and a cash balance of $940,000 from the Fulton County Economic Development Corp., Crossroads Incubator Corp. and their parent company, the Center for Regional Growth.
The new lawsuit, filed Thursday against the EDC, CIC and CRG, seeks $750,000 related to the development of the Estee Commons Apartment Complex.
City Attorney Anthony Casale, who filed the 82-page legal action in state Supreme Court in Johnstown, had no comment Tuesday.
The new lawsuit stems from a loan the EDC made to the CIC in the mid-2000s to redevelop the former Estee Middle School into the apartment complex on Fremont Street.
The lawsuit claims the 1993 agreement was renewed and extended by Gloversville and the EDC “a number of times,” most recently on Jan. 3, 2005, until Dec. 31, 2010.
On Jan. 31, 2006, the EDC loaned the CIC $750,000 – a payment due on Jan. 1, 2011. The lawsuit claims the CIC is in default – a “breach of contract” with all those involved.
The lawsuit states it would be “inequitable” to permit the EDC, CIC and CRG to retain the $750,000.
In response to a petition previously filed by the city to obtain records, the agencies’ attorney – Charles J. Tallent of Canajoharie – wrote 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.
He also claimed the loan for the Estee Commons project was a “prime example of a proper economic development loan” that benefits the city.
Casale said in January the city is worried the EDC is not 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.
Meanwhile, the EDC has been operating the Estee Commons building and collecting rent from the tenants, Casale said previously. He said the rent collected has not gone toward the principal of the loan.
He also said the city is uncertain how much rent is collected from tenants, but it hopes that information will be revealed during the discovery process.
The second lawsuit seeks to replace the EDC as the collector of rent from tenants.
Michael Anich covers Johnstown and Fulton County news. He can be reached at [email protected].
