DLDC resolution moves Clarion issues forward

The Dunkirk Local Development Corporation took a step forward to resolve outstanding issues involving the use of federal funds to help some Clarion Hotel projects in 2009 and running through 2011.

Development Director Steve Neratko told a meeting of the DLDC’s board of directors Wednesday that a resolution to authorize execution of a transaction document has been reached with S&K Hospitality LLC hotel owners Kulwinder Singh and Kulwant Kang.

“We’ve come up with an agreement that would include, as stated in the resolution, $5,000 at closing and a repayment of $120,000 over 20 years at 4.5 percent interest. We would also have mortgages on the property, security interest in equipment, furnishings and fixtures,” Neratko explained. “There would also be a personal guarantee from each of the two owners of the hotel and then there is a portion that is a grant.”

The grant of $23,534.49 would be applied toward the $158,534.49.

“The agreements that were in place did have grants as part of them and they all basically conform to the $120-125,000 that would be paid. It’s basically the same financial agreement that was in place prior, it was just getting all the paperwork in line,” Neratko explained. “We have had conversations with HUD about this, they’re not willing to give a final approval until they see all the final agreements in place, but we were encouraged at the last meeting that they did take a look at the financial obligations of this deal and they seemed pleased with that portion.

“Prior to being able to move forward with this, as part of this resolution we would hire an attorney to put together those final agreements which would include all the HUD requirements that need to be in place so that this agreement would be good with everyone; with HUD, with the Clarion, with us, and put everyone in good standing.”

Neratko later added that HUD didn’t have any issues with the financial portion of the agreement.

“Going back to the original loan … it was proper to do what was done but there was no paperwork?” board member James Muscato asked.

Mayor Anthony J. Dolce said there were two separate issues but Muscato replied that the audit said there was improper use of the money.

Neratko said the resolution would help with the HUD issues

“We will have the proper paperwork in place, it will help with that process. … This will give us the paperwork in place to at least help us prove our case, because right now that’s a major hurdle we have,” he added.

After the meeting City Attorney Ron Szot was asked about the hotel resolution.

“What’s intended by the resolution is to essentially make an accurate repayment structure for the monies that were loaned, and-or granted to S&K Hospitality,” Szot replied. “There’s a lot of documents that had been generated over a series of weeks or months when the original loan and grant were given. Some were at odds with each other, some of the terms, so what this will do is sort of codify the terms and conditions moving forward relative to the money part of everything. … This is a step and doesn’t necessarily have anything to do with whether the money in the first instance complied with anything relative to HUD, federal government, state or anything.”

Dolce said this was the first step in the process to meet HUD’s national objectives, including looking at low-mod income job creation benefits, something the city is working on now.

“They want to see the final documentation prepared by us that lists how all the HUD objectives will be met,” Dolce explained. “There’s still data we’re compiling to forward on to them, before they make a final determination.”

Dolce said it should have been done on the front end and kept track of all along. He said there was no hard date for an end to answering HUD’s concerns but a good step has been taken.

He was asked if the amount of a possible payment is being reduced.

“Yes. We’ve been able to sort out some of these issues and others we know are going to have to be paid back, so that process is still ongoing,” he replied. “That’s definitely a lengthy process. They’re looking at all the projects so there’s a lot there to review. I’m just glad that we were able to come to a resolution so we’ll start to receive payments and get on track financially; there’s still much more to do on the HUD front.”

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