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DEVELOPMENT AGENCY'S LOAN POLICIES RAISE CONCERNS

The sudden closing of Empire Brewing Co. in the Theater District is prompting some lawmakers to raise questions about lending practices used by the city's main development agency.

The 160-seat eating establishment occupied city-owned space in the historic Market Arcade at 623 Main St. With no warning, the owners ceased operations last weekend. Prior to its opening 14 months ago, Empire Brewing received a $100,000 secured loan -- tied to assets of the company -- from the Buffalo Economic Renaissance Corp.

Fifteen months earlier, Breckenridge Brew Pub closed its operation in the same space, saddling the city with an estimated $900,000 in losses, including unpaid principal on a $600,000 unsecured loan.

Economic Renaissance President Alan H. DeLisle said agency staffers are investigating whether Empire Brewing owes the city back payments on its loan. But both DeLisle and Mayor Anthony M. Masiello said they do not expect the city to incur losses as a result of the recent closing, noting that the loan is secured.

Still, the Common Council has called on DeLisle to appear before a committee next week to report on the Empire Brewing controversy and to discuss the agency's lending policies.

Lovejoy Council Member Richard Fontana, the resolution's sponsor, said the fact two establishments both of which received substantial help from the city -- have gone belly-up in the same location raises serious questions.

"We need to set some parameters so this doesn't happen again," Fontana said.

Council Member at Large Charley H. Fisher III asserted that the developments red-flag a "double standard" by the Masiello administration. He accused the corporation of freely giving big loans to larger establishments but taking a more cautious approach with smaller businesses. Fisher claimed the agency "zealously" enforces loan provisions when smaller companies are involved.

"If we were just as zealous on the other end, companies wouldn't be getting millions of dollars," said Fisher. "We're so hard on little businesses, yet we play this giveaway game."

Three other lawmakers expressed similar concerns.

But DeLisle said the concerns are unjustified, claiming larger loans are subjected to far greater scrutiny. He disputed charges that corporation lending policies are tailored to favor larger companies.

"We've initiated a micro-loan program so we can be more flexible and offer more assistance to neighborhood businesses and other smaller businesses," said DeLisle. "I look forward to meeting with the Council so we can put the facts on the table."

In other business Tuesday, the Council:

Sent to committee a proposed agreement with Adelphia Communications, which plans to build a high-rise operations center near the waterfront. The proposed $133 million incentive package includes a $98.6 million contribution from the state, along with $19 million from the county and $15.5 million in city incentives.

The memorandum of understanding will likely be discussed at a committee meeting next week. Most lawmakers have expressed a desire to vote on the package within two weeks, noting that the Adelphia project is expected to create at least 1,000 jobs.

Unanimously passed a resolution encouraging the Vancouver Grizzlies professional basketball team to consider Buffalo as a relocation site. The financially ailing team is hunting for a new home.

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