VALATIE –The village board met this week with Kenneth Flood, the county commissioner of planning and economic development. The public meeting, held April 22, was called to discuss overseeing federal loans granted to the municipalities by the state, generally known as HUD loans.
Currently the loans are controlled by the Local Development Corporation (LDC), an agency created by the village, which also owns the Train Depot building and the US Hotel on Main Street. The village board would like to take back control of the loans, which can be used by residents and local businesses for economic development.
At the Monday meeting board members said they have yet to receive all the details about the federal loans from the LDC. Mayor Diane Argyle said that LDC board President Jason Nastke told her that if the HUD loans are removed from the agency’s portfolio the LDC will have to declare bankruptcy.
HUD is a reference to the U.S. Department of Housing and Urban Development, which provides the money for the loans.
Mr. Nastke was not at the meeting and could not be reached for comment before press deadline.
The mayor and other board members mentioned their concerns that if the LDC does go bankrupt the village would have to take direct control over the Train Depot, which now has two businesses in it, and the US Hotel, which is an apartment house.
Mr. Flood said that if the LDC is a “sub-recipient” of the HUD loans, “you have every legal right to take back the money and administer the loans yourself.” He also advised the Village Board to call state officials who will have a list of all HUD loans the LDC has received.
He said that he did know of LDC agencies in other communities that have bought properties, but he said, “For my philosophy, it’s better in private hands.” He said that because the US Hotel is a large building on Main Street he could understand its importance to the village.
The mayor said it was important to the village to know who made the decision to purchase the hotel. Mayor Argyle added that the village does not want the responsibility for either of the buildings.
“I think there are two issues: the records and buying a residential building,” said the mayor.
If the LDC does have to declare bankruptcy, village attorney Robert Fitzsimmons said that because it is a corporation it would be governed by the same laws that apply to any other corporation. He said there is no reason to believe the village would have to take control or pay the debt on the buildings.
Mr. Flood said that most likely the state would return any HUD loans to the village. He also that the LDC has to apply to the state Attorney General’s Office to dissolve and then that office would divide the assets.
But Mr. Fitzsimmons said that since the village does not have all the information about the loans from the LDC the board did not know their financial situation. “We are speaking in a vacuum here,” he told the board.
Mr. Flood suggested the board look into how the LDC was formed. According to former board members at the meeting, the LDC was stared over a decade ago with $55,000 from the village.
Mr. Flood also told the board that there are private companies that would help manage the HUD loans for the village, or the village could decide to keep the loans with the LDC. He said that his office was already managing several loans, and could not help the village with anything other than advice. But he did say that of the 30 loans he manages for the county, only one is 90 days overdue. “But that’s constant calling,” he said.
Board members mentioned that the LDC has been out of compliance with the state’s Authority Budget Office, and that the LDC by-laws state that the treasurer on the LDC board must be village clerk/treasurer, which is not the case now.
“We need to get all the information together before we go any further,” said board member Angelo Nero.
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