The Jefferson County Industrial Development Agency capped off an unpleasant experience Thursday with the Pleasant Night Inn.
The agencys board of directors voted to write off $198,345 in bad debt from a $250,000 loan it made in 2009 to a businessman who built the hotel on North Broad Street in West Carthage, now run by different owners. Brantingham resident Jeffrey S. Shambos 40-room hotel went bankrupt last year, leaving public agencies that issued loans fighting for scraps during a foreclosure that concluded in December. The JCIDA salvaged $23,800 due to a lien it had on hotel furniture and fixtures with two other agencies. It split proceeds from that lien with the Economic Development Corporation of Carthage and North Country Alliance, which issued project loans of $150,000 and $125,000, respectively.
The $3.4 million, two-story hotel opened in May 2010. Community Bank, which financed a commercial loan for Mr. Shambo, bought the hotel in December at a public foreclosure auction. Community then sold the hotel in May for $960,000 to Rochester couple Keni U. and Twinkle K. Patel.
On Thursday, board members said the once-struggling hotel now seems to be operating well after emerging from bankruptcy under new ownership. Board member Kent D. Burto said that Mr. Shambo took a hands-off approach to managing the hotel and that it didnt have a strong marketing campaign to attract visitors.
I think what happened is he built the hotel, hired people, then left the area, Mr. Burto said. He didnt have the right people to manage it and never got involved. But the new owners have done a better job with marketing and getting involved in the community.
Despite the agencys loss of the loan, board member W. Edward Walldroff said, the bankruptcy process had the benefit of reopening the hotel under different ownership. Liens against the property totaling $525,000 owed to the three public agencies were released by Community Bank. That move enabled the Patels to buy the hotel with no debt.
The only saving grace on this is that it was a viable project that created jobs, and the community is still getting a benefit with the hotel open now, Mr. Walldroff said. The project was made more viable because the new owners arent giving the $200,000 to us. Its a secondary benefit that has helped offset the loss of the loan.
The board also acted on the following business matters Thursday:
nAn $8,500 loan request from Christopher M. Hunt to open a comic book shop called Heroes Haven at Stateway Plaza off Arsenal Street was approved. The loan is contingent on approval of an $8,500 matching amount approved by the Watertown Local Development Corp., or Watertown Trust, which will consider the proposal Oct. 17. Mr. Hunt plans to sell an array of comics, vintage collectibles, toys, board games and T-shirts.
nThe board tabled a $40,000 loan request made by Kimberly A. Stiles, who plans to buy the Little Sisters Inn at Herrings, 35802 Route 3, Herrings, from owner Jon A. Murdock. Board members said they need to learn more about Ms. Stiless plan to buy the restaurant and 21-room hotel before deciding on the loan.
n Though the agency will continue legal action and collection efforts, the board voted to write off the balances of two additional loans: $27,737 owed by Fort Drum Storage and $26,982 owed by Children 1st DayCare & Learning Zone, 29730 County Route 50, Black River. The agency approved a $40,000 loan in 2009 to the day care center, which closed at the end of 2012. Fort Drum Storage, now closed, also received a $40,000 loan in 2009 for its self-storage company at the former American Tramways factory, 753 W. Main St. Chief Financial Officer Lyle V. Eaton said the two loans have been written off for financial planning purposes; the loans wont be reflected in the agencys budget as outstanding debt.