It was a tale of two loans, both overdue, when the Dunkirk Local Development Corporation Board of Directors held its February meeting.
Nicole Waite works in the city's Department of Development and is the secretary for the DLDC. She has been researching what type of mortgage liens the DLDC has on its loans. Development Director Steve Neratko is the DLDC board's chairman and said Waite found "a couple of things on file."
The first delinquent loan discussed was with Enviroteknix, which was partly secured with a November 2004 lien on the home of the firm's owner, Christopher Surma. Neratko said that has since been reworked with a new contract on the loan. Neratko said a February payment of $5,000 was not made.
OBSERVER Photo by Gib Snyder
The Dunkirk Local Development Corporation board of directors decided against foreclosure procedures on an outstanding loan from Paradis Fence and Flag Inc., shown on the right. The board did approve a resolution to foreclose on a loan to Enviroteknix. That loan was secured by a lien on company owner Christopher Surma’s private residence.
"(Surma) came in and paid $2,000 back in January, said he would be back in to pay the rest, the setup, the direct deposit, and to authorize the documents. We didn't feel we should authorize until he made the full down payment," Neratko explained. "He has not come in. He has not set anything up. We have made multiple communications with him, he has disregarded them. It's come to the point where we need to do something.
"I'm asking the board at this point what direction the board would like to take."
Third Ward Councilman Adelino Gonzalez said the board needed to go to the next level.
"Yes, we have to do something because obviously, what we're doing is not working," Councilwoman-at-Large Stephanie Kiyak added.
Talk turned to a policy and Neratko said there were some.
"We've done what we're supposed to do at this point, we would begin foreclosure proceeding," he stated.
Board member Rosemary Banach asked if there was a written policy.
"We would have to go ahead with foreclosure proceedings, if we want to," Neratko replied. "That's a big decision the board has to make. I'm not going to do that without the board's approval."
Banach asked again if the board had a policy in writing. Neratko replied that all the policies are on the DLDC website.
"We have put them out. There is a loan policy procedure. There's things we would like to update in that," he added.
Banach said she had no problem going forward as long as it's in writing.
"There's a mortgage on file. He has not made payments. Our next step would be foreclosure proceeding," Neratko replied.
Neratko added the policy was 15 days and Surma has been given eight months. Neratko said the DLDC is owed some $36,000. Penalties that would have been removed with payment of the loan will be in place.
"The biggest frustration is when you've done everything you could to work with him, set up some great terms that this whole board agreed to, we agreed to all the parameters that were set in place and you can't get a phone call back," Mayor Anthony J. Dolce stated.
"I make a motion that we move forward with foreclosure," Kiyak stated.
"I'll second," Gonzalez added.
"As long as it's in writing," Banach chimed in before the motion passed.
Gonzalez then asked about the property at 220 Washington Ave. which the DLDC holds a $14,000 mortgage on. The site is the home of Paradis Fence and Flag Inc. Discussion centered around possible environmental cleanup costs and property tax payments the DLDC could incur if it took over the property.
Neratko said there has been some interest in both the Flickinger and Paradis buildings. He added that the best path right now would be to continue the current situation and look to take over the building if it could be immediately passed on to a developer.
Concerns were raised about having an inconsistent foreclosure policy by going after one delinquent loan and not another.
"That's up to us who we want to enforce or who we don't," Kiyak stated before discussion turned to adopting a policy.
"We do have to do something," Gonzalez stated. "We just can't say it's OK, we'll forgive you for the loan, bye-bye. We just can't do that."
Neratko said it was in the board's court but the potential liabilities of taking the building were a concern. Neratko added he would contact Paradis again by mail, phone and visiting.
"I think we definitely need to do something. We just can't let it sit. We need to take over the building, it's got to have value somehow," Gonzalez stated. " ... Nothing ever happens, I think we should move."
"They're laughing at us," Kiyak said
Neratko said if the board foreclosed there would be environmental issues.
"It would be impossible to know what those are until we're in there," he added. "When they do those tests they drill 10-12 feet into the basement," he explained.
Discussion turned to taking payment in in-kind services but Neratko said he would rather not go that route. Gonzalez again called for foreclosing. Neratko said it would need to be a simultaneous transfer so the DLDC wouldn't be stuck with environmental costs.
"The studies are expensive but the real cost is the cleanup and you will not know until you own it and you do the drilling," he said.
Neratko added the studies done so far in the Flickinger Building have cost $16,000.
"I know those buildings were warehouses," he said of the Washington Avenue structures. " ... The railroad tracks ran right behind there out onto the piers, there was a lot of different uses."
Neratko added there has been some interest and a buyer could get into the brownfield program if necessary, which is likely.
Gonzalez moved to foreclose on the building but Dolce pointed out there was no resolution filed.
Neratko said the issue would be brought up again in March and he would check with the DEC to see if there are existing reports on the site.
The Paradis building is assessed at $40,000, according to city Assessor Tom Mleczko. Prior to being owned by Paradis, the property was formerly an auto parts store after being used by the Burns Coal and Building Supply, which bought the property in 1941.
Send comments to email@example.com