Hawks Building developer keeps low interest rate loan for project

    Some city officials argued that transferring a loan at such low interest rate to private businesses could set a precedent for future development plans. 

    Posted on Aug. 16, 2014 at 7:57 a.m.

    GOSHEN — The project of turning the north side of the Hawks Building into a boutique hotel and brewery is going according to plans, and some officials say a low-interest city loan will help the developer with initial finances. 

    After donating the building to LaCasa in June 2013, the city agreed to loan $400,000 to rehabilitate the north exterior. The loan interest rate was set at 1 percent for LaCasa.

    That was before Hawks 1886 LLC purchased that side of the Hawks Building. The developer proposed opening a boutique hotel it plans to name Artifax and Hydraulic Ale House, a brewpub.

    The redevelopment commission voted on Tuesday, Aug. 12, to approve the transfer of the loan originally intended for LaCasa to Hawks 1886 LLC. The interest rate remained at 1 percent. 

    The biggest issue was regarding the interest rate of the loan, community development director Mark Brinson said.

    Tom Stump, president of the redevelopment commission, was one of the commissioners supporting the transfer of the loan as it was. 

    Stump said that while LaCasa may have other opportunities to seek funding, a private company like Hawks 1886 may not have as many resources. 

    “I think the 1 percent loan gives them an incentive or an advantage to be successful in this operation, and after all, that’s what we want,” he said.

    However, commission member Jeremy Stutsman said that while he fully supported both projects for the Hawks Building, he opposed the transfer of the loan percent rate. Had the rate increased for Hawks 1886, he would have been more open to the idea of transferring the loan to the private business. 

    “If the group’s going to [transfer the] loan we’re setting a precedent that I don’t want to set,” he said. “I don’t think we should be giving loans to for-profit businesses, but I definitely don’t think we should be doing it at 1 percent [interest rate.]”

    The redevelopment commission recently gave Goshen Theater, Inc. a loan with a 2 percent interest rate. Setting the interest rate lower could bring more businesses to ask for loans, Stutsman said, adding that it would become harder for the commission to say no to other businesses seeking some form of financial relief. 

    Larry Barkes, city attorney, told the commission the city would actually benefit in this case, because it can collect tax income created by the business, as opposed to a not-for-profit organization like LaCasa or Goshen Theater, Inc.

    Stump countered Stustman’s argument, saying the redevelopment commission deals with each case differently.

    “And as you know... I have no trouble saying no to people,” he said. “I think we need to take each of these things individually.”

    Another city official seated in the public stood up to express his concerns on the issue.

    “Ninety-three percent of all bars and restaurants go broke within the next 5 years,” said City Councilman Jim McKee. “Now, that’s not to say this one will, but there’s a great danger in this.”

    Larry Gautsche, president and CEO of LaCasa, spoke with the commission as well, saying LaCasa was not only the one developer that gave the city a bid for the Hawks Building, but it seemed to encourage other developers to step in and work on projects on the Mill Race. 

    He asked the commission to work with the developer and get the agreement finished to move on.

    “I think there are a variety of incentives we put into these projects to make it happen, but I don’t think redevelopment would have anticipated that with the Hawks project everything would fall into place today,” he said. “It’s happened pretty fast, and there’s good momentum.”

    Follow reporter Sharon Hernandez on Twitter at @Sharon_HT.

    Recommended for You

    Back to top ^