NORWICH – Although the City of Norwich currently has six community and economic development loans that are behind in payments in one way or another, Mayor Joseph Maiurano and Finance Director William Roberts say that is expected, and the situation is being handled.
For several months, the Common Council has dedicated time to discussing the status of the city’s 13 outstanding economic development loans. At Tuesday’s meeting of the Common Council, Fourth Ward Alderman Walter Schermerhorn told the council the 13 loans totaled $307,100 as of Oct. 31. Of the 13, seven loans are current and five of those are ahead on their payments. The current loans total $144,900. However, six loans, totaling $162,200, or 53 percent of the total amount, are behind in payments. Schermerhorn, who is the chairman of the Finance / Personnel Committee, requested a plan and a timeline for dealing with the past due loans to be presented at the next finance meeting on Dec. 4.
The City Finance Director explained in a later meeting that each loan has its own specific agreement which stipulates what can be done when a loan is in default for any reason.
“It gets intricate and complex. Some of the loans in default are looking to be restructured, which would provide for a new term and conditions,” Roberts explained. He said there are variations and determinations that need to be made concerning penalties and interest charges on the loans, and said that is what needs to be determined.
Maiurano and Roberts explained that the purpose of the community and economic development funds was to provide loans to businesses for start up purposes, when they may not be able to receive funding through a traditional funding source.
The city recently went through an audit by the State Comptroller’s office. “They were looking for a number of things,” Roberts explained. “One of the things they were looking for, was to evaluate how well municipalities were following the objective of the funding process. They were looking to see that the loans were going to up and coming businesses, high risk candidates who couldn’t get the loans through a traditional manner. These loans are meant to stimulate economic development,” Roberts said. The finance director explained that the audit showed the city as performing well in a variety of manners. The only suggestion they offered was for the city to step up procedures that were already in place.
“If you’re taking on high-risk loans, you shouldn’t be surprised if some default,” Roberts explained. He also pointed out that a number of individuals make their payments on time every time, and several who have fallen behind are making efforts to catch up by making multiple payments.
At a previous meeting First Ward Alderman Anthony Abraham seemed to think the matter was not one to take lightly, saying, “If this was a private corporation, every one of us would be fired.” He also said “We have to do something about these things. The situation is not being solved and the taxpayers are footing the bill.”
Maiurano explained that while the city could take a harsher stance, the fact that some of these businesses are still open and working to pay their employees has to be taken into consideration.
“We’re trying to help as much as possible. You can’t get blood from a stone,” Roberts said. “We’re encouraging little businessmen to keep their businesses going.”
Both Roberts and Maiurano said that while they are working to be business friendly, the city will be evaluating whether or not to add fines or penalties to the delinquent loans.