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March 16, 2013

Schoharie, Otsego vie for brewery

By Joe Mahoney
The Daily Star

---- — SCHOHARIE — Economic development specialists in Schoharie and Otsego counties are competing to attract the same craft beer maker, a company controlled by the people behind the Cooperstown Brewing and Butternuts Beer and Ale companies, officials revealed Friday.

Since late 2011, Schoharie County officials have been trying to pin down a final sale of the former Guilford Mills manufacturing facility in Cobleskill to Long House Holdings LLC, a sister company of Butternuts Beer, based in the Otsego County hamlet of Garrattsville.

On Friday, 15 months after Gov. Andrew Cuomo’s administration awarded a $175,000 economic grant to the project and hailed it for its job-creating potential, there was uncertainty over whether the brewery will ever move into the long-vacant factory.

A majority of the Schoharie County Board of Supervisors on Friday gave Long House a deadline of Oct. 15 to close on the purchase of the Guilford Mills property, a 460,000-square-foot complex owned by the county. If the deal is not completed by then, the supervisors told Long House executive John Lawrence, the county would begin marketing the site to other parties.

During a lengthy presentation on why it has taken so long for Long House to complete the transaction, Lawrence did not mention that an Otsego County economic developer has — according to Schoharie officials — made overtures in an effort to shift the project to Oneonta.

The Otsego County economic developer, Carolyn Lewis, did not return a phone message from The Daily Star.

Sarah Blood, a Schoharie County economic development specialist, told The Daily Star that Lewis has been “very aggressive” in wooing Long House to move its operations to a “shovel-ready” site in Oneonta.

Lawrence, who told Schoharie lawmakers he wants their county to be the holder of a second mortgage for the Guilford Mills property, refused to comment on the status of the discussions with the Otsego County official.

Numerous Schoharie lawmakers told Lawrence they’ve never consented to having the county hold a second mortgage on the property, and indicated they see too much risk in putting the county in that position.

Lawrence, noting the challenges the project is having attracting financing, responded that without the second mortgage, the chances his company will follow through and purchase the Guilford Mills site would be reduced to 10 percent.

Responding to the board’s reluctance to be responsible for a second mortgage, Lawrence did not rule out the possibility that Long House will simply walk away from the Guilford Mills deal.

“If we don’t have backing, we’ll have to go where we have backing,” he said.

After hearing Schoharie County Treasurer William Cherry raise questions about the extended delay by Long House in positioning itself for a real estate closing, some lawmakers, led by Schoharie Town Supervisor Gene Milone, signaled they were ready to kill the entire deal.

But Jefferson Town Supervisor Daniel Singletary argued that without any other potential suitors for Guilford Mills, it made more sense to give Long House the extension until Oct. 15 so it can get its financing plan in order. With supervisors using the weighted voting system, the extension was approved, 2,072 to 747.

Lawrence said later he considered the extension “fair and equitable,” though he acknowledged the board’s lack of enthusiasm for backing a second mortgage could pose problems for the project.

Cherry said that the Guilford Mills property has been valued at nearly $4 million. The pending sale agreement calls for Long House to purchase it for $2.5 million, though a significant amount — up to $1.5 million — would be returned to the company based on the number of workers it hires. The deal calls for the company to get $15,000 for each job it creates after the first 10, with the cap for the total it could receive set at $1.5 million.

“You have a $4 million building that you’re essentially selling for $1 million,” Cherry said.

He also noted that once the transaction is completed, the deal calls for the county to receive no payments for three years, other than a $5,000 installment. Meanwhile, the county will have to pay its realtor $180,000 in commission, the treasurer said.

“They’re almost acting as if they don’t have a successful business somewhere else,” he added. “Why should we have to fund their expansion?”

Lawrence told the supervisors the complex requires significant repairs, including $400,000 for roof work.

Long House has received another incentive in the form of a 10-year payment-in-lieu-of-taxes, or PILOT, agreement — from the Schoharie County Industrial Development Agency. Instead of paying standard property taxes, the arrangement calls for the company to make a $62,000 payment for each of the first five years. In the sixth year, the payment would increase to $77,754 and gradually go to $152,372 in the tenth year.

The Guilford Mills plant has been largely vacant since 2001. In a county where jobs are scarce and where recovery from the 2011 flooding remains underway, officials have been hoping that new tenants at the site would become a catalyst for invigorating the local economy.