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July 20, 2013

Brewery deal hits another snag

By Joe Mahoney Staff Writer
The Daily Star

---- — SCHOHARIE — An Otsego County company’s plan to open a brewery at the closed Guilford Mills* plant in Cobleskill was dealt a new blow Friday when Schoharie County lawmakers decided it would be too risky to have their county hold a second mortgage that would allow the investors to make $1.3 million in needed repairs to the sprawling building.

The vote followed a heated exchange between Cobleskill Mayor Mark Galasso, a proponent of having the county back the financing, and County Treasurer William Cherry, who questioned why the brewery company has been reluctant to make a more significant investment in the real estate.

“Do they have any real skin in the game?” asked Cherry. “If so, I haven’t heard about it.”

The company that has maneuvered to buy the building is Long House LLC, which is affiliated with Butternuts Beer and Brewing of Gilbertsville, which also owns Cooperstown Beer Co. Its representative at the meeting, John Lorence, did not respond to the pointed comments made by Cherry and several town supervisors who voiced similar sentiments.

If Long House does not come up with a financing package by Oct. 15 that would enable it to go through with the purchase, Guilford Mills will go back on the real estate market, Cherry said.

Eight of the 14 supervisors in attendance voted to reject the plan to have the county hold the second mortgage. The six who favored the plan were Robert Mann Jr. of Blenheim, Anne Batz of Broome, Thomas Murray Jr. of Cobleskill, Daniel Singletary of Jefferson, Earl Van Wormer III of Esperance and Harold Vroman of Summit.

Of the weighted votes, 1,589 opposed the second mortgage plan, and 1,054 supported it. Carlisle Supervisor Larry Bradt was absent from the meeting.

Lorence, upon leaving the county office building, was asked if the board’s decision would doom his company’s interest in the property. “This will certainly make things more challenging,” he said. He also said the board’s decision jeopardizes his company’s efforts to create jobs in Schoharie County.

Mayor Galasso said the county could end up facing hefty repair bills for Guilford Mills because the Cobleskill code enforcement office will be aggressive in scouring the property for violations that make the building unsafe. He also blasted Cherry for making statements he branded as “anti-business,” suggesting they will stifle economic development.

“Whenever a business expands, it requires capital and capital is in short supply,” Galasso said. “And when roadblocks like this — which are small minded at best — get in the way of a private sector business, they have to go find an opportunity that doesn’t have those roadblocks. Inevitably that is going to mean some place other than Schoharie County.”

The mayor added: “Here we go again — with no jobs, no opportunity, no tax base, diminishing student population. It’s a well deserved reputation of anti-business. In a 1,500 to 1,000 vote, they proved it again. This is a heck of a hurdle to overcome (for the would-be investors). They (the town supervisors) just gave the taxpayers a $2 million bill (for needed repairs at Guilford Mills.)”

In imploring the board to back a second mortgage, Galasso said if the beer operation becomes successful, the county, after 10 years, would have what he called “a $4.3 million positive position.” He also stressed no cash from the county would be funneled to Long House.

But Middleburgh Supervisor James Buzon said every constituent he has heard from voiced opposition to the second mortgage. Reflecting the division in the county over the project, the Broome supervisor, Batz, said residents who contacted her before the meeting were unanimously for the arrangement because of its potential to stimulate the local economy.

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.

Cherry has expressed reservations about the transaction, noting the county would 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, according to Cherry.

*Editor's note: This story was changed at 1:45 p.m. July 22 to correct a misspelled word.