Line in the sand for Butternuts deal?


By David Avitabile

Schoharie County supervisors Friday gave a less than enthusiastic blessing to the potential buyers of the former Guilford Mills.
In a split vote, supervisors agreed to give Butternuts Brewery Beer and Ale of Garrattsville and Long House Holdings until October 15 to close on the property.
The sale, though, may have hit a snag Friday, when John Lawrence of Long House Holdings said the county may have to hold a second mortgage on the property in order for the deal to go through.
No supervisors spoke in favor of the county holding the second mortgage on the property. In fact, several said they would never support the county holding a second mortgage.
The possibility of a second mortgage has just been discussed but not put in writing. The county board took no action on whether to give the company a second mortgage.
Supervisors, who have seen other potential deals for the building fail in the past, set October 15 as the "drop dead" date.
"I do hope you can pull it off," Chairman Phil Skowfoe of Fulton told Mr. Lawrence. "There's no coming back after October 15."
Larry Bradt of Carlisle said there would be no further extensions.
"If there is no closing by then, the deal is off."
A mid-October closing was his "best estimate," Mr. Lawrence told supervisors.
"We need to move forward." If there are further delays, company representatives may "need to rethink it ourselves."
There has not been much other interest in the property, he said.
"What is the alternative? I haven't seen one."
Since news of a possible delay in the sale surfaced, Mr. Lawrence said he has gotten calls from officials from other villages saying, "We have vacant buildings."
There was no vote taken on whether to agree to hold a second mortgage on the property.
Gene Milone of Schoharie, Mr. Skowfoe and Mr. Bradt spoke against the county holding a second mortgage on the property.
When asked about the chances of a deal without the county holding a second mortgage, Mr. Lawrence said, "You just took it down to a 10 percent chance, maybe."
Mr. Milone replied, "Then bury it. Set a closing date for next week."
It would take a vote by the full board in order to approve a second mortgage, according to Mr. Skowfoe. He said he would not support a second mortgage, and Mr. Bradt agreed.
Company officials are looking to get a bank loan of $1.5 million and may ask the county to hold a mortgage of $2.5 million.
The problem with the county holding a second mortgage is that if the company goes bankrupt, the county could lose the building.
The building could be sold at an auction and the county would have to bid more than is owed in order to retain ownership, officials said.
"We could have this concern for years to come," Mr. Milone said.
Earl VanWormer of Esperance was in favor of giving the company extra time.
The county should give Long House "another chance to go forward" and maybe another funding source will be found.
Anne Batz of Broome and Tom Murray of Cobleskill also spoke in favor of giving the company until October 15 for the closing.
"I don't understand why you're trying to drive away a prospective buyer," Ms. Batz said. "I don't see a line of people interested."
Bob Mann of Blenheim was also in favor of waiting.
He said he was not enamored with the original purchase agreement and preferred a straight sale. But it's probably quicker to continue the current course instead of starting over again, Mr. Mann said.
The motion to give the brewery until October 15 was approved in a split vote with Carl Barbic of Seward, Mike Brandow of Conesville, Sandra Manko of Sharon and Mr. Milone voting against it.
Butternuts officials agreed to buy the building for $2.5 million in the fall of 2011 and spent $5,000 as a down payment. Since then, according to Mr. Lawrence, the company has spent more than $60,000 and 400 working hours on the purchase. In all, about $100,000 has been invested.
County Treasurer Bill Cherry spoke against the purchase.
He noted that the purchase price included an incentive for each job created once 11 jobs are created. The full job creation incentive could knock down the purchase price to $1 million. The building was appraised for about $3.9 million when Butternuts agreed to buy it.
The brewery could open with 20 to 30 jobs and there could be 60 jobs in about five years, according to Mr. Lawrence.
No payments are due for three years after the closing, Mr. Cherry added.
"Why not close now instead," Mr. Cherry said. "They got a great deal. $5,000 down and no payments for three years."
Mr. Cherry also spoke against holding a second mortgage.
"I thought we were the seller and they were the buyer."