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DUNKIRK – Members of the Dunkirk Economic Development Committee learned Thursday that the city may be on the hook for some loans that are not being paid back.

The city may have to pay back more than $100,000 in loans made through the federal Community Development Block Grant Program, which is being audited by the Department of Housing and Urban Development, officials were told.

The audit has revealed problems with a loan to the P&G Market on Central Avenue. The city provided 50 percent of the cost of a new facade on the building and gave the store owners $7,148.

Development Director Steve Neratko said the city may be responsible to pay back that funding because it did not show that the business would maintain current jobs or provide new ones. He said that facade improvements are acceptable under the guidelines of the block grant program, but they must be tied to employment.

An outline of the use of block grant program funds was provided to the committee members. They were told that the funding must meet three national objectives as outlined by HUD: Funds must be used to benefit people of low to moderate income, to prevent blight or to meet an urgent need in the community.

Councilwoman Stacy Szukala said the city will be preparing a payback proposal to HUD for funding used for past projects that were not acceptable under the block grant guidelines. She said she hopes federal officials will consider withholding future funds in lieu of a large payment this year.

New funding was received in the current fiscal year, and grant money was provided to Meals on Wheels and to the Boys and Girls Club of Northern Chautauqua County.

In other business, Lacy Lawrence, assistant director of development, told the committee that leases and renewals for businesses on the city’s boardwalk are being considered. She said that three sites are available for businesses along the boardwalk and that applications will be accepted until the end of February for new tenants. She said the city will look for food vendors, especially an ice cream shop, to occupy one of the sites.

Neratko reported that the city will be receiving new bicycle racks to be installed in March. He said the state Department of Transportation is currently considering a bike path along Central Avenue and Lake Shore Drive, which are both state highways.

The Revitalize Dunkirk Committee backs the establishment of a designated biking area, and it is supporting the effort with petitions, Neratko said.

He also reported on the county land bank project, which looks for vacant lots or lots with homes in disrepair and provides funds for revitalization or offers land for sale to adjacent landowners. Neratko said that several parcels in Dunkirk are under consideration and that he expects final sales to be announced soon.

Neratko reminded members that $250,000 has been set aside so the city can demolish homes where taxes are unpaid and the property is not suitable for residents.