Members of Community Voices Heard protested the decision to pay off the loan instead of to fund a job training program.
By Nancy Peckenham
A decade-old federal loan will be paid off after the Newburgh city council voted on Monday night to pay the remaining $855,000 on what is known as the Crystal Lake loan. The move was taken despite an outcry by members of Community Voices Heard and city council woman Marge Bell, who wanted at least part of the money spent on a jobs training center.
The money used to re-pay the loan came from a fund created when another bad loan for $1.9 million was repaid by the developer of a marina who promised to create jobs in order to receive the federal loan. Those jobs never materialized and neither did the industrial park that city leaders once thought could be built with the Crystal Lake loan.
A 2008 audit by the U.S. Department Housing and Urban Development (HUD) found that the city failed to adequately monitor both loans, which were guaranteed by future grants from HUD’s Community Development Block Grant (CDBG) program. CDBG funds are intended to stimulate economic opportunities in middle- to low-income areas.
Acting city manager Richard Herbek listened as council woman Bell read a statement expressing her opposition to the proposal.
On Monday, council woman Bell blasted city leaders who proposed paying off the balance of the loan with CBDG funds rather than using at least a portion of them for job training or other projects that would more directly benefit residents. “In a family where unemployment has struck (and) the bills are piling up,” she said, “to take the complete unemployment check and use it all to pay the full credit card balance would be nothing other than foolish.”
Acting city manager Richard Herbek and other city administrators argued that by paying off the Crystal Lake loan, the city would save nearly $100,000 in interest payments, money that could be applied to create opportunities for residents. City planning director Ed Lynch proposed hiring a part-time employee to develop a jobs training program that would be eligible for future funding.
Jenny Loeb, a leader of Community Voices Heard and a member of the CBDG citizens advisory committee, expressed her disappointment with the decision to pay off the loan. ““We’ve had commitment and promises for almost two years and want to see it come through and create jobs,” she said.
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