City still owes former owner $1.7 million

The panel approved a $1 million loan to the city's redevelopment agency for demolishing the downtown landmark only to learn the city still owes the former owner of the hotel $1.7 million for the sale of the Mapes site.

"If I'd known that, it would have completely changed my vote," said Councilman Dave Rigdon. "My vote was based solely on fiscal reasons, and this changes the entire fiscal package."

The council, acting as the redevelopment agency board, voted 5-2 Monday to demolish the 51-year-old Virginia Street building.

Rigdon said he voted in favor of demolition because he believed revenue from the sale of the Mapes site could go to repay almost $3 million the financially strapped agency has borrowed from the city's general fund.

The mayor and other council members conceded that they were caught by surprise but said it would not have caused them to change their votes.

"The citizens are not loosing any money," said Councilman Dave Aiazzi. "The redevelopment agency is paying us interest."

Mayor Jeff Griffin said he forgot about the debt on the Mapes when he voted for demolition, "but there is capacity to pay it back."

Finance Director Lisa Sadow said the city owes the Karadinis family $2.25 million for the Mapes. Of that, $500,000 is due Jan. 1, 2000 and $1.75 million on Jan. 1, 2001. However, if the property is sold, she told the council a balloon payment is due.

While council members anticipate $2 million-3 million for the Mapes property, if it is sold for less the money will go to the Karadinis family first.

Councilman Pierre Hascheff, who voted against demolition Monday, said he was aware of the debt.

"That's why I wanted to go with a 90-day delay," he said, adding that one of three developers who proposed saving the Mapes had offered $25,000 a month to the city while developing plans to convert it into a retirement home.

But City Manager Charles McNeely said the agency would be able to cover the loan.

He said the opening of the city's new theater in November, the rehabilitation of the Riverside Hotel into artist lofts next year and payments due from the city's riverfront developer will create income that can be used to pay back the debt.

"It was not our intent that all of our loans will be paid back through the sale of the property," he said.

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