A $139,000 loan approved in 2015 for businessman Steve Masic to develop a Subway restaurant at 520 Niagara St. has been held up as city officials try to determine what price to credit Masic for the real estate he owns.
Masic, who founded Players Bar and operated it for years, purchased the property at 520 Niagara St. for $90,000.
He put the property under an LLC he owns. A few years later, as he was diversifying his business interests, he transferred the property to another LLC he owns and his prior attorney recorded the deed transfer at Niagara County for $8,500.
Since it was an intra-company transfer – that is from one solely owned LLC to another owned by the same person [Masic], no one at the time thought this paper transfer made any difference.
A problem cropped up this year when a city official wanted to hold Masic to the price he transferred the property from one of his companies to another – instead of the price he really paid for the property.
The city’s loan program – as approved by the NFC – a city agency charged with aiding small businesses achieve economic development – requires a 60-40 ratio of owner – city investment.
In the originally approved loan application, the city gave Masic credit for the actual $90,000 purchase price he paid, which entitled the businessman to 40 percent of that price ($36,000) to invest in his project.
City attorney, Richard Zucco, however, who acts as both Assistant Corporation Counsel and Dept. of Com-munity Development, NFC/NFURA General Counsel, while examining the deed, chose to reduce the NFC loan by more than $30,000, basing the loan on the $8,500 intra company transfer rather than the actual $90,000 price Masic paid.
Zucco said that, unless Masic’s attorney can explain the LLC transfer, that, based on an $8,500 sales price, Masic is only entitled to borrow $3,400, against the purchase of the property, not $36,000 originally approved for the property.
“This will effectively kill the project,” Masic said. “Unless the city gives me credit for the $90,000 I actually paid and up-on which the loan was approved, I can’t complete the Subway project.”
Attorney James Roscetti was retained last week to represent Masic and he said he hopes to work the matter out with Zucco and get the project back on track.
“He paid $90,000 for it,” Roscetti said. “It’s worth $90,000 and the City will hopefully see that he has that invested in it and give him credit for it.”
On Wednesday, Anthony Vilardo, Director of Business Development for the City’s Department of Economic Development, weighed in and offered new hope for the stalled project.
Vilardo suggested a meeting between Zucco and Roscetti.
“[P]erhaps a dialogue between Mr. Roscetti and Mr. Zucco could resolve any outstanding is-sues. Everyone wants to see your project get off the ground and for you to be successful,” Vilardo wrote to Masic.
As it stands this $30,000-plus reduction in the NFC loan has temporarily crippled the project and the only new development along Niagara St. since the Seneca Niagara Casino opened is stalled.
Since the Seneca Niagara Casino opened in 2002, with its raft of tax free stores and restaurants, the once thriving Niagara St., which is across the street from the casino, has seen more than a dozen businesses close – belying the notion that the casino would bring spin off business.
Masic’s Subway project is the first new business to dare to try to open adjacent to the all -engulfing casino. Besides facing a bureaucratic challenge from the city, if Masic does open Subway’s doors, he will be competing with native owned restaurants directly across the street which, unlike Masic, do not have to pay sales tax, property tax or state income tax or be subjected to building permits or building up to New York State Code.
Presently the entire street where Masic wants to open up his Subway features empty and boarded up commercial and residential buildings.
The street – in the shadow of the glitzy casino – looks like a third world country.
Downtown businesswoman Deborah Barber said Masic, “would be lucky if the city kills his project. This is no economic climate – on Niagara St. especially – in which to try to start a new business.”