Almost $3 million in low interest loans have been approved for businesses working to expand in recent years even as many mainstream lenders' willingness to gamble has all but shriveled in a down economy.

Lumber City Development Corporation Executive Director Jim Sullivan admitted some of the $2,710,500 in loans they've granted to 18 city businesses for expansions completed since that time were "risky".

Lucky for the city's development interests and taxpayers who can benefit from sharing the tax burden, Sullivan said the gamble is paying off.  For one thing, the figure results from successfully leveraging about $1.3 million the city started with in 2005 in tandem with other public grant sources made available each year for things like structural improvements coinciding with expansions.

The money is approved based on each company's vow to create jobs within three years.  Sullivan said most of the 269 new jobs tied to LCDC loans have already been created, with a few more still offering promise in the new year.

"I would say 90 percent of the 269 (jobs have been created)," he said.  One example is that of Audubon Machinery Corp., which borrowed $400,000 in 2005 toward a total $2.6 million expansion that created all 35 new jobs the company promised within the first six months as a function of their expansion.

A recently compiled project and financing summary details how much money has been lent and how many jobs have been promised in the last five years.  In total, the $2.7 million in LCDC loans has been used to offset a whopping $13.5 million in expansions undertaken in the city in just the last five years.

Most of the rest of the money has been borrowed from banks, but Sullivan said having a commitment with the development corporation doesn't hurt in the bid by local businesses to secure additional loans, as the development corporation's role is considered "gap financing" allowing the banks to stop short of lending for an entire project's cost.

"Some of the loans are riskier than banks would abide." Sullivan said.  "I think it's impressive just the fact that we've done 18 loans.  I think if you were to talk to a lot of other development corporations in the state that's pretty impressive.  Some of them are 20 or 30 years old.  We have hardly any arrearages.  Everybody's paying and that's unique."

The amount actually lent since 2005 is nearly double the amount the city started with, because part of what LCDC does is combine the money with public grants while at the same time reaping the benefits of accrued interest.  Right now, Sullivan said there is a roughly $350,000 balance that will change over time as existing loans are paid back at a slightly higher rate and as new loans are approved.

"We lend it out and get the payback," Sullivan said.  "All of the loans are part of a bigger picture...you've got deals where the state's involved with the economic development program and the loans through the LCDC.

A key component is the state's announcement of a healthy $45 million in Main Street and Community Development Block Grants.  State Office of Community Renewal Deputy Commissioner Joe Rabito said some of the money is derived from federal tax dollars -- isolating it from Albany's budget crisis -- and paid out annually on a competitive basis by the state to communities like North Tonawanda.

"It doesn't go through the New York state budget process.  That's why it survived," Rabito said matter-of-factly.  In fact, he said the overall $45 million is closer to being considered fully funded under the Obama Administration than has been the case in past years -- good news for communities like North Tonawanda with the infrastructure and economic need to capitalize on the programs.

"I would guess we're one of the few communities utilizing the funds the way they're supposed to be utilized,"  Sullivan said.  "We're limited to $750,000 per year from Rabito's outfit... if all the projects go through within the next couple of months we'll have expended it already."

Though larger cities like Buffalo, Rochester and New York City typically take a combined 70 percent of that money they are considered entitled to, NT has a track record as among the most competitive of 1,400 smaller communities statewide in vying for the remaining 30 percent.  That is, cities towns and villages with populations under 50,000 and counties home to fewer than 200,000 souls.

"North Tonawanda has been successful in being competitive for some infrastructure, housing rehabilitation, things like that," Rabito said.  Though the block grant is a new target for Sullivan in the coming year through the city, the Main Street grant program has already paid major dividends in areas like North Tonawanda's downtown corridor, including Webster, Main, Manhattan and Sweeney Streets.

The money tagged for improvements to the outer portions of old buildings was awarded to North Tonawanda among few others when the grant was created in 2006.  About $200,000 in main street money has already been used for work on part of Webster Street's recent resurgence and face lift.  Projects at 26, 15 and 71 Webster Street (home to Crazy Jake's and the Chamber of Commerce of the Tonawandas) along with the Riviera Theater have all benefited. Last year another $175,000 was secured for targeted downtown projects including the future Gateway Harbor Inn and a building at 90 Webster St., once home to Hoagey Brothers.  Plans are already being planned for new, sophisticated renovations to the building.

Not all of the last disbursement has been used, a fact Sullivan said will make the city slightly less competitive in the current application cycle which opened last month and ends in the spring.

"We're not going to stop applying," he said.