Money woes sideline revamping of paper mill site

LYONS FALLS — The proposed redevelopment of the shuttered paper mill as a business park has been delayed by a lack of state funding and by plummeting scrap metal prices.

"The big thing was the collapse of the steel market," said Lawrence L. Dolhof, president of the Lewis County Development Corp.

The nonprofit corporation in August signed an option to buy 10 acres of the 18-acre Lyons Falls Pulp and Paper plant parcel off Center Street from Johnson Industries Inc. for $150,000.

However, a proposed grant of $250,000 from Empire State Development Corp., with the possibility of more funding later, fell through, Mr. Dolhof said.

Also, while the sale of scrap steel from the old buildings was projected to cover $1 million of the estimated $1.6 million project, prices for the metal have dropped from about $300 per ton to under $40 per ton, he said.

"It just became financially unfeasible to do the project in December," Mr. Dolhof said.

Corporation representatives are working to secure funding through ESD and other sources, he said.

"It's been a long struggle, but we're gaining," Mr. Dolhof said.

Corporation officials still are looking to close on the mill property, possibly sometime in March, he said. They have learned that the current owner was issued a notice of violation by the state Department of Labor for allegedly disturbing asbestos in one of the buildings and are seeking a commitment from the state agency not to transfer that notice upon sale, Mr. Dolhof said.

LCDC's attorney, Raymond A. Meier, Utica, is working to coordinate a meeting with state officials, he said.

Mr. Meier declined to comment on the project, suggesting that comment should come from the corporation president.

Asbestos removal is figured into the project costs, and the corporation is seeking a grant from the federal Environmental Protection Agency to help cover that expense, Mr. Dolhof said.

"Obviously, we want to limit our risk," said corporation member Richard C. Lucas, a Republican county legislator from Barnes Corners.

However, LCDC was formed to do higher-risk projects — especially ones involving the purchase and development of property — that wouldn't get done otherwise, he said.

"It's a good project," Mr. Lucas said. "But it may take us awhile."

The former Lyons Falls Pulp and Paper mill was shut in January 2001, idling 186 employees. The Johnsons, who own several businesses in the Carthage area, including Johnson Lumber Co. on Route 26 in the town of Denmark, in 2004 bought several mill-owned parcels for $220,000 through the U.S. Bankruptcy Court in Utica.

County legislators in August approved contracting with LCDC to provide economic and community development services for up to $100,000. However, that money may be legally used only for so-called "soft costs" such as engineering and legal fees, not for property acquisition or demolition.

Legislators also may grant some or all of the $101,346 remaining in the county's Micro-Enterprise Revolving Loan Fund program to the corporation to assist with the project, although they still must vote on the matter.