NORTH ADAMS — The Redevelopment Authority would borrow $160,000 to settle a nearly $300,000 lawsuit with the owners of the Freight Yard Pub under a proposed settlement to be announced this week by Mayor Richard Alcombright.
Under the agreement, the authority would draw from its own accounts to pay the balance of the funds — about $130,000 — to the restaurant, which operates as Bay State Hospitality Group.
The new proposal mirrors the general terms of a settlement shot down last year by the City Council. That deal called for the city to take out the loan rather than the authority.
"It's virtually the same as when I brought it to council back in August," said Mayor Richard Alcombright. "It's going to change by little dollars because of the interest issues."
The authority is set to discuss and potentially vote on the settlement at its meeting Wednesday night. If approved, the settlement could be finalized in early February, Alcombright said.
The Freight Yard Pub sued the authority, its landlord at Western Gateway Heritage State Park, in 2011 after much of its parking was fenced off during for the renovation of the nearby Hadley Overpass from 2008 to 2012. The lease between the restaurant, which argued it lost significant revenue during those years, and the authority stipulated that the building, access to the building, and parking should not be "significant or materially altered" without good faith negotiation.
In a July 2014 judgment in Berkshire Superior Court, the authority was ordered to pay $300,000 in damages to the restaurant.
The ruling also found the authority was owed approximately $80,000 in back rent. But in the two years since the court's decision, the judgment has accrued interest — erasing much of the back rent the redevelopment authority hoped to receive.
Under Alcombright's proposed settlement, the restaurant will pay $42,416, the next year's rent, into an escrow account.
Alcombright declined to detail the borrowing plan until Wednesday's meeting.
"The big kicker here is that the city in no way, shape or for is responsible for the money," he said.
However, the mayor did note that the loan's interest rate would have been lower had the city been the borrower, not the redevelopment authority.