PITTSBURG -- A redevelopment loan owed by the Mehran restaurant is being written off as a lost cause.
The oversight board of the successor agency, which is in charge of winding down redevelopment, announced its action after meeting in closed session earlier this month. The action still has to be approved by the state Department of Finance before it's a done deal.
In 2008, the redevelopment agency made a $62,000 commercial rehabilitation loan to Mehran owners Chris Nazir and Ron Vincent so they could install equipment to cover up cooking odors and build a wall to diminish noise and lighting as a condition for a live-music permit granted earlier for banquet rooms next to the restaurant. The loan was refinanced in 2010 to a longer repayment term after the owners defaulted in April 2009.
As of May 15, Vincent and Nazir owed almost $45,000 on the loan after failing to make monthly payments for 33 months, said assistant city manager Garrett Evans. The decision was made to write off the loan because it would be too costly to take the owners to court.
"It may take as much in legal costs to recover (the loan balance)," he said.
Under the law that did away with redevelopment in 2012, tax-increment funds, which result from increased property taxes from redevelopment projects, are required to first pay down redevelopment debt and make pass-through payments to school districts and other local agencies.
"The successor agency has very limited funds," for other uses, Evans said. "There is sort of a cost challenge here ... If we had a normal (redevelopment) budget, we can pay for attorneys fees."
Mehran, Pittsburg's only Indian and Pakistani restaurant, opened in 2005 in the 3800 block of Railroad Avenue in a small shopping center surrounded by homes.
In 2008, Mehran was at risk of losing the live-music permit granted by the city. The owners had previously agreed to more than a dozen conditions established with a small group of neighbors to obtain the permit. But they were running short of money to meet the two remaining conditions: equipment to cover up cooking odors and a wall to diminish noise and lighting. So the redevelopment agency provided them with a loan to do the needed work.
Nazir said Thursday he was unaware of the action taken by the successor agency regarding the loan.
Keeping up with the loan payments became difficult when the economy took a hit several years ago, he said.
"We made payments and we fell behind and they told us to pay up," said Nazir, adding that they made an effort to do so but the commercial rehabilitation loan was "a big burden on us and we had other things we were taking care of."
Nazir said almost $1 million has been invested in the restaurant, which was formerly a bridal shop.
Contact Eve Mitchell at 925-779-7189. Follow her at Twitter.com/EastCounty_Girl.