The city of Gardiner plans to sue Alex Parker’s Steakhouse, a downtown restaurant that closed last month, to recover the nearly $37,000 the restaurant owes on a loan the city awarded it two years ago.

Alex Parker’s Steakhouse announced its closure in mid-November on its Facebook page after first saying it would just be closing for the first half of November for upgrades.

The city sent a letter to the restaurant owner, Peter Powers, on Nov. 21 saying the $36,595 still owed on the loan was due Tuesday because the restaurant no longer was operating, City Manager Scott Morelli said.

The restaurant didn’t pay by the deadline, so the city is working with its attorney to pursue legal options to recover the money, Morelli said. He expects the city will file a suit in court by the end of next week.

Powers, who listed his residence as Scarborough in his liquor application with the city, declined to answer questions when reached by phone Thursday.

“We’re not interested. Thank you,” Powers said before hanging up.

Morelli said he will visit the property with the building owner Friday to see what equipment is inside the restaurant for collateral. If the city isn’t able to recover its money from the restaurant owners, it might sell whatever it has for collateral to get back some of what is owed, he said.

Powers is looking to sell the restaurant, so it might make sense to hold on to equipment if someone buys it, Morelli said.

The building is owned by Auta Main, of Gardiner, according to city assessor’s records.

The head of Gardiner Main Street, a downtown revitalization organization, said he would prefer transferring the restaurant’s equipment to another restaurant if one opens in the same space, because the location would be more valuable if a new business owner didn’t need to buy new equipment.

Patrick Wright, executive director of the nonprofit, said he’s been in contact with a group interested in opening a restaurant in the space, but he wouldn’t give any more information about the potential venture.

Wright said one of the partners in the group is operating another restaurant in another place, but it probably wouldn’t be an expansion of that restaurant. He said the group may seek funding support through Gardiner Main Street’s downtown business incentives program launched in April, the Gardiner Growth Initiative.

If that venture doesn’t work out, Wright said his organization has been in touch through the incentive program with restaurants that could be interested in expanding to Gardiner.

“I do think it would be a great opportunity for an entrepreneur to fill a greatly needed niche for another quality restaurant in Gardiner,” Wright said.

The city gave Alex Parker’s Steakhouse a $40,000 loan from its revolving loan fund in December 2012 to help cover startup costs, renovation of the restaurant’s interior and the public walkway, operating capital and inventory, according to a memo to Morelli from then-Director of Economic and Community Development Nate Rudy.

The city’s Economic Development Committee recommended to councilors that they approve the loan because of Powers’ past success with restaurants in Georgia and Florida, the amount of personal cash he was putting into the business and his enthusiasm for improving Gardiner’s downtown.

As part of opening the restaurant, Powers funded the renovation of the public walkway from downtown to the Arcade parking lot.

The five-year loan came from the city’s revolving loan fund, which was established in 2001 with a loan from the U.S. Department of Agriculture Rural Development.

As of October, more than $365,000 was available and eight outstanding loans totaled almost $260,000, according to Finance Director Denise Brown. The city has paid $21,225 a year to the USDA since 2005 and will do so through 2029 until the original loan is paid off, Brown said.

When the city granted the loan two years ago, city officials said they had written off three loans totaling more than $100,000 in the five years before.

The city is typically last in line to be repaid if a business closes, but in the case of Alex Parker’s Steakhouse, the city is the only creditor, Morelli said. Powers invested $87,000 of his own money in the venture, according to the loan documents.

Powers’ partner and the restaurant manager, Harold Royals, told the Kennebec Journal in April 2013 that the pair had spent about $100,000 of their own money for renovation and startup costs.

Paul Koenig — 621-5663

[email protected]

Twitter: @paul_koenig

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