2016-03-03 / News

Biddeford officials lambasted about restaurant’s issues

By Ben Meiklejohn Staff Writer

BIDDEFORD – With legal action now being taken by the Biddeford-Saco Area Economic Development Corp. against a would-be restaurant owner, officials in Gardiner are saying the corporation should have seen red flags earlier.

In October, the corporation lent $125,000 to Harold Royals of Saco to open Steer N Stein restaurant at 140 Main St. The corporation is now seeking legal action, claiming that some of the money was spent on activities not related to opening a restaurant.

In December, Royals had sent an email to the Courier, identifying Peter Powers of Scarborough as a business manager for the restaurant. Royals then recanted the attribution, saying Powers was only a consultant, and that Powers would eventually be the head chef and kitchen manager for the restaurant.

Powers was the owner of Alex Parker’s Steakhouse in Gardiner, where he received a $40,000 loan from the city’s revolving loan fund to open the restaurant. Powers closed the restaurant and filed Chapter 7 bankruptcy a year later, without paying back $37,000 to the city.

“It was the straw that broke the camel’s back,” said Gardiner City Manager Scott Morelli, noting that the city discontinued offering the loans after Powers defaulted on his loan.

“The loans that we were doing, that other communities have done, are inherently risky because people are only applying for them because they can’t get the full amount from a bank,” Morelli said. “Some will default, and some will succeed and create jobs and taxes and all that.”

In December, the Courier interviewed Royals and asked him about his relationship with Powers and Alex Parker’s Steakhouse. Royals said he was not involved with Alex Parker’s Steakhouse, but had been friends with Powers for many years.

“I had very little to do with that, basically nothing,” Royals told the Courier, also stating that he had only been to Alex Parker’s Steakhouse “a couple of times.”

However, Morelli said Royals was much more involved with Alex Parker’s Steakhouse than he was letting on.

“From the city’s perspective, legally, (Royals’) name did not appear on any of the paperwork that was presented to us,” Morelli said. “It was Alex Parker’s, Inc. and Peter Powers as sole operator and guarantor. It was just him on there, but Harold was at all the meetings where loans were considered and approved by the council. He was at the meetings when there were late payments.

“He organized cleanup days to make the back parking lot look good.”

Jonathan Ault, an at-large city councilor in Gardiner, told the Courier in December that the Biddeford-Saco Area Economic Development Corp., “they’re about to lose a ton of money.”

“We lost so much money on them, that we closed our revolving loan fund,” Ault said at the time.

Now that the corporation is seeking legal action, Ault is questioning why the corporation didn’t do its research first, before lending Royals $125,000.

“I just think the whole story is bizarre,” Ault said. “When I first heard about it, I was incredulous. Here’s this situation where an economic development corporation gives a $125,000 loan to a couple in November whose bankruptcy discharge from their last municipality-sponsored restaurant failure hadn’t even occurred until late December. It’s incredible. Especially so, since even the most cursory of investigations would’ve revealed the true relationship between Peter and Harold – Harold’s name was on the liquor license for Alex Parker’s – and left to the lie the notion that Harold had ‘only been to Gardiner once or twice.’ It’s just wild.

“I honestly can’t decide whether they’re criminal or just plain incompetent.”

Morelli said there should be better ways for cities and economic development organizations to do background and financial checks on individuals before handing them large sums of money.

“In Gardiner, taxpayers were left holding the bag in this case,” Morelli said. “There’s something in the system that needs to be tweaked and I don’t know what the solution is. You can’t keep going from city to city and borrowing money and defaulting on it, and I hope that’s not the case (in Biddeford), but obviously there’s a great gap in the system.”

In August, both Powers and Royals were arrested on Pine Point Road in Scarborough, on charges of assault, disorderly conduct and failure to provide correct name, address and date of birth.

The Courier contacted Royals to get an update on the restaurant’s grand opening, which was scheduled for March 1, but postponed, due to problems with the property’s plumbing, according to the restaurant’s Facebook page. Royals began to complain about the last interview he had with the Courier (see “Tapping In,” Dec. 24), and then said his phone reception was bad. Royals did not respond to any further requests for comment.

William Armitage II, executive director of Biddeford-Saco Area Economic Development Corp., said he could not comment on the loan. The corporation helps provide gap financing for projects, using a combination of private funds and public funds from the cities of Biddeford and Saco.

Armitage said he could not even discuss what portion of the loan was funded by public monies because the issue was now a legal matter.

The opening date for Steer N Stein was originally expected to be in February, and then pushed back to March 1. However, on Feb. 12, a post on the business’s Facebook page claimed that all the plumbing in that section of the building needed to be replaced.

Steve Ebling, owner of the property, did not respond before the Courier’s deadline as to why the plumbing needed to be replaced. Bebe’s Burritos & Cantina had occupied the space for 15 years before moving out in May of last year.

When the Courier interviewed Royals in December, a line of customers were waiting to pay for a membership in a mug club for $35.

In January, Royals created a site on GoFundMe.com, soliciting donations toward a goal of $125,000. As of the Courier’s deadline, no donations had been made on the site.

The description of the GoFundMe page states that Royals intended to donate 25 percent of the restaurant’s profits to pay for rooms for homeless veterans, and another 15 percent of profits to local charities.

“By raising enough money to pay off this loan from the EDC, Harold will be able to donate an additional $18,506 a year to the cause of homeless veterans. This would pay for an additional 430 room-nights for our homeless veterans in places where pets are accepted,” the fundraising page states.

“With the projected profits from the business, this will be a total of 982 room nights for homeless veterans where they can be safe, warm, and close to all the services they need to get on their feet until they can get permanent

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