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But in March 2009, he and several colleagues urged county leaders to be fiscally cautious.

In a memo, they questioned the plan’s “financial feasibility” and whether the county and town should back the project without a financial guarantee from Gallub if it fell apart.

County Commissioner Bruce L. Castor Jr. said he was not given the memo. In recent interviews, Castor also said, as did Matthews, that they were unaware the county had agreed to let the private investor, Logan Lender, get repaid first if the plan fell apart.

That practice, known as subordination, isn’t an uncommon tool in public redevelopment financing. But, experts say, it must be done after scrutinizing a project’s feasibility and financial safeguards.

The same year, lawmakers shrank the tax-credit program, and Raleigh Studios backed out of the deal.

The studio plan collapsed.

When the state withdrew its promised $10 million Redevelopment Assistance Capital Program grant, Gallub focused on renovating the Sears building into office space. The centerpiece of the project became a plan to build a new structure for the maintenance company USM, which already was located at Logan Square but looking for new quarters, and a parking garage.

Despite the changes, taxpayer dollars flowed into the modified plan.


In 2010, the state gave the modified project a reduced state capital grant of $7 million.

The county gave Gallub:

- A $2 million loan in July 2010. That money won’t be repaid unless it comes through a lawsuit.

- The $6.2 million loan made in November 2010 by the county guaranteeing a Redevelopment Authority bond sale. That is the debt the county begins paying down this year.

- A $10 million loan through the U.S. Department of Housing and Urban Development’s Section 108 program. Local governments that borrow money guaranteed by that program, according to HUD, “must pledge their current and future CDBG (Community Development Block Grant) allocations to cover the loan amount as security for the loan.”

HUD is waiting for the county to say how it wants to repay the $10 million loan, spokeswoman Niki Edwards said.

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