The Schenectady Metroplex Development Authority has begun the foreclosure process on the Van Dyck, a landmark music club known for its jazz and blues shows.
Two years ago, Metroplex granted the Van Dyck's owner Peter Olsen a controversial short-term $275,000 loan to keep his business afloat. At the time, Olsen had just bought out his partners and needed the extra money.
Chairman of Metroplex Ray Gillen said of the loan, We knew there was some risk, but we were in a good position, and even if the business sold at auction, we'd get our money back and more.
The loan is now due and Olsen has yet to come up with an acceptable plan to repay it, said Gillen.
"We have to protect our investment in the club," Gillen said. "We're lending the public's money here."
Olsen said he is looking at a variety of options to repay Metroplex. He said he has been talking with two banks, a loan broker, three people who want to purchase the place, three people who want to lease it, and two men who are interested in becoming partners.
Gillen said the board originally voted to grant Olsen the loan because the business attracts people from outside Schenectady into the city.
"They just got named one of the top 100 jazz clubs in the country," Gillen said. "It's frustrating because you want that to survive."
Founded in 1947 by Marvin Freidman of Harlem, the Van Dyck was first conceived as a piano bar. The restaurant has played host to up-and-comers alongside many big names in jazz, including Dizzy Gillespie, Mose Allison, Marian McPartland and Coleman Hawkins.
Olsen and his partners bought the restaurant at an auction and reopened it in1997. They put about $1 million in renovations into the building, including a new heating and air-conditioning system, a new roof and all new mahogany finishes. Olsen and his partners also renovated the kitchen and added a brewery. Several upstairs rooms were combined to create one large performance space, which seats 125 people.