SOUTH PORTLAND — The City Council on Monday night voted unanimously to approve a $50,000 loan to a nonprofit group building a group home in Knightville for disabled adults.

But the council did not vote on a $50,000 bailout of a local steel company hit hard by the recession.  

Councilors met in executive session prior to their business meeting at City Hall to privately discuss providing a “bridge loan” to Megquier & Jones, a 114-year-old company that has been based at 1156 Broadway for nearly 50 years. 

The company said in a letter to city officials that it is running out of options to weather the recession. With only five bridge and two structural jobs, the company has had to permanently lay off five employees, reduced its work week to 32 hours and furlough some workers for one to two weeks. 

Although the company’s losses totaled more than $600,000 in September, bank and shareholder loans have helped maintain the current staff of 35 to 40 employees.

The City Council had scheduled a vote on the proposed loan, which would come from the Fairchild Semiconductor Tax Increment Financing account, but withdrew the item from the agenda at the beginning of the meeting.

Mayor Tom Blake said councilors needed more information than was provided in the private session before making a decision. They scheduled an emergency closed-door session on the issue for Friday afternoon, Nov. 20.  

“We’re not in the business of giving loans, but we have that ability,” Blake said. “Because it’s not our business, we want to make sure we are doing this extremely cautiously, professionally and correctly.”

Since loaning money to companies is a new endeavor for the city, Councilor Tom Coward said the council was careful in its private deliberations.

“We had some questions; we’re not a bank,” Coward said. “The council had a variety of opinions, but we needed more information.” 

Like communities across the country, Blake said South Portland businesses are being hit hard by the recession. He said the steel company is a longstanding business in the city, which would like to help them with a loan. He said the interest rate could be tied to the five-year rate for treasury bonds as of Nov. 30. 

Blake said the city is not necessarily going to make these loans a habit, but will consider requests on a case-by-case basis.

“We’re not readily going to give loans to anyone who needs them,” Blake said. “We need to deal with these issues as they come forward. Whether or not we entertain (the steel company’s request) again at a public hearing depends on the information they provide.”

Meanwhile, E Street Development received unanimous support for a $50,000 loan, which must be paid back over five years at 1 percent interest. The funds will come from federal Community Development Block Grants. 

Work is already underway on a former ceramics studio at 20 E St. near Knightville’s Legion Square for a group home with in-house support services for semi-independent, developmentally disabled adults. There will be nine residential, owner-occupied condos in the building, which will be staffed 24 hours a day by two support professionals.

Mary Chris Bulger, a Cape Elizabeth resident who is spearheading the project, said that only four of the nine units have been sold at this time. Bulger, whose autistic daughter would be a resident in the home, said 16 interested families attended an informational session at the public library earlier this month and she expects several to submit applications for residences.

Bulger said a new roof on the building is almost complete and new windows should be installed by the end of the week. The loan, she said, will allow work to continue while families explore the concept. 

“This concept is complex and it takes a while for for families to fully understand, so we didn’t expect anyone to sign up that night,” she said. “We are very appreciative, not only of the loan, but the support we have received from so many in government and administration in the city.” 

Bulger said the Maine Department of Health and Human Services has agreed to provide $10,000 a month for the project through June 30, once the project is finished. The group is also seeking a loan from Bangor Savings Bank.

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net