Questions surround agency’s first business loan

Monday, July 10, 2000 | 2:39 a.m.

Controversy about the loan Carrion obtained from a special fund has erupted as Eureka County works to diversify its economy in the face of a gold mining slump that has hit rural communities throughout northern Nevada.

"How are we going to get anything done if everybody has a conflict?" asked Carrion, a prominent businessman who's been supervising the construction phase of his casino project for more than two months.

The loan comes from a $1 million fund of mining-tax proceeds established to boost business in Eureka County. Carrion is head of a board organized to diversify the economy and find candidates for the cash.

The loan Carrion received was the first granted from the fund.

It's causing a heated debate in Eureka, especially among Main Street store owners. They see a rival with a leading position in the county's economic-development apparatus using public money to enhance his business.

"It's ugly in a small town," said Pete Goicoechea, chairman of the Eureka County Commission. The commission set up the loan program.

"It looks pretty awful," commission member Sandra Green conceded of the loan procedure's outward appearance.

Carrion, 55, is chairman of the Eureka County Economic Development Council. The commission created the council last year to recruit businesses.

The economic council is the second major piece of the county commission's diversification program, coming after the Community Development Corp., established in 1997.

The non-profit corporation, also organized by the county commission, grants the short-term loans.

Carrion and others involved in Eureka County economic expansion efforts say the council and corporation boards act separately, although they're part of the same business development effort.

"The economic development council will go out and find these potential clients, the CDC will fund them," said Carrion, the first client to obtain funding.

Carrion said he notified the economic development council of his intention to apply for a loan and offered to resign as chairman if the board thought it necessary. He was not asked to resign.

"It's really not a conflict," Wayne Robinson, an economic development council board member, said of Carrion's loan. "I wasn't really happy with the way it was brought about. But there was nothing wrong with it."

"The objective is economic development for Eureka County," said CDC board member William Riggs. "The community has to survive somehow. How are we going to do that?"

Eureka has few business owners. Denying loans to those serving on economic boards would severely limit growth, community leaders say.

"He is expanding," Green said of Carrion. "He will be hiring more people. It does improve the look of downtown. It gives you that much more of a tax base."

Attracting businesses from outside the county has been tough. That was another reason for granting a loan to Carrion, who is combining the Owl Club with the Nevada Club, a casino he's buying next door.

"People don't want to come here," Robinson said. "There's no railroad. We're not on (Interstate 80). We've brought hundreds of people to town, but nobody has said, 'Yes.' We are a long way out. It's hard to compete."

Initially, county officials wanted to use the $1 million to establish a large dairy business in Eureka. The plan didn't work, so the money was given to the CDC as a grant to get the loan program started.

"It worked the way it was supposed to," Goicoechea said of the CDC. "Unfortunately, their first major loan ended up being somewhat of a hubbub."