POTSDAM — A Potsdam couple’s plans to build a $7.4 million hotel are still under way despite an initial setback, although it is uncertain whether it will still be in Potsdam.

Village Planning and Development Director Frederick J. Hanss announced at a planning board meeting Thursday that funding for the hotel had fallen through. G2G Inc, founded by Jeffrey A. and Rebecca A. Gerrish, had sought to fund the project through Community Bank, which recently announced it would not issue loans for hotel projects.

Despite this setback, G2G has had several different lenders in mind since the project began and will continue to move forward, according to Mr. Gerrish.

The couple is worried that Mr. Hanss’s announcement that the company failed to receive funding through Community may have jeopardized negotiations with other lenders, according to Mr. Gerrish.

“For (Mr. Hanss) to proclaim its death was far short of accurate,” Mr. Gerrish said.

Mr. and Mrs. Gerrish were not present at Thursday’s meeting.

According to Mr. Hanss, the village never assumed the death of the hotel project. The lack of funding was viewed merely as a setback.

“Our working assumption is that this is not a dead project. It is a project that ran into a stumbling block when it tried to secure financing,” he said. “And when it secures that funding, it will be able to move forward.”

Once a lender is found, Mr. Hanss said, the village will be happy to work with G2G.

He said village officials are eager to welcome a hotel to the area, as evidenced by the strong support G2G received after it presented plans to the village earlier this year.

The couple planned to build a four-story, 60-room Country Hearth Inn & Suites, either next to Mama Lucia’s Restaurant or in Commerce Park off Route 11B.

Although Mr. and Mrs. Gerrish are continuing to explore building in Potsdam, they are weighing other options. They are considering moving the hotel to Waddington, where they have received a favorable response from local leaders, Mr. Gerrish said.

Opening a hotel downtown is seen as a desirable for Potsdam. The need for a hotel was listed as a high priority in Potsdam’s Downtown Waterfront Revitalization Plan, which was adopted earlier this year.

There is another developer that is in talks with the village to build a comparably sized hotel, but Mr. Hanss said he could not provide any more information about that project.

During the Planning Board meeting, Mr. Hanss said the village had nearly completed applications for state grants that could have provided up to $900,000 for G2G’s project, but these public funds would not have been granted until G2G secured private funding.

“The firmer commitment you get from the bank the better,” Mr. Hanss said.

The state’s consolidated funding application deadline was July 19, so even if the company receives private funding it likely will not receive state funds until 2013.

“They’re going to have some time to work out the kinks in their proposal and come back,” Mr. Hanss said.

G2G will not wait for another round of grant funding before starting construction, instead electing to move forward without the grants, Mr. Gerrish said.

There are several other sources of public funds they plan to pursue that could total up to $250,000.

If funding is obtained, construction on the hotel will likely not begin until May 2013 to avoid building through the winter, Mr. Gerrish said.

Johnson Newspapers writer Brian Hayden contributed to this report.

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