City Stands by Its Ultimatum to Chill-Can

YOUNGSTOWN, Ohio – The city is sticking by its ultimatum that the Chill-Can project’s developer start operations and bring jobs to the city by the end of May or face legal action.

Law Director Jeff Limbian and the city’s outside counsel Joe Houser met with M.J. Joseph Development Corp. attorney Brian Kopp Friday to discuss Youngstown’s demand that the developer make good on two agreements it negotiated in 2017.

Little was accomplished during the meeting, Limbian says.

“It’s as close to an impasse as you’re going to get before we go to court,” he says. “I see that litigation is the most likely result unless we hear something significant from Mitchell Joseph.”

The city notified California-based M.J. Joseph Development Corp., a subsidiary of Joseph Company International, and its CEO Mitchell Joseph March 26 that it was in default of the two agreements. These agreements stipulated that the city would provide a $1.5 million site development grant and a 10-year 75% tax abatement so the company could begin work on a proposed $20 million campus devoted to research and development of the world’s first self-chilling can.

In return, the company pledged to create 237 jobs at the complex. According to the city, the development was supposed to have created at least 150 jobs by now.

However, since the project broke ground in November 2016, three unused buildings sit at the site and just a handful of people have been hired, mostly in maintenance and security. Not a single can has been produced.

Now, the city is seeking to claw back its $1.5 million and other associated costs, rescind the company’s tax break and reclaim the development site.

Limbian said that he’s not optimistic that Joseph will be able to reach the benchmarks regarding hiring and operations by May 24 or 25 – essentially 60 days after the city sent its letter to the CEO.

According to Limbian, Kopp said that the COVID-19 pandemic has slowed the developer’s progress on the project significantly and it will likely require more time to complete the complex.

“They wanted to come to some sort of terms. Our position is that this all fell apart before COVID,” Limbian says. “So, that’s really a non-starter.”

However, the company says it remains committed to the project, according to a statement issued by Joseph earlier this week. “I want to assure the people of the Mahoning Valley, especially the residents of the city of Youngstown, that we have never waivered in our commitment to the Chill-Can Beverage and Technology project,” he said. “To date, we have invested $5 million of our own funds into the project above and beyond the grant from the city and we will continue to do whatever is necessary to make the East Side facility a center of innovation and manufacturing.”

Limbian describes as “suspect” the claim that the developer has spent between $4 million and $5 million on the project, at least at the Youngstown site.

In a statement Friday, Kopp reiterated the company’s dedication to the project, but it’s not clear as of now whether the parties will be able to reach a settlement or agreement.

“My client is committed to this project,” Kopp said in an email. “But whether the differences with the city can be resolved is yet to be determined.”

Yet after more than four years since ground was broken for the project, city officials are skeptical.

“They say they’re committed to the project, but we just haven’t seen the signs of it,” he said.

Limbian said a second meeting with company representatives or legal counsel has not been scheduled.
The city allotted $1.5 million in wastewater grant money to Joseph to clear and develop the site – 22 acres on the East Side that was once populated by homes and residents. At the time of the Chill-Can development, most of those residents had moved, but about 12 remained.

In 2017, the city spent more than $360,000 to acquire those lots, relocate the residents and demolish the remaining houses in the neighborhood to make way for the project.

During a press conference April 1, Mayor Tito Brown said that he would prefer new jobs at the site rather than three empty buildings, and has tried since 2018 to work with the developer.

“Their benchmarks have been missed, and we have now moved on to legal options,” he said. “We displaced residents, were promised new jobs – those jobs have not happened.”

The mayor said that the best-case scenario is future job creation at the site. “I would rather have the jobs than the three buildings that are empty out there. We know we need these jobs.”

Limbian said Friday that there might be other parties interested in using the site and putting it to use. “There have been a couple of inquiries, so apparently there is some interest,” he said.

As for the Joseph Co. asking for more time to finish the project, Limbian thinks that time has expired.

“They think that this is a viable program that we just need to be patient about,” Limbian said. “Frankly, the mayor’s patience has run out.”

Copyright 2021 The Business Journal, Youngstown, Ohio.