City Taking Chill-Can Developer to Court
YOUNGSTOWN, Ohio – Attorneys representing the city are preparing litigation that will be filed by the first week of June against M.J. Joseph Development Co. over the ill-fated Chill-Can project on the East Side.
Law director Jeff Limbian said a teleconference meeting between the parties on Wednesday failed to reach an accommodation, forcing the city to take the company and its CEO, Mitchell Joseph, to court.
“It didn’t go well at all,” Limbian said. “In fact, it was worse than we expected. We’re having our firm prepare litigation now.”
The law director said that papers would probably be filed in Mahoning County Common Pleas Court following the Memorial Day weekend.
“If the city wants a legal fight, we will give it to them,” vowed Brian Kopp, Joseph’s attorney. “Cases are won in courtrooms, not press conferences. And the contracts, not wishful thinking, define the city’s rights and remedies.”
Limbian said the city is seeking restitution from Joseph Development in excess of $2 million – money he said the city spent to help the developer prepare a 22-acre site to make way for a bottling and technology campus intended to produce the world’s first self-chilling cans.
The project was supposed to create more than 200 jobs – 150 of which should have been in place by now – according to development agreements signed with the city in 2017.
However, after more than four years since breaking ground, the project remains unfinished, no cans have been produced and just a handful of security personnel have been hired
Limbian, along with outside counsel Martha Bushey and Joseph Houser of Manchester Newman & Bennett, held a teleconference with Kopp Wednesday morning to discuss the matter.
“They offered $250,000 and for the city to withdraw its claims and allow them to continue with whatever plans they choose to develop,” Limbian said. “That isn’t even close.”
Limbian said that the impasse has left the city with no choice but to proceed with litigation.
“We want to see the city made whole, and that would amount to approximately $2 million,” Limbian said. “We made that clear to his counsel.”
The city will request that the court validate its approximately $2 million claim and untangle issues with the land, part of which is still owned by the city, he said.
According to data from the Mahoning County auditor’s office, portions of two of the three buildings at the site were constructed on property that was never turned over to Joseph and under title with the city.
“We can expect that there will be a complete severing of ties between the city and Mitchell Joseph,” Limbian said.
However, the law director acknowledged that the legal process could take “a number of years” to resolve.
On March 26, the city placed the Joseph Development Co. and its CEO on notice that it was in violation of two development agreements the company signed in 2017. The notice gave Joseph 60 days to make good on the agreements or face potential litigation.
Under one agreement, the city provided a $1.5 million development grant in return for Joseph building his Chill-Can campus in a neighborhood where his family’s bottling business once operated in the 1920s.
Youngstown also committed additional funds of at least $360,000 to purchase houses and vacant, and then to relocate some of the remaining residents in the neighborhood to new homes. About a dozen residents were relocated from their houses to make way for the project.
As part of a separate enterprise zone agreement, the city awarded Joseph Development a tax abatement of 75% over 10 years on any improvements at the site.
In return, Joseph was to complete a bottling facility, warehouse and plastics facility by Oct. 1, 2017. The company was expected to hire 50 employees during the first and second year, 100 employees by years three and four, and provide 87 jobs in its fifth year, according language in both agreements.
Joseph, who was born in Youngstown, said he wanted to build a $20 million bottling, research and development complex at a site bordered by Oak Street, the Himrod Expressway, Fruit Street and Himrod Avenue. His company, Joseph Company International, is based in Irvine, Calif.
In April, Joseph stated that he was still committed to finishing the project.
“I want to assure the people of the Mahoning Valley, especially the residents of Youngstown, that we have never wavered in our commitment to the Chill Can Beverage and Technology project,” Joseph said in a statement.
He said much of the delay recently was because of COVID-19 restrictions and the temporary closures of his California plant and another operation in the United Kingdom.
Limbian said the city is still open to discussions but emphasized, “they have to be realistic discussions.” After several meetings over the past two months with Joseph’s counsel, Limbian was not optimistic that any sort of settlement could be reached.
“Based on the tenor of the conversation, it’s highly unlikely that Mitchell Joseph cares enough about the city to make it whole for the damage that’s been done,” Limbian said.
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