YOUNGSTOWN — The city took the first steps toward legal action against the Chill-Can plant after years of broken promises about city revitalization and jobs.
Mayor Jamael Tito Brown announced Wednesday the city is giving the M.J. Joseph Development Corp. 60 days to meet the original benchmarks agreed to as far back as 2017.
The city entered into an agreement with the development corporation in 2017 to develop the Chill-Can plant, which would produce the world’s first self-chilling beverage can: A consumer twists a knob at the bottom of a can and activates a cooling apparatus. In about 90 seconds, the beverage temperature drops about 30 degrees, according to The Business Journal.
In 2017, the city gave the development group a $1.5 million grant to develop the site and spent an additional $360,000 to purchase and demolish the homes of about a dozen residents who lived within the property for the Chill-Can plant.
As detailed in a May 2020 ProPublica/The Business Journal investigation, "More than three years later, Youngstown is still waiting. A pair of metal buildings resembling airplane hangars sit empty on the site. Piles of stacked framing, covered in protective plastic, rest on an abandoned road that bisects the area."
The letter sent on March 26 notified the corporation that they were outside of their legal obligation for the grant that was provided by the city by failing to meet benchmarks of completing construction or hiring employees.
Brown said his focus is on getting jobs for residents of Youngstown. Without seeing progress, Brown said it was time to take steps for legal action.
“I can’t continue to hear the same story over and over and not get the results,” Brown said.
Law Director Jeff Limbian was direct in his assessment of the immediate future of the project.
“... I think over the next year or two if you have cans that you need chilled, you better buy ice,” Limbian said.
All talk, no action
The plans for development began in 2017 through former Mayor John McNally. When Brown first became mayor in 2018, he said he was able to assess the situation and see that the project was still in development. In his second year, Brown was in communication with Mitchell Joseph, the firm’s chairman and CEO.
Brown said the COVID-19 pandemic could have slowed the project, though other essential businesses were able to thrive during the past year. Brown said it became apparent, pandemic or not, there was not much production going on.
“The time has run out, and it’s time to produce and that has not happened,” Brown said.
The city has been in communication with the corporation throughout the pandemic with bi-weekly virtual meetings to discuss progress, Brown said.
In recent meetings, Brown said the response has been the same: The discussion has focused on waiting for contracts to come in along with promises of an “amazing” result when they do.
The last meeting took place about four weeks ago.
Despite assurances from Joseph officials that good things were happening, Brown noted, “They have not happened.”
Limbian said the mayor told him months ago that the project could not continue the way it has been, especially with the pandemic.
“Given the tenor of the last conversation we had with Mr. Joseph on Zoom, it became apparent that it’s a lot of hot air and not a lot of production,” Limbian said.
According to the city's letter, the corporation should have 150 full-time permanent jobs at the project site as of now.
Right now, the city needs jobs, Brown said.
“This is just our first step to really put them on notice that they’ve missed the benchmarks,” Brown said.
The letter outlines the failed benchmarks that were required by the Amended and Restated Development Agreement and the Ohio Enterprise Zone Agreement after the city provided substantial assistance to the company.
The benchmarks outlined that the corporation failed to meet based on the development agreement made in 2017 included:
- The developer failed to complete the construction of the warehouse building and bottling facility by Oct. 1, 2017;
- The third building was required to be completed by the end of September 2017;
- The developer was to complete the warehouse building, bottling facility and plastics facility by Oct. 1, 2017.
Failure to meet the benchmarks set by the city in 60 days could result in litigation and demand by the city for repayment of the grant funds provided for the project, according to the letter.
The city also entered into an Ohio Enterprise Zone Agreement with the corporation in 2017 that would create 237 new full-time, permanent job opportunities. The job creation period began on Nov. 1, 2017.
The schedule for hiring was to create 50 new full-time permanent job opportunities in the first two years, 100 new full-time, permanent job opportunities in the third and fourth years, and 87 new full-time, permanent job opportunities in the fifth year of development.
Failure to comply with the agreement can result in the loss of the real estate tax exemption for the project.
As of Wednesday, the city has not heard back from the company or the company’s attorney in response to the letter.
Limbian said the city hopes that given the terms of the agreement, Joseph can make good on his promises.
“It's still the hope that eventually cans that chill on their own come out of that facility, although that seems highly unlikely at this point,” Limbian said.
After 60 days, the city will seek to initiate action in court to return the funds granted by the city as well as seek ownership of the land where the Chill-Can plant was expected to be, Limbian said.
The exact amount is yet to be determined but could include the $1.5 million grant, demolition costs and the $360,000 needed to purchase and demolish the homes of about a dozen residents.
Brown said the best-case scenario for him would be to produce jobs for residents in the city and have the property put back into productive use.
“It's a straightforward conversation,” Brown said. “Can you produce what you say that you would do? If not, we need to start peeling back those pieces that we can control.”