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Board of control to buy land for V&M Star and Exal Corp.
The city will spend $1.4 million to buy 61 acres on Salt Springs Road.
YOUNGSTOWN — Though a potential major project by V&M Star Steel is far from certain, the city’s board of control signed a contract to purchase about $5 million worth of property needed by the company for the possible expansion.
Though the board approved the V&M contract Monday, the company hasn’t signed the deal.
Also, the board of control agreed to spent $1.4 million to purchase 61 acres at its Salt Springs Business Park from LaFarge North America Inc. for a possible expansion of Exal Corp.
The money to buy the property comes from a $4.9 million state grant to the city. The rest of the state grant will be used to make the land level as well as install roads and water and sewer lines.
As with V&M, there’s no guarantee Exal will move ahead with expansion plans.
The struggling economy is the main reason both proposals are on hold, according to officials with the companies and the city.
If Exal doesn’t use that land, it could be used by another company, said city Finance Director David Bozanich, a board of control member. Other board members are Mayor Jay Williams and Law Director Iris Torres-Guglucello.
Exal is “impacted by the downturn in the economy,” Bozanich said. “If that doesn’t work out, we’re very confident” another company could use the site.
Exal’s proposal calls for the new plant to employ about 300. Exal, which makes aluminum bottles, currently employs about 385 workers at its Performance Place Business Park location off Poland Avenue.
As for the V&M proposal, no property will be purchased until the company signs the contract, Bozanich said.
The proposed deal calls for the company to reimburse the city up to $5 million to buy the land, site preparation, environmental expenses and legal fees.
The struggling national economy is delaying V&M’s decision on the nearly $1 billion proposed expansion, company officials said. V&M’s decision on the potential expansion, which would create about 400 new jobs, is expected toward the end of the year.
V&M, located on Martin Luther King Jr. Boulevard, recently laid off 50 workers and reduced the weekly hours of the rest of its 400 workers from 40 to 24.
Despite that, Bozanich said he’s optimistic the plan will move ahead.
If V&M signs the contract, and the city purchases the land, the company has as late as April 30, 2010, to repay the city. The contract calls for V&M to pay the city for the land purchases and related costs 30 days after the company cancels the project or March 31, 2010.
Even if the expansion doesn’t happen, V&M could lease the property, about 120 acres, from the city for $100 a year up to 99 years or buy it for $1, according to the agreement signed by the board of control.
V&M, which manufactures seamless tubes used mostly in the gas and oil industry, continues to negotiate with Norfolk Southern to buy about 30 acres of railroad land V&M needs for an expansion.
The state announced last month that it would provide $20 million from the federal stimulus package needed to buy the railroad property and relocate the rail line to help V&M.
skolnick@vindy.com