V&M deal hits snag

Girard doesn’t want about 80 acres of its land to become part of Youngstown.

YOUNGSTOWN — A dispute between Youngstown and Girard could jeopardize a potential $970 million expansion project by V&M Star Steel.

At issue is about 80 acres in Girard near V&M on Martin Luther King Jr. Boulevard in Youngstown.

Youngstown recently purchased the largely vacant land for about $5 million so that V&M could use it for a potential expansion. The company will reimburse the city for the purchase.

Youngstown Mayor Jay Williams said V&M Star officials want that land to become part of Youngstown — though it would stay in the Girard school district — as part of a “boundary-line adjustment.”

Girard Mayor James Melfi said he doesn’t support moving the boundary because it’s nothing more than annexation of Girard land to Youngstown.

“We have a problem,” he said. “I don’t want to give up the acreage. We want to do everything to be fair to the company and both cities. But the expansion project is in Girard. We’re trying to work out a cooperative agreement. We absolutely don’t want to lose the project, but we don’t want to lose out on what Girard is entitled to. It’s unfair to ask Girard to give up our land.”

V&M Star President Roger Lindgren couldn’t be reached Friday to comment. V&M Star officials have repeatedly refused to discuss this potential project publicly.

V&M, which manufactures seamless tubes used mostly in the gas and oil industry, hasn’t given a firm commitment to the expansion project. A final decision from the company on the project is expected by the end of the year.

Williams and city Finance Director David Bozanich said V&M officials have told them the Youngstown-Girard location is the company’s preferred site if the company moves ahead with an expansion project.

That was until the boundary dispute arose.

V&M has given the two cities about two weeks to come up with a solution.

“They have an expectation this will be worked out quickly,” Williams said.

“It’s unfair for us to make these types of decisions in a few days,” Melfi said. “We were placed in a corner.”

V&M Star wants the 80 acres in Youngstown, Williams said, “because of the ability for us to get it done through federal stimulus funding, our economic development history, our ability to acquire the parcels and because the city is accepting the environmental liability of that property.”

The initial cleanup cost of the 80 acres is estimated to be $5 million, Williams said. The city would seek state funding to pay for the cleanup.

On Wednesday, Youngstown City Council authorized the board of control to move ahead with a boundary agreement with Girard. The board won’t take action until a deal is made with Girard, said Williams, its chairman.

But Melfi said Youngstown council’s vote raised concerns for him.

“We’re trying to figure out a way” to resolve the issue if Girard refuses to give the land needed by V&M to Youngstown, Williams said.

Williams, Bozanich and Melfi declined Friday to discuss other options except to say they exist.

“We’re going to propose solutions that address everyone’s needs,” Williams said. “I’m concerned about this. Everyone [involved in the project is] concerned.”

Bozanich added: “The project is, by far, too important to be caught in any issues regarding the inability of government to make this work. It’s incumbent upon both communities to make this project work.”

There is also concern that if the project dies because of this issue, Youngstown would have to give the state a $20 million federal stimulus package allocation it received to buy and improve railroad property on the V&M proposed expansion location.

At one point, the two cities planned to create a joint economic development zone at the company’s expansion site. That would have allowed the two cities to split a 2.75 percent income tax placed on those working at the location. V&M’s expansion would create about 400 jobs.

But attorneys working for Youngstown recently discovered that state law doesn’t permit joint economic development zones to be created between two cities with different income-tax rates, Williams said. Youngstown’s income-tax rate is 2.75 percent, and Girard’s is 2 percent.

“There is a shortcoming in the JEDZ language,” Williams said.

Action by the state Legislature to add that provision to the joint economic development zone law would be needed, Melfi and Williams said. Approval could take up to a year, the mayors said.

Melfi said he doesn’t want to give Youngstown the property and have the cities sign an agreement to share the income-tax revenue because that deal may not be legally binding.

“All of the burden is on our small city to make sure the agreement is fair,” Melfi said. “The complication is on our side of the border.”

skolnick@vindy.com