Efficiencies of business drive V&M’s annex plea t

Handling of taxes and land cleanup would be easier if 80 acres in Girard became part of Youngstown, the global steel company says.

YOUNGSTOWN — There is no legal reason why the potential V&M Star expansion project has to be on land inside Youngstown’s boundaries, officials with Youngstown and Girard say.

But if the expansion is to occur, V&M Star officials want 80 acres in Girard to become part of Youngstown, said Youngstown Mayor Jay Williams and Girard Mayor James Melfi.

“The company made it clear from a practical business standpoint they wanted the property in Youngstown,” Williams said.

The company is interested in expanding near its Martin Luther King Jr. Boulevard plant in Youngstown.

Youngstown recently purchased about 80 vacant and contaminated acres in Girard for about $5 million for the expansion.

V&M will reimburse Youngstown for the property purchase no later than Dec. 31, 2010, even if the expansion doesn’t occur.

Melfi’s objection to changing the boundary line to put those 80 acres in Youngstown is placing the potential project in jeopardy.

A majority of members of Girard City Council, which will make the boundary line decision, don’t object to having the 80 acres become part of Youngstown to help the project.

Discussions between officials in Youngstown and Girard stretched into late Friday without a resolution.

“It’s moving in the right direction,” Williams said.

“There’s no resolution; there’s a lot of work to do,” Melfi said.

V&M President Roger Lindgen recently told Youngstown and Girard officials that an agreement on the boundary-line issue is needed by next Friday or the company would look elsewhere for its potential $970 million project.

Lindgren declined to comment Friday on why his company wants the land for the potential expansion all in Youngstown.

But Melfi and Williams said Lindgren told them earlier this week that it’s easier for the company to have the property in one city. That city is Youngstown because that’s where its current local plant is located, the mayors said Lindgren told them.

“The company made it clear from a practical business standpoint they wanted the property in Youngstown,” Williams said.

V&M’s concern, Williams and Melfi said, is that workers at two cities would cause confusion with income tax. Youngstown’s income tax is 2.75 percent, and Girard’s is 2 percent.

There are several businesses with employees based in one location working in more than one community with different income taxes without any problems.

“That’s a good point, but I didn’t make that decision,” Williams said. “This is the company’s wishes.”

The responsibility of cleaning up and maintaining the 80 acres of contaminated property was another reason V&M wants the land in Youngstown, Williams and Melfi said.

V&M and the state of Ohio have no interest in being responsible for that issue, Williams said.

Youngstown stepped forward and accepted that responsibility, Williams said.

Had Girard known about the liability issue, it would have been willing to accept that responsibility, Melfi said.

“I’m not trying to open old wounds, but we would have taken every measure to remediate” the land if asked, Melfi said.

It will cost at least $5 million to clean up the 80 acres, Youngstown officials say.

Though state officials aren’t guaranteeing to provide Youngstown the money to clean up the site, the city is optimistic that will occur, Williams said.

If V&M moves ahead with the expansion project, it would hire about 400 employees making about $60,000 to $70,000 a year, Williams said.

If the expansion happens, the two cities had planned to split a 2.75 percent income tax imposed on those working there as well as a profit tax of the same percentage from the company, Williams and Melfi said.

Each city would get about $1 million annually, Williams said.

skolnick@vindy.com

V&M Star project

V&M Star Steel has announced a possible expansion on the border of Youngstown and Girard. Here are some incentives given to V&M and benefits of the project should it move ahead:

V&M has received $2.6 million in state tax credits.

The state helped steer a $20 million federal stimulus package allocation to help buy and improve property needed by the company.

Youngstown is spending $5 million to buy 120 acres of property, including 80 in Girard, needed by the company for this project. V&M will repay the city no later than Dec. 31, 2010.

The Public Utilities Commission of Ohio agreed to discounted electric rates for the proposed expansion.

If the 80 acres in Girard is relocated to inside Youngstown’s boundaries, employees working in the expansion facilities would pay income taxes at the Youngstown tax rate of 2.75 percent. That would amount to about $2 million annually. Those dollars would be divided evenly between the two cities every quarter.

Youngstown would supply the facility with water, collecting profit from its sale.

Girard would supply sewer service to the facility, collecting profit for providing that service.

Regardless of which city the plant is in, the property tax would go to Girard schools.

The expansion must be approved by corporate officials in France. A decision is expected at the end of this year.

Source: Youngstown, Girard officials, and Vindicator files