City agrees to purchase property

By David Skolnick | June 20, 2009 at 12:00a.m.

Youngstown finance director David Bozanich

Youngstown could finalize a deal soon for the land for a steel-company expansion.

YOUNGSTOWN — The city has an “agreement in principle” to purchase railroad property that is key to a potential major project being considered by V&M Star Steel.

City Finance Director David Bozanich said Friday that a deal for Youngstown to take ownership of the Norfolk Southern railroad property should be finalized shortly, probably by the end of the month.

“It’s a big step in the right direction,” he said.

The state announced in April that it would provide $20 million from the federal stimulus package to the city to buy the railroad property and relocate the rail line to help V&M’s potential $970 million expansion project near its Martin Luther King Jr. Boulevard facility.

V&M would lease the railroad land and three other properties that border its location along the Youngstown-Girard border if it moves ahead with the expansion.

The city plans to purchase those properties for about $5 million toward the end of the month. But the city won’t finalize the deals until V&M officials sign a contract guaranteeing the reimbursement of that money. Even if V&M decides not to move ahead with the project, the company would pay the city for those properties, Bozanich said.

V&M officials won’t comment on the proposal.

The struggling national economy is delaying V&M’s decision on the expansion, which would create about 400 jobs. A decision is expected toward the end of the year.

“It’s a tough economic environment,” Bozanich said.

V&M won’t pay for any environmental cleanup expenses for the properties, Bozanich said.

The environmental cleanup would probably cost at least $2 million, he said.

The city would seek state funding to pay for that work, he said.

V&M manufactures seamless tubes used mostly in the gas and oil industry.

If the V&M expansion doesn’t occur, the city would retain ownership of the properties and could lease it to other interested businesses, Bozanich said.

skolnick@vindy.com