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City OKs Development Agreement for VAM USA Mill
YOUNGSTOWN, Ohio -- VAM USA LLC would begin with two threading mills with the potential for expanding to four lines if it moves forward with its proposed $81.5 million project, Youngstown’s finance director said Thursday.
The city’s Board of Control approved a development agreement with VAM USA that gives the company the option of leasing or owning land adjacent to the former Genmak building at 1053 Ohio Works Drive, which Vallourec purchased last year.
VAM USA is a joint venture between Vallourec, which opened a $1 billion pipe mill in Youngstown last year, Nippon Steel Sumitomo Metals Corp. and Sumitomo Corp.
“They’re awaiting some test results on some holes they dropped about a week ago [at the site],” said David Bozanich, city finance director. Prior testing by the city did not uncover any “significant contaminants” but the company wanted to go through “due diligence,” he remarked. “Should they discover something in that due diligence process, they want the ability for the city to continue to have ownership and then lease it back,” he said.
“What we don’t want is for the company to be shopping [the project] somewhere else,” Bozanich cautioned.
The development agreement approved Thursday by the board, which consists of Bozanich, Mayor John McNally and the city’s law director, Martin Hume, also includes a 10-year, 75% property tax abatement and a $369,000 grant to for water and wastewater improvements.
VAM is considering the construction of a 69,000-square-foot addition to the existing building. Total investment is estimated at $81.5 million.
Bozanich expects a decision from the company within 30 days regarding whether it will move forward with the project. “It looks very promising. “We think that we’ve provided the right development incentives and the right structure to the deal and we’re hoping to get a positive decision out of them shortly,” he said.
“If you read the agreement, it certainly looks like they’re ready to move forward,” McNally concurred following the meeting. “Overall, I think we’re getting to a point” where a decision should be coming soon, he said.
The development agreement approved Thursday specifies that the developer would exercise “commercially reasonable efforts” to begin construction by April 1. Once operational, the plant would employ 84 workers, according to the agreement.
“We think those numbers could significantly grow as that business grows,” Bozanich said.
VAM, in a statement released two weeks ago, acknowledged it is in “active negotiations” with the city “to secure property for a potential pipe-processing facility on Ohio Works Drive.”
A local spokesman for the company said yesterday he did not have any new information since the Feb. 14 statement.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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