The Business Journal and ProPublica are investigating how Ohio’s Mahoning Valley has used financial incentives in hopes of an economic comeback in the heart of the Rust Belt.
This article was produced in partnership with The Business Journal, based in Youngstown, Ohio, which was a member of the ProPublica Local Reporting Network in 2019-2020.
The city of Youngstown, Ohio, is cracking down on a company that touts itself as the maker of the world’s first self-chilling beverage can, saying it hasn’t lived up to its pledge to hire workers and bring economic development to the city’s long-suffering East Side.
The move follows an investigation last year by The Business Journal, based in Youngstown, Ohio, and ProPublica, which found that little had happened after the city gave the company behind the Chill-Can a $1.5 million grant to help develop a $20 million research and manufacturing campus. It was one of the largest awards of its kind in city history.
Officials also approved massive tax breaks for the property. And they spent an additional $360,000 to purchase and demolish the homes of roughly a dozen residents who lived within the footprint of the future Chill-Can plant. The project was expected to bring more than 200 jobs to a distressed section of the city.
For Youngstown, the deal was just the latest in a long line of fizzled developments, underscoring how officials have gambled with economic development dollars in hopes of reviving the city. Between 1991 and 2017, the city awarded millions of dollars in property tax breaks to 94 projects that pledged new jobs, according to data provided by the city. Yet half of those projects failed to deliver on their promises, The Business Journal and ProPublica found. One in four projects reported zero net job creation.
In a letter sent last week and in a press conference Wednesday, officials placed M.J. Joseph Development Corp. and its CEO, Mitchell Joseph, on notice that they might have to repay the $1.5 million in grant funding, lose their tax incentives, and face potential litigation for defaulting on two lucrative development agreements negotiated nearly four years ago.
The push comes after years of back-and-forth negotiations — and unmet job-creation promises. “It’s time to produce,” Youngstown Mayor Jamael Tito Brown said at a midday press conference.
“I continue to hear the same story time and time again” from Joseph, he said, “and the citizens and the voters deserve to see action, and that’s why we’ve taken action.”
Joseph has missed construction deadlines, failed to add the projected jobs, and failed to abide by the terms of the 2017 development agreements, the city has said.
Joseph could not be reached for comment Wednesday. Neither he, his company nor his lawyer have responded to the letter sent on March 26 by the city’s outside counsel, Joseph Houser, notifying Joseph that he and his company have failed to comply with the terms of the development agreements.
Previously, the M.J. Joseph Development Corp. said it was still dedicated to opening its Chill-Can campus in Youngstown. Infrastructure problems, such as aging utility lines, had delayed the project, owner Joseph said.
Under one agreement, the city awarded the developer $1.5 million in grant money through its wastewater fund. The money was used to demolish a neighborhood and prepare land for the new development.
A second agreement, made under Ohio’s enterprise zone program, provided a generous 75% abatement on real estate taxes over a 10-year period. The city also spent the additional money to purchase and demolish a patchwork of occupied homes and relocate residents of the neighborhood to other dwellings.
In return for these incentives, Joseph pledged to construct a warehouse, bottling facility and plastics facility by Oct. 1, 2017, and to bring at least 237 new jobs to a depressed section of the city.
According to the enterprise zone agreement, Joseph was to create 50 jobs during the first two years, 100 new full-time jobs during years three and four, and another 87 jobs during year five. The developer broke ground on the complex in November 2016, and the job creation period began on Nov. 1, 2017, documents state.
However, the jobs have not materialized. Three buildings, the last of which was constructed during the fall of 2020, sit unused at the site.
The city has given Joseph 60 days to cure these defaults or face consequences.
Given the parameters of the city’s agreements, said Jeff Limbian, the city’s law director, “we hope within 60 days Mr. Joseph will show up and make good on his promises. Unfortunately, that hasn’t happened.”
Since fall 2020, the city has held weekly or biweekly meetings via Zoom with Joseph company officials; according to Brown, company officials repeatedly said they were waiting on a big contract. The last conversation took place “three or four weeks ago,” said Limbian, who described the tenor of the company’s response as “a lot of hot air.”
Brown, the mayor, is facing a three-way Democratic Party primary in May and, if he wins, a general election in November. He emphasized the city’s announcement “is in no way political. I wanted to do this back in the summer.”
The mayor added, “I would rather have the jobs than three buildings that are not producing.”