IDA Board approves loan cancellation to MVP Plastics
JAMESTOWN — County economic development officials are writing off over $1 million in loans that a failed startup company hasn’t paid.
The Chautauqua County Industrial Development Agency Board of Directors authorized the cancellation of three loans to Jamestown MVP Plastics, LLC during Tuesday’s meeting in Jamestown. Two Al Tech loans totaling $849,085.71 will be written off and a Chautauqua Revolving Loan Fund totaling $47,142.09 will be written off.
MVP Plastics had plans to produce environmentally-safe plastic products in Falconer, but it never reached full potential after running into financial troubles and ceasing production last year. The company had goals to hit 125 jobs during its first phase of production and 125 more afterward, but that wasn’t met.
Carol Rasmussen, business development manager, told board members there was a lender that had first position on the facility and equipment. The IDA had a lean on the building, but they didn’t get much out of it. Rasmussen said the building went to foreclosure and was purchased by Hope’s Windows Inc.
Board member David Bryant said writing off over $1 million is one of the biggest disappointments during his time on the board. Bryant asked if any lessons were learned. Kevin Sanvidge, administrative director and chief executive officer for the IDA, said the owner had several million dollars invested and plans that showed he was in the business before.
“He had a lot of cash and a lot of times with start-up business there’s never enough cash,” Sanvidge said. “He had several million dollars to start in and he invested money. Would we have done something different? I’m not sure as far as this loan goes.”
Sanvidge said the loans were approved by the Loan Review Committee, a group made up of professional bankers and board members. Receiving a loan isn’t a rubber stamp as he said the committee turns down many applications.
“They do not make decisions that are irresponsible. They take their jobs very seriously,” he said. “It’s a lot of work and they do their jobs and they do it well.”
Al Tech loans go to assist manufacturing in Chautauqua County for real estate, equipment and working capital purposes. Those who receive the loan must create jobs. The Chautauqua Revolving Loan Fund helps eligible businesses for the same purposes. Job creation and retention is also required.
In December 2009, the IDA launched an effort to buy Sysco’s Falconer facility, located at 2060 Allen St. Ext. Sysco shut down in April 2009 after consolidating operations to nearby branches in Syracuse and Pittsburgh.
Borrowing money from the county, the IDA purchased the 300,000-square-foot facility in 2009 for $450,000.
After sitting for a year on the market, Jamestown MVP, LLC and Jacob Deutsch, president and CEO, bought the entire building for $1 million in February 2011. The plastic manufacturer also bought property behind the building from Acu-Rite.
Shortly after, MVP sold two-thirds of the facility to Maplevale Farms, which was leasing space at the facility after its Clymer facility suffered a roof collapse in December 2010. The sale went for $4 million.
“From a prudence perspective, the board can take a sense of pride that they reacted to the circumstances at the time,” said Greg Peterson, counsel. “The end result for building is bigger and better with Hopes. Nobody likes to write off $1 million, but there were a lot of interesting circumstances here that the IDA showed a lot of prudence and opportunity.”
In other matters, the board took preliminary action on a project by Arnold Duke at the former Key Bank building on Main Street in Jamestown. Next month, the IDA will examine an application and hold a public hearing to approve a sales tax exemption for the project totaling $200,000. Plans for the building include upscale corporate apartments, a restaurant and other business.