DEVELOPMENT: Breaking point on MVP Plastics
It is hard to believe there are no lessons to be learned by county Industrial Development Agency officials as the final chapter closes on the debacle known as Jamestown MVP Plastics LLC.
MVP Plastics had plans to produce environmentally safe products in Falconer, but the company 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. Last week, the IDA board authorized writing off two Al Tech loans totaling $849,085.71 and writing off a Chautauqua Revolving Loan Fund totaling $47,142.09.
David Bryant, an IDA board member, said writing off a million dollars in loans was one of the biggest disappointments of his time on the IDA board and asked Kevin Sanvidge, IDA administrative director and chief executive officer, if there were any lessons learned. Sanvidge’s response? “I’m not sure as far as this loan goes.”
We have no doubt IDA officials did their due diligence before approving the MVP Plastics loans. MVP Plastics was a coup for local economic development officials in 2011; the company would use large amounts of municipal electricity and water while creating 250 new jobs. Jamestown MVP Plastics looked to be a good investment. Its owner was flush with cash and had a business plan that made sense. It would bring decent manufacturing jobs that paid well, sending more money into the local economy. The IDA did what government lending agencies do to protect themselves, securing a first position on the facility and equipment and a lien on the building, though that didn’t make much of a dent on the loan balance when the building went into foreclosure. The deal made perfect sense — until it didn’t.
It is unrealistic to expect the IDA to stop making loans to companies like Jamestown MVP Plastics. Such loans are expected by companies looking to locate in places like Jamestown and Dunkirk; if companies don’t get such deals here they will get them elsewhere. It is also unrealistic to expect that we will learn nothing after writing off a million dollars in taxpayer-backed loans, either.
The IDA took a chance on a company that also had personal financial risk involved in the deal. It was a good effort to boost the local economy that unfortunately didn’t work out. There have been higher-risk endeavors that have worked out, but business ventures can be risky. Jamestown MVP Plastics LLC fell victim to the pressures of doing business in New York state. We encourage the IDA to keep driving forward on projects in the future that could boost the economy while trying to identify factors that made this one fail. We need to avoid a repeat performance.