Land swap, tax profits at play in V&M deal

Youngstown and Girard need to decide how income tax will be distributed.

YOUNGSTOWN — Youngstown and Girard officials aren’t providing specifics of a tentative deal reached to help attract a potential $970 million V&M Star Steel expansion to the area.

In some cases, several key details remain unresolved, so officials in the two cities can’t provide specifics. Even a final map of the location of V&M’s proposed expansion site isn’t in the possession of either city.

Also, V&M urged city leaders not to disclose details of the negotiations that led to a tentative deal late Monday.

What is known is Girard would lose 192 acres to Youngstown as part of the deal, confirmed Girard Mayor James Melfi.

Though the mayor says he can live with the city’s losing about 6 percent of its entire property — and 37 percent of its “heavy industrial” property — to Youngstown for this potential project, he’s not pleased with the outcome.

“I’m still angry that Girard was thrown aside and then depicted as the ones holding up” the deal, Melfi said.

Melfi said his anger is pointed at Youngstown city officials; Kim Stefanski, V&M’s legal counsel; U.S. Rep. Tim Ryan of Niles, D-17th, who helped mediate negotiations; and the Youngstown/Warren Regional Chamber, which also helped with negotiations.

Not only does Girard lose the 80 acres V&M wants for a potential expansion project, but the city would lose an additional 112 acres to Youngstown under the tentative deal, Melfi said.

That property would be used by V&M to get to the potential expansion location, some would remain vacant and unused, and about 40 acres of it is designated for a railroad right of way.

“I don’t know why you have to transfer the property, except the company wants it done,” Melfi said. “It was just another land grab.”

While declining to discuss the acreage, Youngstown Mayor Jay Williams said the additional land also is needed to put the “pieces and parcels [of the project] together. The pieces fit together.”

When a final map is done, probably later this week, everything will make sense, said Williams, who declined to discuss details of the project.

Though there is a tentative agreement, Melfi said there are many important details that are unresolved.

A big detail is the distribution of income tax collected from the proposed project, Melfi said.

Youngstown currently collects a 2.75 percent corporate profit tax from V&M as well as a 2.75 percent income tax on its employees at the company’s Martin Luther King Jr. Boulevard location in that city.

The proposed new V&M facility is owned by Youngstown but located in Girard. It will become part of Youngstown shortly, at the insistence of V&M.

The tentative deal calls for Youngstown and Girard to share those two 2.75 percent taxes on new employees at the potential expansion site as well as the income tax charged to construction workers who would build the proposed new plant.

The problem is figuring out the average profit tax paid to Youngstown during the past several years by the MLK site to determine how much in additional profit-tax revenue would be split between the two cities if a new plant is built, Melfi said.

“The auditors and accountants are determining a fair number so we don’t get cheated,” he said.

Williams is far more diplomatic, saying the cities will determine a “fair and equitable” amount to share from the potential V&M expansion.

“There are a whole host of financial, accounting, taxing and legal issues to work out,” he said. “Right now, we’re working on the details.”

The final deal between the two cities is progressing, and V&M officials are satisfied with the results, Williams said.

V&M officials repeatedly have declined to discuss the potential expansion project with the media.

The company expects to make a final decision on building a potential expansion at the end of this year. Youngstown officials have said V&M has told them the Youngstown-Girard location is the company’s preferred site.

If the expansion happens, V&M is expected to hire about 400 employees making $60,000 to $70,000 annually, Williams has said.

Melfi said he would have continued to fight for a better deal, but Girard City Council has the votes to move ahead with this project without his approval.

Girard council is to meet at 7 p.m. today in executive session to discuss the proposal. A majority of councilmen have said they favor the deal.

“This is the greatest thing to happen to our community and the Mahoning Valley in the past 50 years,” said Councilman Joseph Shelby, D-at large. “The value of the property will be increased by the cleanup. We’re fortunate we can take advantage of the talent in Youngstown. Girard City Council views this as a $1 billion stimulus package from a private entity.”

To not give up Girard property, nearly all of it vacant and unused “would be ridiculous. I don’t believe we made any sacrifices,” Shelby said.

On Tuesday, 14 Mahoning County Democrats, most of them high school and college students, had a “thank you” rally to cheer V&M, Youngstown and Girard for the tentative deal.

The rally was originally going to focus on urging the two cities to get the deal done, said Brandon Kovach, a field director for the Mahoning County Democratic Party.

“Young people want to stay in this area,” he said. “Folks our age would definitely be interested in jobs to keep them in this area.”

skolnick@vindy.com