YOUNGSTOWN – A Mahoning County Court of Common Pleas judge has upheld a magistrate’s decision that the owner of the Chill-Can site must repay $1.5 million the city gave it as a grant for the project blocked.
Judge Maureen Sweeney’s decision on Monday was consistent with a Sept. 28 ruling by Magistrate Dennis J. Sarisky that MJ Joseph Development Corp., owner of the Chill-Can location, “breached agreements” made with the city to receive $1.5 million in water and wastewater grants for the project and “the city is entitled to damages.”
MJ Joseph failed to construct four finished buildings on the East Side site and create 237 jobs by Aug. 31, 2021, Sweeney wrote, violating agreements he had with the city. To date, one employee and three unfinished buildings sit on the 21-acre site.
Sweeney also wrote in his decision that a hearing will be held to determine other potential damages to the city.
Court documents say the city entered into a development agreement with MJ Joseph Development on October 20, 2016, in which the company agreed to “build and operate bottling and warehousing facilities and employ local residents.” In turn, the city would issue payment for certain grant funds, transfer title to certain parcels of land, and provide tax incentives to “Joseph.” This specifically included the $1.5 million grant.
On July 27, 2017, an “Amended and Restated Development Agreement” requires MJ Joseph to construct four buildings and employ 237 workers by August 31, 2021.
Prior to entering into the agreement, “the City’s Legal Department made it clear” to Mitchell Joseph by letter dated March 28, 2017 to his attorney that if the owners of Chill-Can “breached their obligations, the City would seek or may seek a specific remedy number in addition to monetary damages.The plaintiffs elected to enter the settlement, according to Sweeney’s ruling.
The city’s lawsuit seeks other funds: $414,948.09 spent on 15 properties purchased for the project, which also includes relocation costs. It also lists $318,532.71 in demolition and reduction costs and, as of June 2021, at least a loss of $575,000 in tax revenue due to the failure of the project.
That lawsuit said “the full amount of lost tax revenue will be proven at trial,” but the city was losing about $18,333 per month. At this rate, the city would have lost nearly $300,000 in additional tax revenue.
Brian Kopp, a lawyer for MJ Joseph, said on Monday: ‘We will review the decision with our client and move forward. As Judge Sweeney ordered, we will get the dates of the necessary hearings and trial.
Lawyers for MJ Joseph filed an objection Oct. 12 to Sarisky’s decision, saying she misapplied “contractual language and binding precedent.”
Sweeney disagreed with the objections, writing that there was no need for a hearing because “the court has conducted an independent review of the issues and satisfied itself that the magistrate has correctly determined the issues factual and concluded that no error of law appeared before the magistrate. decision.”
City Director of Law Jeff Limbian said, “The city is relieved that the judge viewed the situation the same way” as the city and Sarisky.
Limbian added: “Based on the maneuvers of Mitchell Joseph (who owns the development company), I hardly expect him to honor what he owes the city. We will have to keep fighting to recover the city’s assets. So much for Mitchell’s concern for his hometown.
Joseph, who grew up in Youngstown, said the project, which began in November 2016, would cost around $18.8 million and be fully operational by 2018 to produce the world’s only self-refrigerating beverage can.
The city filed a breach of contract lawsuit for $2.8 million on June 17, 2021, claiming the company failed to deliver on its promises to develop the site.
Knowing the city’s lawsuit was coming, MJ Joseph and sister company Joseph Manufacturing Co. Inc. filed a lawsuit on May 24, 2021 against the city to stop it from recovering the $1.5 million from subsidies. This lawsuit also argues that the city has no legal rights to the money, property and buildings.
In a certified letter dated March 29, 2021, the city informed Joseph that it had 60 days to construct a number of buildings and hire approximately 150 workers or it would file a lawsuit. The city followed through to June 17 with the trial which was postponed due to Joseph’s lawsuit.