ELYRIA — While any economic development endeavor pursued by a city is a risk, Mayor Holly Brinda believes making a loan available to a company looking to make Elyria its new home is a calculated risk that can do a lot of good for the city.
“It’s not like the money will be spent and gone,” she said Thursday. “It will be loaned in what we hope is a catalytic project that will revitalize Midway Mall and bring more traffic to the area from outside the county, which is what we want.”
Brinda is speaking about a request she made Monday to Elyria City Council to authorize a $500,000 donation to the Elyria Community Improvement Corp.
The city’s CIC, which is a quasi-public entity that can make economic development deals in a way that shields the city from liability, will use the funds to administer a loan to a company looking to move its headquarters into the city.
The business in question will make an investment of $3.3 million and create 22 new jobs over three years. The loan of $500,000 will provide gap financing as all traditional lending methods have been exhausted, Brinda said.
Residents hearing about the project this week are skeptical.
“Considering we are about to lose $2 million dollars in taxes, with Bendix (Commercial Vehicle Systems) leaving, I hope Council thinks long and hard about this project,” said resident Deb Brady in an online comment.
“If said company doesn’t have the start up money to even lease and renovate the building then stock it with what it will sell, how will it survive in Elyria?” added resident Ken Behnar to the online conversation.
The response from Council has been mixed.
“I don’t think it’s a good investment of city dollars regardless of the source,” said Councilman Mark Craig, I-4th Ward.
Craig wonders if a donation to the CIC fits with the spirit of what the city said it would do with $3.4 million in unclaimed funds received in 2013.
“What we were talking about doing with that money was tangible things like infrastructure projects, streets and roads,” he said. “That’s how we ended up doing the state Route 57 project.”
The city received the windfall when the Ohio Department of Commerce hailed Elyria as the recipient of the largest amount of unclaimed funds in Ohio’s history. Then, Brinda said the money would not be used for personnel or operating expenses that could not be sustained in the future. Instead of doing things like hiring police officers, firefighters and other employees, or starting programs residents would like to see continue from year to year, Brinda said unexpected windfalls should go toward more fiscally responsible things like paying down debt, replacing equipment, building facilities or making capital improvements such as street paving and pool replacement.
When asked Thursday if the loan matches that idea, she said it did because it was always the intention to use the money to leverage other resources for the city.
The city has some of the windfall money left because its share of matching dollars from state Route 57 reconstruction project was less than originally thought, which gave the city the funds for the CIC donation.
More about the project will come out in recent weeks when Council discusses the creation of an enterprise zone agreement as a part of the deal.
Enterprise zones are designated areas of land in which businesses can receive incentives in the form of tax exemptions on eligible new investments. Enterprise zones are not part of the traditional zoning program — which limits the use of land — instead they allow local officials to negotiate with businesses to encourage new business investment in the zone.
Right now, it is known that the entity wants to move into the former Macy’s department store building that is attached to Midway Mall. It has been vacant since Macy’s closed in 2016.
Although Midway Mall changed hands to the Nandar Realty Group in July, Macy’s, Dillard’s and Sears were not part of the deal because they are individually owned. Brinda said the city is focusing on those properties because “that’s where we can have the most influence right now.”
Another idea being considered is whether the city can receive the old Dillard’s building and demolish it to make 18 acres of land available for redevelopment.
While Brinda said she signed a confidential agreement to protect the financial information being shared during negotiations, she said the project has been thoroughly vetted and Council has been apprised in executive session of several details.
“The terms of the agreement will also be a part of the public record when the contract is finalized,” she said.
According to transparency requirements of how CICs must operate in the state, each must file annual financial reports with the Auditor of State’s office and submit to audits by the state agency. CICs are subject to public records laws except for the disclosure of financial and proprietary information and trade secrets. Also any other information submitted to the CIC in connection with the relocation, location, expansion, improvement or preservation of a business is confidential until the entity commits in writing.
When the company applies for the CIC loan, it will submit a lot of supporting documentation before the deal is finalized, including financial statements, tax returns, project budgets, bank loan documentation, annual reports, business histories, site plans and the resumes of key personnel.
Brinda said the company will have employment goals and terms of repayment in the contract.
Contact Lisa Roberson at 329-7121 or firstname.lastname@example.org.