The Chautauqua County Industrial Development Agency board of directors hear details of the 2016 audit from CPA Dave DeTanna (Buffamonte, Whipple, and Buttafaro), during the board’s March 2017 meeting.
JAMESTOWN – The Chautauqua Industrial Development Agency board of directors Tuesday signed off on cancelling nearly $900,000 in money owed through loans for a failed business in Falconer.
More than $1,000,000 in loans was given to Jamestown MVP Plastics in 2011 and 2012 to help with the purchase of a facility and new equipment. Jamestown MVP was a start-up company that had plans to produce environmentally-safe plastics at the former Sysco Foods location at 2060 Allen St. Ext.
However, the market never developed for the products and the company was forced to close its doors late last year. As a result, Jamestown MVP Plastics was unable to pay off the remainder of the money it owed on two IDA Al Tech loans, totaling $850 thousand dollars (one initial 20-year loan for $500,000 was approved in 2011, and a second loan for $500,000 was approved in 2012), along with another Chautauqua Revolving Loan Fund loan totaling $47,142 (of an original $75,000 loan approved in 2012).
The cancelled loans represents about 8 percent of the total amount of money the IDA is able to loan out.
IDA Director Kevin Sanvidge said the cancellation of the loans was disappointing, and members of the IDA board agreed. However, Sandvidge also noted that the IDA Board probably wouldn’t have done anything differently to prevent the loans from being given to the project, largely because the loans were also reviewed and approved by an independent loan committee, prior to the IDA board signing off on them.
“It is an independent loan committee made up of two [IDA] board directors and five independent local bankers, so they look at all the information – business plan and financials of an investor – and make a decision, as they would with any loan that would come in front of their bank. The difference is we don’t have Dodd-Frank telling us what to do and what not to do,” Sanvidge told WRFA, alluding to the federal law that places strict regulations on banks when it comes to giving loans to individuals and businesses.
Sanvidge added that there was some risk involved with giving the loan to Jamestown MVP and the IDA did give some leeway, but that was countered by the amount of private investment money the company was putting toward the project.
“The leeway here would have been the lack of strong costumer base, but also the fact that he invested $10 million into this – between the purchasing and upgrading the building and buying new equipment,” Sanvidge said. “It’s a fabulous building and now there’s a new owner in the building looking to move forward with a well-established manufacturing company.”
When Jamestown MVP received the loans from the IDA, it had said it planned to hire 125 people and would be the largest customer for the Jamestown Board of Public Utilities.
IDA BOARD RECEIVES CLEAN AUDIT FOR 2016
In other news, the IDA also received its independent audit for 2016 from Dave DaTanna of Buffamante, Whipple, and Buttafaro.
The audit showed the IDA had a total of $19 million in total assets and $13.27 million in net assets, which were down about $75,000 from the previous year. However, it also showed the IDA had a significantly higher amount of administrative revenue than the previous year, mostly through an increase of $800,000 in application fees collected by the IDA.
“One of the [application fees] was from the Celoron Hotel project, which is a $31-33 million project,” Sanvidge said. “I’d like to say we’re going to do one of those a year, along with manufacturing projects. But that’s our job, to go out and try and land these projects and [the Celoron Hotel] is the grand slam in the World Series for us. But we do keep swinging and swinging for the fence, and it pays off.”
The audit presented by DaTanna was unmodified with no exceptions, meaning it was clean. It also had no major recommendations for the IDA board, in terms of how it manages or controls its finances. The 2016 audit will be posted on the IDA website in the coming days.
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