Did City Manager Fabricate Need to Spend $50,000 by Saying it was “Pivotal” and "Contingent Upon" Bringing Auto Company to Loveland?
Loveland, Ohio - After the last Loveland City Council meeting on September 13, Council member Mark Fitzgerald was asked, “Where did you come up that brilliant question you asked tonight?”
Fitzgerald smiled wryly and asked back, “Which one?”
“The one you asked to the AMP executive?”
Lerick Chissus the Director of Manufacturing and Purchasing Director for Advanced Mechanical Products, Inc. (AMP) drove to Loveland that night in one of his “electrified” sport utility vehicles and offered City Council Members and staff, a ride. He didn’t say which model he had with him, but the Electric Mercedes-Benz ML350, is their current showcase vehicle. Jonathan Schmaltz reporting for the New York Times said AMP officials say the ML359 would sell for $77,400. AMP removes the trappings of the internal combustion vehicle and replaces it with an electric motor and batteries. They currently have an order to sell 1,000 of the cars to Northern Lights Energy, a company that is constructing a network of electric vehicle charging points throughout Iceland.
According to the Mercedes-Benz web site you can enter the luxury SUV ML350 market at $48,990 and leave fully loaded for $160,000. You can buy your own ML350 and AMP will convert it for you - they keep everything they remove. Estimates for the conversion is $25,000.
During the council meeting, Chissus took the podium to announce that they were moving their assembly facility from Blue Ash to 100 Commerce Boulevard in the Loveland Industrial Park. His remarks came immediately after City Manager Thomas Carroll said the City would be giving AMP $50,000 of Loveland taxpayer’s dollars to the company.
In a memorandum to City Council, Carroll said he was introducing “...to City Council a new economic tool in the City’s toolkit to assist Amp Electric Vehicles.”
In the memo Carroll also said, “As a start-up supported by venture capitalists, Amp was intrigued by the City’s offer to provide a forgivable loan to them to assist Amp with making its proposed location at 100 Commerce Boulevard suitable for their growing business.”
Carroll continued in his memo, “The loan will be forgivable over the next five years provided Amp continues to reside inside the City limits.” The memo also said, “This incentive, combined with other assistance through our partners in economic development at HCDC (Hamilton County Community Development Corporation) and the State of Ohio have proven pivotal in helping Amp decide to grow their business inside the City of Loveland and the State of Ohio.” and “They are contemplating several locations in Michigan and elsewhere in Ohio.” Carrol’s memo was given to council 4-days earlier.
Carrol’s memo announced the $50,000 gift to AMP and asked Council to adopt a resolution that evening so he could have a check written. In the resolution it states in the third Whereas Clause, “Amp Electric Vehicles has signed a lease to locate their company inside the City limits contingent upon an economic incentive from the City of Loveland.”
While Chissus was at the podium, he said that they would move into the Loveland Commerce Park in 18 days, on October 1.
It was that statement from Chissus that prompted Fitzgerald’s question. Fitzgerald prefaced his question citing his own credentials as a facilitator of economic development, mentioning his first introduction to Loveland was as a consultant to help build the Loveland Commerce Park where AMP had signed a lease.
Fitzgerald said that one of the phrases that has been “jargoned” in the economic development and government incentive circles is, “But for.” He explained, “But for the incentive - the project would not go forward.”
Speaking to Chissus, he said, “Now I heard you mention that you have a move in date. So, I guess my question is, is your move in conditional upon this fifty thousand dollar loan from the City, or are you going to proceed regardless?”
Chissus replied, “We’re going to proceed regardless.” He then offered that the move to Loveland was only contingent upon receiving incentives from the State of Ohio.
Chissus said earlier that it was the attractive building, its pond and fountain that really attracted them to Loveland. “We needed a building we could show off to our customers, to investors, to our own investment banker.” He said it was “the facility” he wanted to bring people to.
Loveland Mayor Robert Weisgerber was later asked why the $50,000 promised to Amp was referred to as a “loan” even sometimes leaving out the adjective, “Forgivable.” He replied that it was because they have to re-pay it if they don’t spend it on “our property.”
Further explaining, Weisgerber said, “Our property. They have to spend it on our property, the building they are leasing. It will increase our tax base.” Weisgerber also said, it was he, the City Manager, and Assistant City Manager, Gary Vidmar who offered the $50,000 to AMP.
The property is currently listed by Hamilton County as being owned by 100 Commerce Boulevard LLC, 11930 Kemper Springs Drive, 45240 and a mailing address of Bellwether Real Estate, Attn. Tax Dept., 1360 E 9th St. STE 300, Cleveland, Oh. 44114.
When further pressed, Weisgerber was asked to explain the difference of a average Loveland resident who received a bank loan today, or a grant, or a gift of $50,000. The Mayor said it is different, “Because there are conditions - they have to spend it. And we will get the money back because AMP and their employees will be paying future income taxes to the City.”
Weisgerber also told Loveland Magazine that the $50,000 would come out of the “General Fund.” The fund that as discussed earlier in the same meeting was expected to face a $600,000 shortfall and that taxes would likely have to be raised to cover much of the deficit.
Fitzgerald and Councilwoman Linda Cox asked that the “loan” be secured with an insurance policy or letter of credit. Cox said, “I’d like to see more security in the agreement.” After amending Carroll’s prepared resolution to have an agreement drafted that reflect assurances AMP would pay the money if they moved from Loveland within five-years, the motion carried with a vote of 7-0.
A new Resolution has been prepared for tonight’s council meeting, however the assurances Fitzgerald and Cox were seeking is absent from the new agreement the City Manager hopes Council will pass.
Read Carroll's Memo to City Council: Download 9-13-11-1 pg 101
Read Resolution Download AMP Resolution
This LOVELAND MAGAZINE VIDEO is from the September 13 Loveland City Council meeting where an AMP executive, said the offer of $50,000 was not needed as an incentive for moving to the Loveland Commerce Park.
Loveland Magazine was the only news media outlet present, to cover this meeting of Council.
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