Funding for beleaguered company withdrawn
JOHNSTOWN — The city on Monday night withdrew its involvement with a $405,000 grant it was awarded — but never received — for the unfinished Johnstown Renewables LLC construction project.
A resolution approved by the Common Council indicated “adverse developments have transpired with regard to this project.”
Funding was to be used to assist in the startup of Johnstown Renewables to develop a facility to convert waste whey into useable products.
But the Johnstown Renewables project now faces litigation. The Fage USA yogurt plant on Aug. 3 filed a $20 million to $50 million breach of contract lawsuit against Johnstown Renewables, the facility it was supposed to purchase acid whey from. An Albany firm – CHA Consulting Inc. – has also filed a $127,700 mechanic’s lien against the firm.
“I just want to back out of this for now,” Mayor Vern Jackson told the council.
The current Community Development Block Grant the city was awarded in October was withdrawn “with the understanding that the city reserves the right to reapply for CDBG funding for this project,” the resolution says.
Jackson said following the meeting that the Johnstown Renewables situation has been a “huge disappointment” for the city.
Construction on the $17 million Johnstown Renewables building at the Johnstown Industrial Park was halted midway last spring, with no public reason given. Jackson said one of the major investors in the plant passed away. The company was supposed to take the byproduct of Fage USA’s yogurt and turn it into reusable ethanol alcohol and animal feed.
The project was expected to create 30 jobs to start. Construction was halted on a 5.4-acre parcel. Workers had been constructing the plant on the north side of Enterprise Drive.
But Johnstown Renewables last spring shut down construction at its halfway completed 224 Enterprise Road building.
Michael Anich covers Johnstown and Fulton County news. He can be reached at firstname.lastname@example.org.