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FCIDA approves ending lease early

JOHNSTOWN — The Fulton County Industrial Development Agency on Tuesday approved an early termination of the agency’s lease with Johnstown Renewables.

“They had asked for the early termination,” IDA Executive Director James Mraz said Wednesday of the company.

Johnstown Renewables was a failed venture at the Johnstown Industrial Park. The company was expected to use whey byproducts from the nearby FAGE USA yogurt manufacturer and turn it into useable products such as ethanol and animal feed. The estimated $16 million project was expected to create 27 jobs to start. But construction was halted on a 5.2-acre parcel. Workers had been constructing the plant. But Johnstown Renewables shut down construction in spring 2017 at its partially-completed Enterprise Road building.

California-based advisory firm Heritage Global Partners last October began a lengthy auction process, as key Johnstown Renewables assets such as project equipment and silos were liquidated.

Mraz reported to his IDA board this week at the Fort Johnstown Annex that IDA attorney Kara Lais recently spoke with Johnstown Renewables’ counsel. He said the auction is now complete and final sales totals are being tabulated. Once tabulation is complete, figures will be provided to the IDA, Mraz said.

Funds have been placed into an escrow account per an agreement. Mraz said Johnstown Renewables’ counsel didn’t specify how much has been put into the account. He said that based on final auction results, Johnstown Renewables may be filing more paperwork to revise what the company claims to be the sales tax exemptions it took. Meanwhile, Mraz said Johnstown Renewables wants to proceed with the early lease termination.

At its October meeting, the IDA authorized recapturing an estimated $960,000 in sales tax benefits Johnstown Renewables received on this project because it had not completed the project and created 27 new jobs it committed to create in its project application. An escrow agreement with Johnstown Renewables was executed whereby all proceeds from the auction would go to an escrow agent and eventually paid to the state Department of Taxation and Finance to repay the sales tax benefits Johnstown Renewables received.

The IDA has given Johnstown Renewables multiple attempts to complete its project per the lease. The original lease agreement with the IDA stated the company would complete the project by Dec. 31, 2017. The IDA board agreed to extend completion date through Dec. 31, 2019. In December, the IDA board extended the completion date of the auction through Jan. 31, 2020, and project completion date identified in the lease agreement until Feb. 28, 2020.

Michael Anich covers Johnstown and Fulton County news. He can be reached at manich@leaderherald.com.

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