GREENVILLE — This city has reached a tentative agreement in a United Solar Ovonic bankruptcy case.
A bankruptcy trustee representing the failed manufacturer and its parent company, Electric Conversion Devices, sought reimbursements on paid taxes and the payments of remaining grant money the city awarded the company in 2006 for opening up shop in Greenville.
The Greenville City Council unanimously adopted a resolution Tuesday that will result in the city keeping the more than $1.1 million paid by USO in 2010 and 2011 taxes — which are actually designated to the school and library through debt millage refunds — and claimed refunds of payments in lieu of taxes, and relieving the city and state of having to pay a majority of the remaining grant funds promised to the company as part of Community Development Block Grants.
The city is off the hook for these payments because the company failed to adhere to the grant’s requirements of maintaining a certain level of employment when it laid off hundreds of employees and filed for bankruptcy in February 2012.
The company will, however, have a reduction of its 2012 taxes from more than $488,000 to $15,000 and will keep the grant money it already had received from the city. The funds returned to the company, which no longer exists, will be distributed to its creditors.
In 2006, the Greenville City Council approved a $45 million tax incentive package for USO. The package included a $7.38 million Michigan Economic Growth Authority tax credit, a $20.346 million Renaissance Zone property tax savings, a $3.573 million industrial facilities tax exemption, a $6.252 million state sales tax exemption, an $899,000 state investment tax credit, a $1.6 million grant for employee training and $5 million in infrastructure improvements.
The city and the Michigan Strategic Fund (MSF) were sued for more than $5.2 million for money the bankruptcy trustee claimed they owed under the terms and conditions of the block grants. As part of the agreement, MSF agreed to pay $1.5 million of the grant money and the city will not request a reimbursement for the amount already paid to the company.
“At the end of this process, I think this is a fair and equitable agreement for all parties,” City Manager George Bosanic said. “We hope to move forward with new opportunities for the city of Greenville.”
The agreement will now go in front of the bankruptcy trustee and United Solar Ovonic creditors for approval.
Plans were announced in March 2006 to construct six solar panel manufacturing facilities in Greenville for a total of 1,200 new jobs. In reality, four plants were created in two buildings and a total of 474 people were employed at the peak of operation.
The Greenville plant shut down early last year after failing to have productive operations since November 2011.
Company officials cited the struggling European economy, which it had become dependent on, that had been hit even harder than that of the United States. Energy Conversion Devices and United Solar Ovonic had incurred $263.2 million in debt due in 2013, in addition to significant legacy costs incurred over the past 50 years.