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Published: Friday, 3/24/2006

Erie County told to repay state over $200,000

BY STEVE MURPHY
BLADE STAFF WRITER

MILAN, Ohio - Thanks to a federal grant, a local engineering firm was able to borrow more than $200,000 from Erie County and expand its operation.

The project created 30 jobs at Sierra Lobo Inc.'s new Milan facility, most of them high-paying engineering positions working with such clients as NASA and the Air Force.

"The business has done great," said Alex MacNicol, county planning and development director.

But now, four years later, the Ohio Department of Develop-ment wants the money back from the county.

Holly Pendell, a department spokesman, said the Community Development Block Grant funds carried a stipulation requiring that 51 percent of the 30 new jobs go to low-income residents. However, Sierra Lobo fell far short of that mark.

Mr. MacNicol said the number of jobs held by low-income people never rose above seven.

"We need to hold people to their obligations," Ms. Pendell said. "Whether they get that money back from Sierra Lobo isn't really up to us, but the county is going to pay it back to us."

Mr. MacNicol said the county has agreed to repay the original $203,627 in quarterly installments. The county won't ask the company to speed up its repayment of the money, which is part of a revolving loan fund for businesses. The company is supposed to repay the money in installments ending in July, 2010.

"We haven't said a lot to the company, because they've been positive and really helped the community," he said. "So we don't want to go back to the company and say, 'Can you give us the loan back?' "

Mr. MacNicol said he understands that the state is enforcing federal regulations but wonders about the wisdom of withdrawing funds from a project that produced good-paying jobs.

"I think maybe they could have shown a little more flexibility, since it's such a successful project," he said. "I think they need to look at that program and really try to create the better jobs. We've got a lot of lower and moderate-income type jobs in our community, retail jobs."

Sierra Lobo has about 300 employees, including 30 in Milan and about 140 who work at NASA's Glenn Research Center in Cleveland under a contract with the federal space agency, said George Satornino, a founder and president of the Fremont firm.

He expressed puzzlement at the state's request for repayment of the block grant funds.

"It seems kind of strange, the whole thing," Mr. Satornino said. "I think we have very good jobs. Most of our engineers have master's degrees, and the stuff we're doing out here is pretty leading-edge work. ... I'm just not sure what low income means, really."

Ms. Pendell said the Department of Development had tried to guide county officials toward a different funding program.

"We appreciate their effort, and I do believe the company and the county did work to try to meet these requirements, but in the end it probably wasn't the right grant for them to apply for," she said.

Contact Steve Murphy at:

smurphy@theblade.com

or 419-724-6078.



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