City cuts US Endoscopy's economic development grant

A Mentor economic development grant for US Endoscopy’s expansion project will be reduced because the medical device manufacturer’s hiring projections are lower than expected.

In 2010, US Endoscopy proposed to create 150 jobs and invest $4.3 million in equipment, building improvements, as well as research and development by the end of 2012.

However, since the company received a Mentor economic development grant in 2010, which was worth $871,000 over 10 years, only 50 employees have been hired. The city provides Mentor Incentive Grants to encourage companies to create jobs. The grant is based on payroll taxes the business pays to the city and the level of its investment.

Even though US Endoscopy  still expects to hire 150 employees, it’s not certain when that number of employees will be hired. Because of this delay, the city grant will be reduced to $211,000 over the next eight years of the economic development grant agreement, said Ron Traub, Mentor’s director of economic and community development.

Mentor City Council approved the grant reduction at its regular meeting on Tuesday.

Traub received a letter from US Endoscopy explaining why the company’s initial hiring projections were not be achieved.

 “At the time of our application for the Mentor Incentive Grant, we anticipated that our Urology Division project would receive Third Frontier (state) funding in 2010, which would have facilitated the hiring included in our project projections,”  Peter Brumbergs, US Endoscopy’s chief financial officer wrote in a letter to Traub. “We were not awarded Third Frontier Funding in 2010, rather, we were recently awarded Third Frontier funding effective July of 2011. This one-year delay in funding led to a delay in hiring.”

Although US Endoscopy’s expectation of hiring 150 employees has not changed, the timing of these hirings is difficult to predict, according to Brumbergs.

Brumbergs requested that the  Mentor economic development incentive grant percentage be determined each year based upon actual payroll levels at the end of the year. However, Brumbergs requested a grant payment for the 50 employees the company hired in 2010.