Wednesday, January 21, 2015YOUNGSTOWN, Ohio -- The city wants to retain control of -- or at least the ability to use -- a parking lot near 20 Federal Place in case it gets the funds to build a parking deck on the site, Finance Director David Bozanich says.
The parking lot, at Wick Avenue and West Commerce Street, is a point of contention -- although not the only issue -- in discussions between the city and NYO Property Group. NYO submitted the sole bid last October in response to the city’s request for proposals.
NYO, owner and developer of several downtown properties including Erie Terminal Place on West Commerce and the proposed repurposing of the Stambaugh Building as a hotel, bid $1.7 million for 20 Federal and the city parking lot, to be paid over six years at 3.5% interest.
The proposal calls for NYO to make interest-only payments of $52,500 for two years; $52,000 in interest and $200,000 on the principal in the third year; $45,500 in interest and $200,000 principal in the fourth; $38,500 in interest and $200,000 in principal the fifth; and $31,500 interest and a $900,000 principal balloon payment the sixth.
“The parking lot is vital to the success of the building at 20 Federal Place and the long-term plans for NYO and downtown development in general,” says Dominic J. Marchionda, NYO property group managing partner.
“The city’s concern,” Bozanich explains, “is that in the longer-term scheme of things, we’re able to use it to construct a parking deck on the property. It’s a linkage area between [Youngstown State University] and downtown. So we do realize that it is a key component for future development.”
The city is working to structure a deal that would allow NYO to use the property for a certain period of time, with the city able to reclaim it with a 30- or 90-day notice should it secure the funds to build a parking deck.
“Kent accomplished something similar to that in a deck they built in downtown,” Bozanich says. “You have to bring in a transportation component.”
Parking wasn’t the issue 20 years ago that it is today with more people working and living downtown, and the greater activity on weekends, the city finance director points out.
“Parking is paramount to us and it’s a good problem to have,” Bozanich says. “We have to solve it in a way that works for all of the parties, which we’re working on.” The city and NYO have engaged in discussions that the finance director characterized as “positive. We’re looking at how we eventually make this work,” he says.
“We’re always willing to work with the city,” Marchionda says. “We would be receptive to some sort of contingency plan as long as it makes sense to an overall development strategy for the long-term sustainability and progress of downtown.
“We feel that we can bring in new and dynamic tenants to add to the vibrancy of the central business district, as well as cultivate existing tenants,” Marchionda continues. “To do so, parking would have to be available. For example, a parking deck would be a win-win for connecting the city and the university at that location. With that said, a parking deck as an example is something that we would strongly support and help deliver as an enhancement to our downtown business district and the university.”
NYO has its own “long-term plan” for the property but not one Marchionda could discuss, he says. The company is focused on working with the city and 20 Federal’s existing tenants. “We are interested in working with others with significant skin in the game,” he adds.
The cost of building a deck comes to about $14,000 per space, Bozanich says. “You can’t get the return on that investment to offset the cost of those spaces without heavy subsidization on the front end. … It might not work today but as things improve and programs change and federal focus becomes different in terms of how they provide funding dollars to communities, there may be something in the future.”
One possibility for building a deck might be through YSU. That was one reason why the city was “aggressive” in getting the new building for the Williamson College of Business Administration built on Wood Street as opposed to Fifth Avenue across from Stambaugh Stadium, Bozanich says.
At 20 Federal Place, the city is concerned with creating the “right environment” for businesses to want to stay and grow, generating additional income taxes for the city, but also removing the building from the city’s balance sheet, Bozanich says. “Right now we’re walking a delicate balance there, trying to appease all of the parties into finalizing a deal,” he remarks.
Another city concern is ensuring the building’s tenants “aren’t financially harmed” by a transfer of ownership.
The city collects in excess of $1 million in income taxes from employees in the building, most of whom work for VXI Global Solutions Inc., which operates a call center and employs 1,200 people. VXI has expressed concern about a private owner taking over the property and supports the city retaining ownership.
“We’ve engaged both parties,” NYO and VXI, Bozanich reports. “The city’s concern is that the final structure is one that makes the building work.”
Copyright 2015 The Business Journal, Youngstown, Ohio.
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