YOUNGSTOWN, Ohio -- The city is engaged in what its finance director characterizes as “preliminary” discussions with representatives of NYO Property Group regarding the developer’s purchase of 20 Federal Place.
NYO submitted a $1.7 million bid to acquire the city-owned building and a nearby parking lot. The developer was the sole entity to submit a proposal by the Oct. 3 deadline, even though its largest tenant, VXI Global Solutions Inc., submitted a letter stating it preferred that the city retain ownership.
“Quite frankly, it’s a pretty complicated process because we want to make sure that VXI and the other tenants in the building are being treated fairly, as the city’s treated them to date,” said David Bozanich, city finance director. Several of the tenants are in the building “because they wanted to be part of Youngstown’s rebirth and we gave them some pretty good terms,” he said.
“We want to make sure that that continues but, at the same time, we also believe that the building should be a privatized asset. Government doesn’t truly belong in the real estate business in the long term,” he continued. The city purchased the building, the former headquarters of the former Phar-Mor Inc. in 2005. For decades the landmark structure was the flagship store of the former Strouss’ department store chain.
NYO, which owns and manages several buildings downtown and last night detailed plans to redevelop the Stambaugh Building as a DoubleTree hotel (READ STORY), continues to work with the city on a deal, NYO principal Dominic J. Marchionda said Wednesday.
“We want [the deal] to happen,” he told The Business Journal. “The city does an excellent job of running the city and running our local government. We feel we can do a better job of running that building, working closely with the existing tenants and being a partner in their business and making it the building that it should be. We want the deal to go forward and we anticipate the deal will go forward. But we’re still in our due-diligence period.”
Discussions are underway regarding the criteria and the conditions the city seeks before it would accept a proposal, Bozanich said. “Those take into consideration some of the economic factors and some of the quality-of-life factors that the city wants to see as it relates to the tenants in the building,” he explained. “We are at preliminary negotiations that outline those criteria.”
Along with those early discussions, the city Board of Control this morning approved a conflict of interest waiver connected to attorney Denise Bayer’s “potential representation of NYO Property Group” in negotiations with the city for 20 Federal. Harrington, Hoppe & Mitchell Ltd., with which Bayer is affiliated, does other work for the city unrelated to 20 Federal Place, Bozanich said.
“We didn’t view it as a conflict for them to work on both. Should we view it in the future as a conflict then at that time, we would request that attorney no longer work with the city. But as it stands right now, because it’s still preliminary, we don’t feel that there’s any conflict,” he said.
In other business, the board -- which also consists of Mayor John McNally and the city law director, Martin Hume -- approved a subordination agreement with Wells Associated Renaissance Partners LLC in connection with redevelopment of the Wells Building downtown. The agreement assures that any repayment the city would seek of its $100,000 performance grant would be subordinate to the partnership’s repayment of its loan from Huntington Bank for the $5 million project.
The board also approved $25,000 for the Youngstown Business Incubator, representing the city’s second-year contribution to YBI’s five-year capital campaign.
It also agreed to pay up to $15 million to the city of Campbell for its share of income taxes generated during the second half of this year by a project in the former Cold Metal Products building. The building straddles both cities.
Pictured: The view from the mezzanine of 20 Federal Place.
Copyright 2014 by The Business Journal, Youngstown, Ohio.
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