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Youngstown OKs Lease Agreement for InfoCision
"By Dan O'BrienYOUNGSTOWN, Ohio -- The city's Board of Control yesterday approved a lease agreement with InfoCision Management Corp. -- a deal officials say will serve as a model for future agreements aimed at luring additional tenants to the Phar-Mor Centre downtown.InfoCision, a teleservices company based in Akron, is in the process of renovating 10,000 square-feet of space on the fourth floor of the building that formerly the headquarters of the former Phar-Mor Inc. Drugstore chain. The board approved a 14-year lease with the company.The lease makes it possible for InfoCision to expand up to 40,000 square feet, said David Bozanich, city finance director. The agreement is to take effect pending further review by the city's law department.Bozanich said InfoCision will lease the space at $4.50 a square foot, including maintenance and utilities fees. InfoCision announced about a month ago it intend to start up operations ing the Phar-Mor Centre, initially bringing 150 new jobs to the downtown. The company is currently renovating the offices and expects to spend $1 million in total improvements. Operations are likely to begin by week's end.Yesterday the Ohio Tax Credit Authority approved a 55% Job Creation Tax Credit for a seven-year term. The value of the tax credit will be $363,613 over the term; the company is required to maintain operations at the site for 14 years, officials said. Other state assistance committed for this project includes a $48,000 Ohio Investment in Training Program grant. InfoCision's lease with the city is chock full of incentives that city officials hope will entice other businesses to Phar-Mor.For starters, the city is offering rent credits of up to 100% based on any out-of-pocket improvements done to the building by private tenants, reported T. Sharon Woodberry of the city's economic development office. Those receiving rent credits must still pay a fee for standard maintenance and utilities."These incentives supplement the other incentives we have," Woodberry said, such as the city's tax credit program, enterprise zone program and float loan initiative.Rental rates for office space at Phar-Mor will range from $3 a square-foot to $5 a square-foot over a five-year term, Bozanich said, based on a company leasing 10,000 square feet of space.Mayor George McKelvey said the rates would only apply to new lessees, and said the city has no intention of luring tenants who now have offices in other buildings downtown. "We're not going to cannibalize tenants from other buildings," he promised.Government agencies, however, could find space in Phar-Mor once the city takes full possession of the building, McKelvey added. For example, he said discussions are under way about a new owner for the Wick Building, which is owned by the city and houses some municipal offices, such as economic development.Once an agreement is reached with a buyer for that building, McKelvey said it's possible those city offices would relocate to Phar-Mor. Bozanich said although the new lease structure is targeted at businesses moving into downtown, the city will explore extending the incentives to other government entities. The Youngstown Central Area Community Improvement Corp., now housed in the George V. Voinovich building, for example, is expected to move its offices to Phar-Mor once the city gains full control, he said.Last summer, an effort was mounted for the city to acquire Phar-Mor and relocate the Mahoning County Job and Family Services department to the building. That project, sources confirmed, was blocked by the Cafaro Co. of Youngstown. Job and Family Services leases space in the McGuffey Plaza, which is owned by Cafaro.The board of control also approved an assignment of the lease agreement with the Strouss Building Associates for the Phar-Mor building.The agreement allows the city to assume the lease and not the debt incurred over the years by SBA, which is in the process of dissolving, Bozanich noted. "We'll have ownership without the liabilities," he added.SBA informed the city in November it would probably shutter the building, displacing the few remaining tenants. The city then secured InfoCision as a major tenant, thereby saving the building and the offices inside.In order to buy time, the city entered into a month-to-month agreement with SBA so the building could be managed until InfoCision could ramp up operations, McKelvey said. "Had we not been successful, it's very likely it would have been closed by March," he said.Exterra Recovery, another company that occupied the fourth floor, shut down two years ago, leaving only the law firm of Nadler, Nadler & Burdman and Strollo Architects as office tenants.Retail tenants include Jerry Lee's Jewelry and several small vendors operating in the building's food court.To ensure the transition of ownership goes smoothly, Bozanich said some of the maintenance personnel from SBA will still be under contract with the city when it assumes control of the building.The building was once the site of the Strouss-Hirshberg department store, a favorite retail haunt during downtown Youngstown's glory days. In the 1980s, the building was converted to offices to house Phar-Mor Inc., then one of the fastest growing retail drug chains in the country.Phar-Mor's founder, Michael "Mickey" Monus was convicted of fraud in the early 1990s and the corporation went bankrupt. In 2002, after the company's second bankruptcy filing, Phar-Mor was liquidated and the downtown offices closed for good.Bozanich said officials are contemplating a new name for the building once the city takes possession. The city is also in discussions regarding taking control of a parking lot along Commece Street to serve tenants in the building. Contact Dan O'Brien at [email protected]"