Thursday, March 13, 2003
A big project in a limited area instantly changed the property's market value.
YOUNGSTOWN -- Purchase price: $1.5 million.
Twenty-six acres of downtown land on the edge of a river to build an arena and hotel: priceless, literally, according to one observer.
Questions dating to 2001 resurfaced recently about the land between the Market Street and South Avenue bridges. Critics have left Mayor George M. McKelvey defending the pending purchase in recent weeks.
City council's May 2001 selection of the site before any negotiations happened doomed virtually any chance of paying a lower price.
Despite that debacle, the land sale has to be seen in a wider perspective, some say.
The director of Youngstown State University's Center for Urban and Regional Studies and a consultant to the city is one of them.
Hunter Morrison calls the land priceless. The city is blessed to get it, he said.
Property near water, on a main street with room to expand a development literally is priceless, he said.
"This is a very rare find," Morrison said.
Administrations in other cities would be considered heroes for acquiring so much waterfront property downtown, whatever the price, Morrison said.
Cleveland, where he was planning director, considered itself lucky to buy a 20-foot strip of land on the water's edge, he said.
The $1.5 million price needs wider context, he said. Morrison pointed to the federal government's $1.2 million purchase for less than three acres a couple of blocks away for the new $20 million courthouse.
The nature and magnitude of the project instantly affected the value of the property between the bridges, said Scott Lewis of Edward J. Lewis Inc. in Warren. The real estate and consulting firm has many years of experience dealing with downtown Youngstown property.
The $150,000 value pegged by the Mahoning County Auditor's office for the vacant land probably was the right value then, Lewis said.
But that changed the instant the project was announced, he said. Everybody immediately knew the site was the likely spot, Lewis said.
A big project in a relatively small space -- downtown -- with little other available land instantly changed the market, he said.
Developers expect land for such a project to make up between 10 percent and 25 percent of the cost, said Bill Kutlick of Kutlick Platz Realty, a commercial real estate firm in Boardman.
Real estate angle
A $1.5 million purchase price is a fraction of the total project, he said. Estimates have put the arena, hotel and conference space development at $50 million or more.
The price, which works out to $1.32 per square foot, isn't bad even if the city used the property only to build a warehouse, Kutlick said.
Setting a market value in downtown Youngstown is difficult, appraisers say.
A main reason is a lack of comparable sales.
The federal courthouse, for example, is just one of two open pieces of property that were bought and built on in at least a decade. The other is the George V. Voinovich Government Center. That land already was owned by the builder, the city's downtown redevelopment agency.
"It makes it a very difficult job," said Jason Vantell, a commercial appraiser at Vantell Gregory Associates.
Looking at downtown property in other cities with similar-type sales and conditions to Youngstown is the only way, he said.