DOWNTOWN YOUNGSTOWN CIC panel urges policy change on buildings

The downtown agency has for years insisted on six-year lease-to-own deals.
THE VINDICATOR
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Downtown's redevelopment agency is moving to change its long-standing policy on building ownership.
The property committee of the Youngstown Central Area Community Improvement Corp. recommended a new policy Tuesday. The change would let entrepreneurs buy CIC buildings outright under certain conditions.
Supporters say the new policy would help developers secure bank financing. The change also would protect CIC's interests should a business fail and leave behind a vacant building, they say.
"This gives us another option. We still have a lot of control," said Artis Gillam Sr., a committee member and 1st Ward councilman who represents downtown.
The new ownership policy goes to a full board vote next week.
The agency has for years insisted on a six-year lease-to-own policy on nearly 20 buildings it owns.
The deals are to assure that a business is stable before CIC gives up a building. That avoids public funds' being spent buying back a property if a business fails and the building is left vacant.
The Draught House and Plaza Optical, both on West Federal Street, earlier this year became the first to complete lease-to-own deals.
Reluctance
The approach, however, scares off other entrepreneurs, said Jason Whitehead, CIC executive director.
Business people know that banks are reluctant to lend money to somebody who doesn't own a building outright, he said. Banks want the collateral -- the building -- available if the owner defaults.
Developers usually can't renovate buildings without financing, he said.
Businesses that are leasing the John R. Davis and old First Federal buildings, both on West Federal Street, would be the first to use the new ownership policy, Whitehead said. Each has found bank financing for renovations difficult because of its lease, he said.
The new policy says building buyers would have to show financial ability to buy, renovate and operate the building. In most cases, a buyer also would need a bank loan.
Bank connection
Involving banks protects the CIC, said Reid Dulberger, an agency staff member.
First, bank financing adds credibility and stability to a project, he said. Second, banks that foreclose on a property have an incentive to put the building back in productive hands. Selling the building helps the bank recoup its investment, he said.
There is a small chance a buyer could put up the purchase price and the renovation investment without needing a bank loan.
In that case, the CIC would make special arrangements to protect the agency, Dulberger said. Requiring a deposit and contract language that returns a failed building to the CIC are among the options.
Mark Brown, property committee chairman, voted for the new policy but said he wasn't a big fan. He has been a strong advocate of the lease-to-own policy.
Brown, who is The Vindicator's general manager, said the CIC has never lost a project because of the ownership issue, despite popular perception. Nonetheless, Brown said he supports the new policy if it will mean more development downtown.
rgsmith@vindy.com