ERIE TERMINAL Mayor finds local interest

Members debated the performance bonds required to buy CIC buildings.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- A mysterious New Jersey firm isn't the only one interested in the Erie Terminal Building.
Mayor George M. McKelvey told downtown's redevelopment agency Tuesday that he is in talks that could bring 300 to 400 office jobs to the almost vacant Commerce Street building. McKelvey said only that a local businessman is interested in the building, calling the talks sensitive.
He wouldn't elaborate to the property committee of the Youngstown Central Area Community Improvement Corp.afterward. He cited confidentiality promised to the local business.
McKelvey said the New Jersey firm's offer seemingly hastened the local interest in the building. He told CIC about his talks so the agency didn't move on selling the building before considering the local option.
That doesn't appear to be a problem.
Company information
CIC officials say they have sought information, but have no more details than they did a week ago about a company called Southgate Properties.
The Fort Lee, N.J., firm recently offered $1.15 million for the building, saying it wanted to move quickly. CIC is half-owner of the Erie Terminal with Strouss Building Associates.
CIC members say they are willing to work fast, too, but want to know more about what properties Southgate owns, has developed or been involved with before considering a sale. Any buyer would need to show it can and would add to downtown revitalization, they said.
There also is the matter of settling outstanding debts on the building, which could be complicated.
CIC says Strouss Building Associates owes the agency about $550,000 for the building. The state also is owed about $900,000 and the city about $650,000 concerning the building, officials said. All the debts, some of which are disputed, would have to be worked out before selling the building.
The property committee also debated CIC's policy of requiring 100 percent performance bonds to buy buildings the agency owns.
Project funds
The policy assures there are funds to complete a project should a developer buy a building and fail. The funds at least would leave a marketable building, not an eyesore left for future speculation, CIC officials say.
Several board members question the policy, saying it's an obstacle for developers.
Councilman Richard Atkinson, R-3rd, said CIC needs to cut the costs of doing business. Performance bonds can kill projects before they start, he said.
CIC needs to take a chance and sell the properties, he said. If developers fail, at least the agency will have tried, he said.
"If we take a hit, we take a hit," he said. "I don't think it will break the city. I don't think it will break the CIC."
Charles P. Sammarone pointed out that CIC has only three marketable buildings. The rest have been deemed unsalvageable.
Members arrived at a compromise suggested by McKelvey.
He said the performance bond policy should remain to protect CIC and prevent speculators from just sitting on vacant properties.
But developers who need help securing performance bonds should be extended any available assistance, he said.
rgsmith@vindy.com