Tuesday, April 28, 2009
By Harold Gwin
An issue with a land lease with YSU prompted the developer to relocate phase one.
YOUNGSTOWN — Construction on The Flats at Wick student housing complex on the north side of Youngstown State University will still start this spring — but the location of the first of four proposed buildings has been changed.
Developer US Campus Suites LLC had planned to put the first 115-bed apartment building on the southwest corner of the project site bounded by Elm Street on the west, Madison Avenue on the north, Bryson Street on the east and an expressway service road on the south.
That plan involved leasing about one acre from YSU for $110,000 for 40 years, followed by a 20-year extension at a fee of $220,000. The building would belong to the university at the end of that lease period.
The lease was negotiated with Dominic Marchionda, president of US Campus Suites, and the YSU Board of Trustees approved the arrangement in February.
Phase one of the $28 million, 450-bed, four-building project carries a cost of $7.5 million, and Marchionda said KeyBank is providing that financing.
KeyBank, however, wants to alter some terms of the lease, which could delay the project’s start, Atty. Greg Morgione, YSU associate general counsel, told the trustees earlier this month.
The bank doesn’t want any subsequent owner of the project, should it ever be sold, to be bound by all the lease mandates such as YSU approval of the housing management company and the requirement that the housing meet all YSU standards, Morgione said.
Marchionda has decided to move the phase-one building to the northwest corner of the project site on property that he already owns, Morgione said.
“It’s not a big deal,” Marchionda said. “I just don’t want to delay the start of this project.”
Clarifications on the lease issue could take 30 to 45 days, he said.
Moving the phase-one building allows the project to keep its original timetable with a start of construction in June and completion in 2010, he said.
“We’re going to continue to move forward. It’s a great project — for the university and the community,” Marchionda said.
The phase-one work includes the demolition and remediation of the Electrochemicals Inc. building on the project site.
The land under the building will become part of a tenant parking lot. None of the four apartment buildings will be on that footprint, Marchionda said.
The city is helping to secure funds for that cleanup and has applied to the Clean Ohio Assistance Fund for $750,000 to cover some of the estimated $1.8 million cost. Word on that funding is expected within a month.
The city’s board of control on Monday approved loaning up to $2 million to U.S. Campus Suites to help finance the housing project, making the money available at 0.25 percent interest for up to 18 months.
US Campus Suites provided a $2 million irrevocable letter of credit from KeyBank as a condition of the loan. If the company defaults, the bank would cover the loan.
The city won’t release the money until the Electrochemicals Inc. demolition and remediation is done.
gwin@vindy.com