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Youngstown trying to sell 20 Federal Place again
YOUNGSTOWN
After failing to get an offer to buy its 20 Federal Place downtown office building, the city is putting it up for sale again.
The big difference is the original attempt to sell the building in June came with a minimum asking price of $2 million, while this effort doesn’t seek a minimum amount.
“If we get a good offer, we’ll sell,” said city Finance Director David Bozanich. “If not, we’ll continue to hold on to the property until the time comes when we get a good offer. It’s not a distress sale. The building is doing well, and it’s successful. But government shouldn’t be in the business of competing with private real-estate developers on office space.”
Bozanich will open proposals, if there are any, to buy 20 Federal Place at noon Oct. 3.
“One of the holdups the last time was the minimum number,” said Mayor John A. McNally. “The $2 million was removed to see if we get any proposals on the building. If we get any, it will be a decision by the administration to accept or let it remain as it is. I’m optimistic we can sell it for a good price.”
The city received no offers to purchase the former national headquarters of defunct Phar-Mor by the original June 6 deadline.
However, an official with VXI Global Solutions, a call center and the largest employer at the West Federal Street building, wrote a letter that the company is “very interested in submitting” a proposal.
Greg Ouimet, VXI’s vice president, wrote the company has “been actively conducting our due diligence but are requesting a 60-day extension to properly complete our review and develop the best response, considering the current financial operating position of the facility.”
It’s been about 90 days after Ouimet’s letter, and Bozanich said city officials haven’t spoken to VXI about buying the building.
But the city has “had some conversations with potential developers” about 20 Federal, said Bozanich, who declined to disclose the names.
The city spent about $2.4 million on improvements in the past year-plus on the eight-story, 400,000-square-foot building at 20 W. Federal St. It’s owned the structure since 2005.
“We bought the building because no other developers were willing to take on the challenge of owning it at the time,” Bozanich said. “We didn’t want the largest downtown building to be shuttered, but we’d like to privatize it if possible.”
The building has an occupancy rate of about 75 percent.
The city expects to make a profit of $347,000 this year on the building if it continues to own it. The only reason it turns an operating profit is because of the $930,000 the city gets in income-tax revenue from those who work at the building. There are about 1,000 people who work there, Bozanich said.
If someone else owned the building, the city would continue to receive tax revenue without incurring any costs. But preliminary calculations by the city show that if a company owned the building, that business would lose money. There is about 48,000 square feet of unused rental space, according to the notice seeking offers to buy it.