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The decision to sell 20 Federal Place hinges on a parking lot as part of the deal
YOUNGSTOWN
The sale of the city-owned 20 Federal Place downtown office building could be decided by a parking lot.
The NYO Property Group, one of downtown’s largest landlords, wants to purchase the building for $1,973,000 over six years.
The company wants a parking lot on Commerce Street, near the back of the building, to be part of the deal, but city officials aren’t interested in selling it.
“The deal doesn’t work without the parking lot,” said Dominic J. Marchionda, NYO’s managing member.
“The parking lot is an issue,” said Mayor John A. McNally. “The city is not real interested in giving up ownership of that lot, so that factors into it.”
The two sides have spoken about a potential sale without much progress, McNally said.
“We’re still in the same place,” he said.
But Marchionda is optimistic a deal can be made.
“We definitely want to move forward,” he said. “Right now, we’re doing our due diligence.”
NYO was the only company to submit a proposal to purchase the former Phar-Mor Centre by an October 2014 deadline. The city failed to get any offers when it first tried to sell 20 Federal Place in June 2014 with a minimum asking price of $2 million. The second time, the city removed the minimum amount.
NYO’s proposal calls for the company to make a $200,000 down payment and includes 3.5 percent interest payments for six years. The company would pay nothing but interest, $52,500 annually, in the first two years.
In the third year, NYO would pay that same interest along with a $200,000 payment toward the principal. It would pay $200,000 principal payments in the fourth and fifth years with interest payments of $45,500 and $38,500, respectively, and a $900,000 payment with a $31,500 interest payment in the sixth year.
“Their proposal was fine, but I couldn’t say we were thrilled with it 100 percent,” McNally said. “Our larger concern is the effect a sale would have on all of the [building’s] tenants.”
VXI Global Solutions, a call center at 20 Federal Place that employs about 1,100 of the 1,300 workers there, has urged the city not to sell the building.
“VXI made their position clear to the city,” said city Finance Director David Bozanich. “We want them to continue to grow there. Our first priority at the building is job creation. That means keeping VXI there and growing the number of employees downtown.”
NYO officials have met with many of the building’s tenants and they’re supportive of the sale, Marchionda said.
“We want to meet with VXI, and that’s the next thing to do,” he said.
The mayor said tenants, other than VXI, have expressed “concerns about the city not owning the building. They’re comfortable with the city owning it. I’d like to have the city out of the landlord business, but I wouldn’t do that just to get rid of the building without consideration to the tenants.”
McNally and Bozanich don’t anticipate a deal possibly being struck for at least a few months.
The city made about $347,000 last year on the building. It made that profit because it collected about $930,000 in revenue from its 2.75 percent income tax from workers at the building. Without that, the city would lose money on 20 Federal Place.
And that’s an issue if a private company owned it.
The city projects a financial loss of about $200,000 for a private business if it buys the building primarily because Youngstown keeps the income tax. But city officials say a new owner also could lease some of the building’s vacant space in an effort to turn a profit there.