By DAVID SKOLNICK
The former Paramount Theatre
The Federal Building in downtown Youngstown
The city is willing to lend $2 million to persuade a call-center company to expand here, creating at least 500 jobs downtown.
City council Wednesday approved the $2 million loan, with an interest rate of 0.25 of a percent for up to 12 months, with VXI Global Solutions, a Los Angeles-based company.
Also Wednesday, council approved an incentive package to help the owners of the downtown Federal Building with their plans for a $2.5 million expansion.
But council declined to purchase the long-closed Paramount Theatre, another downtown building, for $80,000.
The Paramount deal isn’t dead, but council members said they don’t see why the city should buy the building now and assume the liability that comes with the dilapidated structure.
The VXI expansion announcement should come “either later this week or early next week,” Nick Covelli, the company’s senior vice president for global sales, told The Vindicator in a telephone interview after the vote.
VXI employs about 500 to 600 on the fourth floor of the city-owned 20 Federal Place building.
A $2.7 million expansion would be on the building’s fifth floor.
“The deal is moving forward,” Covelli said. “Everything looks positive. We’re not quite there yet, but it should proceed smoothly.”
City council agreed in April to give $650,000 — $350,000 in cash and $300,000 in utility improvements — to VXI to get the company to expand here.
“The city has been great to work with,” Covelli said.
VXI would need to provide the city with a letter with an irrevocable line of credit from a lending institution to obtain the loan.
Also, the city’s board of control needs to approve the loan and $650,000 in incentives.
“This is a substantial investment in our city,” T. Sharon Woodberry, Youngstown’s economic development director, said of VXI. “We’re hoping to have the lease signed soon. The loan is a key piece in the negotiations.”
The Youngstown location on West Federal Street handles inbound customer-care calls that include providing information about products and billing for companies.
The starting pay for VXI jobs in Youngstown is $9 an hour. Top employees earn $800 to $1,000 a week, company officials say.
Though city council was enthusiastic about the VXI loan, its members were cool to the administration’s request to buy the Paramount for $80,000.
The administration wants to seek about $750,000 from the state to remove asbestos and demolish the building except its facade.
The city would use the property as a parking lot for those paying their water and wastewater bills at the nearby city hall.
Louis Frangos of Cleveland purchased the building for $79,900 in April 2006. Frangos said he spent about $80,000 on the building since then. The 92-year-old building on the corner of West Federal and North Hazel streets is in poor condition.
“I’m concerned about the city assuming the liability of this potentially dangerous building,” said Councilman DeMaine Kitchen, D-2nd.
Councilman Paul Drennen, D-5th, added: “Why are we spending the same amount of money he did for the building? It doesn’t make economic sense. There are safety violations. It’s almost like the city is bailing him out. If it’s deplorable, he should demolish it.”
Also Wednesday, council OK’d a request to waive the water, wastewater and building-permit fees for the Gatta Co. LLC of Niles for its proposed $2.5 million renovation of the Federal Building.
The 108-year-old structure on the northwest corner of West Federal and North Phelps streets was purchased in October 2009 by the company co-owned by Dominic L. Gatta Jr. and Dominic L. Gatta III.
The company plans to use the first floor for commercial and retail space and convert the upper three floors into about 12 apartment units, said the younger Gatta.
The company is seeking federal and state historical-tax credits to help offset a portion of the project’s cost, he said. The company should hear no later than June 30.
about receiving the tax credits, he said.