By PETER H. MILLIKEN | email@example.com
Mahoning County expects to collect nearly $1.6 million in rent from seven Oakhill Renaissance Place occupants this year, an amount which covers slightly more than half the county’s $3.1 million total annual cost of ownership of the former hospital.
The rent exceeds the $1.3 million the county is paying annually over 20 years in combined principal and interest on the $14.5 million the county borrowed to renovate Oakhill, but it falls far short of covering Oakhill’s $1.8 million in annual operating costs.
“I wouldn’t consider it a good deal because you’re never going to have the whole building full,” said Carol Rimedio-Righetti, chairwoman of the county commissioners.
“We can’t afford to renovate any more of this building,” Righetti said, adding that only $7,830 of the Oakhill renovation money remains unspent or uncommitted.
“I will not see Mahoning County go in the hole over bricks and mortar,” Righetti vowed.
Oakhill is the former Forum Health Southside Medical Center, which the county bought in U.S. Bankruptcy Court in 2006 for use as a government office complex. The former hospital, which contains 315,548 usable square feet, is about 45 percent occupied.
“If we get nonprofits that are willing to come in the building, that are willing to pay for their renovations, we would be happy to make an arrangement with them,” Righetti said.
“This was a business decision to consolidate services in Mahoning County. The whole thing of it was to get out of leases that were draining the county dry financially,” said Commissioner Anthony T. Traficanti, who voted for the county’s purchase of Oakhill.
Most notable was the lease for county Job and Family Services space at Garland Plaza on the city’s East Side, which cost the county $449,000 in annual rent, not including utility and maintenance costs, and generated complaints about mold, he noted. JFS moved to Oakhill in July 2007 after having been at Garland for 19 years.
At Oakhill, “At the end of the day, after we get everybody moved in that building, after we do pay our debt off, the taxpayers of Mahoning County have valuation added. They have equity,” unlike the previous rental arrangement at Garland, Traficanti said.
“It’s paying what it’s supposed to pay [in rental income], even at half-capacity.
We should be recruiting state agencies in there. We should be moving the rest of the county agencies in there, and we should be looking at nonprofits” as Oakhill occupants, Traficanti said.
“That building has so much potential,” he added. More than 500 people work at Oakhill, which might have been mothballed if the county hadn’t bought it, Traficanti said.
Getting enough rental income to pay half the county’s cost of ownership of Oakhill “probably is not a bad deal,” said Commissioner David Ditzler. He said of Oakhill, however: “We’re stuck where we are. We are less than half full, and, even if you took all of the remaining county-controlled entities to place them into that facility, you wouldn’t come close to getting that facility filled.
“If you look at it from a profit-and-loss standpoint, to be good stewards of the taxpayers’ dollars for the long haul, this was not a good business decision from day one,” Ditzler said.
“Whether it was a good or a bad decision, it doesn’t really matter. It’s a county building. We have to take care of it as such, and we have to maintain it,” said Audrey Tillis, county budget director. “A one-stop shop [for government services] is a nice idea. We’ll make the best of it.”
The Oakhill operating costs for 2013 are projected to be $1,451,290, including the costs of wages and benefits for cleaning and maintenance personnel, utility and facilities department supply costs; plus $33,307 for insurance; plus $288,824 for wages and benefits for five sheriff’s deputies assigned to Oakhill security.
The former hospital’s utility costs in 2012 were: $200,600 for electric; $38,109 for water; $22,842 for gas; and $236,260 for steam heat.
Oakhill has converted from steam heat provided by Youngstown Thermal to a new, energy-efficient heating system that uses natural gas-fired boilers; and the complex no longer uses steam. The new heating system was funded by a $2.6 million federal stimulus grant awarded in March 2010 and $900,000 in county money.
Estimated facilities department wage-and-benefit costs attributed to Oakhill this year total $516,936. Eight full-time facilities department workers devoted half or more of their work schedules to Oakhill last year. A ninth full-time facilities worker devoted 25 percent to Oakhill and 75 percent to other county buildings.
The county facilities department had 33 workers in 2006, when the county acquired Oakhill, and it has 31 today.
The total facilities department budget increased from $2.3 million in 2006 to $3.2 million in 2013, and Tillis attributes that growth in part to the acquisition of Oakhill.
Traficanti said rising costs of employee health care and of construction and maintenance supplies also contributed to the increase.
Three of the five deputies assigned to Oakhill security are paid for by JFS and one each by the county’s Veterans’ Service Commission and auto title department, said Maj. Jeffrey Allen of the sheriff’s office.
JFS’ deputies are included in its rent, but auto title’s deputy cost is not included in its rent.
RENOVATION AND DEBT
Oakhill’s renovation costs and debt obligations were presented to the county building commission in a recent detailed report from Carol McFall, chief deputy county auditor.
McFall enumerated for the commission the multimillion-dollar cost already incurred for boiler, chiller and roof replacements at the former hospital in addition to the costs of interior renovations for occupants.
“One of the biggest hidden costs of Oakhill is the possibility of major repairs that we’re not aware of at this point,” McFall said.
“A lot of the exterior doors to that building are going to need replaced,” McFall said, noting that Door E to the sheriff’s quarters at Oakhill, which was the former emergency room door, was recently replaced.
“Throughout building commission meetings, there were suggestions made by outside contractors that all of the windows need to be replaced on that building,” McFall said. “If something goes wrong with the parking deck, we have to come up with the funds” to repair it, McFall added.
Oakhill elevators will need to be repaired or replaced, Righetti said.
“If something breaks, we fix it,” Traficanti countered. “We did replace a ton of windows already” at Oakhill, he said, adding that grant money could be available for other Oakhill renovations.
Annemarie DeAscentis, a county budget specialist, for helping obtain the energy-saving stimulus grant for Oakhill’s new boiler system, Which was installed late in 2011, and he said he hopes more Oakhill renovation and improvement grants can be obtained by the Western Reserve Port Authority.
Righetti said DeAscentis is responsible for applying for federal and state grants for Oakhill renovations, but Righetti said such grants have specific qualifying rules and purposes.
She added that county officials are always on the lookout for federal and state grants that might be available for all county building renovations, such as historic preservation grants for the 102-year-old county courthouse.
“Oakhill will be in [gradual] steps when we do our renovation,” Traficanti said.
“I am proud of what we have up there to show the taxpayers of the county, and it is paying for half of itself, and it’s not even full,” Traficanti added. “I think that’s great — $1.6 million in rent.”
If Oakhill were filled to capacity, Traficanti said he is convinced “without a doubt” that Oakhill’s rental income would pay nearly all the former hospital’s combined operating and debt costs.
Major renovations must also be performed soon at the county courthouse, jail and administration building, he noted.
The Oakhill operating-cost projections for 2013 came from a cost-allocation study done for the county at a cost of $16,000 by Maximus, a Reston, Va.-based consultant, which based its estimates on actual 2011 costs.
The rent-paying occupants of Oakhill and their 2013 rents are: JFS, $727,081; the county Child Support Enforcement Agency, which is part of JFS, $234,619; auto-title department, $111,708; the county recycling division, $119,310; the Ursuline Sisters’ Comprehensive Care Center, $28,805; the Mahoning-Youngstown Community Action Partnership, $191,966; and the Youngstown City Health Department, $153,248.
Several Oakhill occupants pay no rent because they are supported by the county’s general fund, which is its main operating fund.
They are the county coroner’s office, board of elections, Veterans Service Commission, sheriff’s and auditor’s offices. The auditor’s office has record storage space in the former hospital.
Occupancy costs for departments not paying rent are absorbed by the county’s general fund.
Besides Oakhill, only two other county-owned buildings generate rent income.
One is the county Children Services Building at 222 W. Federal St., where the Ohio Bureau of Workers Compensation pays $99,136 a year to rent 7,011 square feet on the second floor.
Another is the county-owned building at 850 Industrial Road, where the Mahoning Soil and Water Conservation District pays $10,304 annually for 1,472 square feet of office space.
The county collects no rent from its courthouse, administration building, or jail or from its Industrial Road buildings, other than the one occupied by SWCD.
The Industrial Road buildings include those occupied by the county engineer’s and sanitary engineer’s offices, dog pound and emergency management agency.
The county’s borrowing for the Oakhill renovation project totals $14.5 million plus $5.9 million in interest over 20 years, with interest rates on the debt varying from 1.6 percent to 4.22 percent.
In 2006, the county borrowed $5.1 million at 4.22 percent interest for 20 years.
A $430,000 Ohio Department of Development loan pre-dating the county’s purchase of the building was refinanced by the county in 2008 with interest of $36,076 and paid off in three years.
A $2.9 million, 20-year economic recovery zone bond in 2010, which was funded by federal stimulus money, has a 3.26 percent interest rate.
A $3.5 million, 20-year bond in 2011 has a 3.37 percent interest rate.
A $2.4 million, 10-year bond in 2012 in anticipation of sales-tax receipts has a 1.65 percent interest rate.
“Rates are currently around 2 [percent] to 2.5 percent, although the market has been erratic lately and these are hard to predict until they go to market,” McFall said.
The county typically cannot refinance a bond until about 10 years after it borrows the money, but the county will do so if that is in its best interests, McFall added.