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No formal proposals were made for 20 Federal Place



Published: Sat, June 7, 2014 @ 12:00 a.m.

By David Skolnick

skolnick@vindy.com

YOUNGSTOWN

The city received no offers to buy 20 Federal Place, but the downtown office building’s largest tenant is “very interested in submitting” a proposal.

VXI Global Solutions, a call center in the West Federal Street building, submitted a letter by the noon Friday deadline for those interested in buying the city-owned structure. VXI owns other buildings it uses for its call centers.

Besides expressing interest, the letter from Greg Ouimet, VXI’s vice president, wrote that 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.”

Ouimet also wrote that VXI requests that the purchase include the Commerce Street parking lot near 20 Federal Place.

City officials had discussions with at least three developers about 20 Federal Place, said Finance Director David Bozanich, who didn’t identify the developers.

Each, he said, was concerned about parking and wanted to talk with tenants at the building to determine if they would stay there under new ownership, Bozanich said.

The city’s proposal had a minimum asking price of $2 million for the 400,000-square-foot structure and specifically noted that it would retain ownership of the parking lot on Commerce Street near Wick Avenue.

Bozanich and Mayor John A. McNally said Friday that city officials would re-evaluate the minimum asking price and that there is the possibility of including a lease of that parking lot. The city will seek proposals again to buy the building shortly, Bozanich said.

“It’s our intent to put the building in private-sector hands,” he said.

McNally said, “We were hoping we would get some additional responses,” but “it’s still my goal to sell the building.”

Preliminary calculations by the city show that a company purchasing the building would lose about $217,000 annually, but there is about 48,000 square feet of unused, rentable space that, if leased, could get a new owner “above the break-even” mark, Bozanich has said.

The building’s current occupancy rate is 75.38 percent.

The city expects to make $347,000 this year on the operating side if it continues to own 20 Federal Place. The only reason it turns an operating profit is because of the $930,000 the city receives in income-tax revenue from workers at the building.

If another entity owned the building, the city would continue to receive that tax revenue without having to incur any other costs.

Between its purchase in 2005 and improvements to the building, the city has spent about $4 million on the downtown building. It was the national headquarters of Phar-Mor, which went out of business the year the city bought the structure.


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