Youngstown wants to sell a downtown office building it ownsTweet
The city officially put its 20 Federal Place downtown office building on the market.
The minimum asking price is $2 million for the 400,000-square-foot West Federal Street structure.
Preliminary calculations by the city show that a company purchasing the building would lose about $217,000 an- nually, 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, said city Finance Director David Bozanich.
Sealed proposals from those seeking to purchase the building must be submitted to the city’s finance department by noon June 6. The three-member board of control — Bozanich, Mayor John A. McNally and Law Director Martin Hume — will decide the new owner of the building, assuming proposals are received.
The building’s current occupancy rate is 75.38 percent, city officials said.
An “ideal owner” of the structure would be the partnering of VXI Global Solutions — a call center at 20 Federal Place and its largest tenant — with another company, Bozanich said.
The city has talked with VXI about a sale, and “there’s a definite interest under certain circumstances” that could lead to a deal, said Bozanich, who declined to discuss those circumstances.
VXI owns other buildings it uses for its call centers.
If a company is selected to buy 20 Federal Place, the city would require a nonrefundable $20,000 deposit and give that company 60 days to get its financing in place, according to the request for an acquisition proposal notice. If a company can’t close after those 60 days, the city would keep the deposit.
The city is retaining ownership of a parking lot on Commerce Street, near Wick Avenue, in any deal to sell 20 Federal Place, and would allow the new owner spots in the lot at that owner’s expense, Bozanich said.
Also, if there is need for additional parking, the city would negotiate a deal for the use of the Covelli Centre parking lot and the site of the former Wean United Building, in the process of being demolished, according to the city’s proposal notice for the 20 Federal sale.
The city has a contract with VXI to provide its employees with free parking and will continue honoring that even if 20 Federal is sold, Bozanich said.
Selling the city-owned building at 20 W. Federal St. has been a priority for McNally since he started serving as mayor in January, saying the city “shouldn’t be a landlord in general.”
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 someone else owned the building, the city would continue to receive that tax revenue without having to incur any other costs.
On the capital-improvement end, the city spent $2.4 million in the past year-plus on a new air-conditioning unit, three new elevators and new windows.
The city purchased the structure in 2005 for $850,000.
Phar-Mor Inc., which used the building as its national headquarters, was going out of business and was going to board it up.
“We couldn’t have such a large vacant building downtown, so the city had to buy it,” Bozanich said.