Council blasts mayor over 20 Federal Place tenant handling, lease
YOUNGSTOWN — Tenants at 20 Federal Place — scheduled to be evicted Sept. 9 for a major renovation project at the city-owned building — may be able to stay until mid-October as many scramble to find new locations or face the real possibility of going out of business.
City council’s buildings and grounds committee members strongly criticized Mayor Jamael Tito Brown at a Thursday meeting for deciding to evict the tenants with little notice as well as stalling on a lease agreement with a firm working to redevelop 20 Federal Place and secure state and federal funding.
The small extension is of little help to many of the 19 businesses that are located at the downtown building at 20 W. Federal St., they say.
“I have no idea what we’re going to do,” said Hachem Jaafer, owner of the Capitol Grill. “The city is not going to help us. Everything is crazy right now. I can’t find a new location. My only option is to put my equipment in storage. I’ve lost my income, and no one seems to care.”
Councilman Julius Oliver, D-1st Ward and committee chairman, said: “We put some people out of business by handling it this way. Some are out of business, and some have nowhere to go and it’s (Brown’s) fault.”
Finance Director Kyle Miasek said the administration decided to wait until after getting a $6,962,250 Ohio Brownfield Remediation Program grant to remove asbestos and other hazardous materials from the building and do partial demolition before sending eviction notices.
“We dropped the ball in that we didn’t notify tenants sooner,” he said.
The city got the state grant June 18 for the building at 20 W. Federal St. It sent eviction notices July 11.
The city is providing $2.3 million in matching dollars for the remediation and demolition work.
Oliver said city officials were confident the state grant would be approved months earlier and blamed Brown’s administration for bungling its handling of the tenants at 20 Federal Place.
There are 19 tenants at the 332,000-square-foot building, which has an occupancy rate of less than 20 percent.
About half of the tenants are ready to vacate by Sept. 9, two are retiring and most of the rest are working with Steadfast City Economic and Community Partners, a St. Louis firm assisting Youngstown with the project, or are in talks with the city law department about possible extensions or legal issues, said Sarah Scribner, Steadfast’s project manager.
“We created this situation, and we are putting these business out,” added Councilwoman Lauren McNally, D-5th Ward.
The city administration declined to offer financial assistance to businesses currently at 20 Federal Place, Scribner said.
That’s because the city has kept rent so low at the building for years, which it considers previous financial help, she said. Also, the city has been losing money for a long time on the building with those low rents, she said.
“It was time to cut the chord,” Scribner said.
Several businesses being evicted from 20 Federal Place are having trouble finding rent as low elsewhere in Youngstown, she said.
Bids for the project will be ready by Oct. 1 with a contract awarded Oct. 31 and work starting Nov. 7, Scribner said. The project has to be finished by June 30, 2023.
That construction start date is why the tenants have to all be out by mid-October, Miasek said.
“This whole process has me pretty upset,” Oliver said of the tenant eviction and Brown’s refusal to notify them until nearly a month after the state grant was awarded. Oliver said it was known months earlier that the city was in solid shape to obtain the grant.
Oliver and McNally want the city to use some of its federal American Rescue Plan funds to help relocate businesses being forced out of 20 Federal Place. Scribner said some businesses asked for $30,000 to $100,000 to help with relocation costs.
Oliver said “another level of frustration” for him and other council members is the administration delaying the signing of a master lease agreement with 20 Federal Place LLC, which was created by Desmone Architects, the Pittsburgh firm selected by the city to handle the redevelopment of the downtown building.
City council has pushed for more than a month for the administration to sign the lease deal, which is needed for the building to be eligible for a $7.4 million state Transformational Mixed-Use Development Program tax credit and about $24 million to $26 million in state and federal historical preservation tax credits.
The 20 Federal Place project is estimated to cost $74 million.
The city’s board of control — consisting of Brown, Miasek and Law Director Jeff Limbian — has to approve the master lease.
The board is meeting today though the master lease is not on the agenda. The board also could hold a special meeting next week to consider the master lease, Miasek said.
“I’m hopeful we’ll be able to call a special board of control meeting on Monday and execute the lease,” he said.
The deadline to submit for the historical preservation tax credits is Aug. 29, Miasek said. While Desmone applied for the mixed-use tax credits while it was in an ongoing dispute with city administration officials, Miasek said technically it hasn’t been submitted. The state gave the city a grace period a few weeks ago that is close to ending, he said.
“At the moment, the (tax credits) are in jeopardy without the master lease in place,” Miasek said.
Adam Buente, a senior assistant law director, said the master lease proposal was sent to an outside legal counsel which “had a couple of minor issues” and a special board of control meeting could be scheduled for Monday.
McNally said she is unable to express how disappointed the entire city would be if the administration doesn’t sign the lease proposal soon in order to get the tax credits.
Oliver said: “It would seem like we’re almost dropping the ball on purpose,” and “it seems like this lease is not a big deal to the administration even though it is huge.”
Councilman Mike Ray, D-4th Ward, said this project is “one of the biggest economic opportunities ever for the city” and wants the administration to finalize the lease agreement.
Brown and Limbian, who were in Columbus on Thursday, have expressed numerous concerns about the lease agreement with Limbian going so far in a July 7 letter to the mayor writing the proposal “is inadequate in that it does nothing to protect the assets of the city.”
But on July 25, Brown said he’s “at a better point” in discussions and was pleased that National Retail Estate Development, a firm with a portfolio of more than $1 billion in development properties, expressed “interest in pursuing an investment” in 20 Federal Place.
Daniel Killinger, National Real Estate’s president, wrote a letter last month stating his firm could help “secure other public funding and the construction loan required to complete the project. Combined, the equity and construction loan would amount to an estimated $26 million.”
National Real Estate is working to be part of 20 Federal Place LLC, which would have the lease agreement.
Deborah Flora, executive director of the Mahoning County Land Bank, which helped get the brownfield grant and is a 20 Federal tenant, said Thursday her agency has the authority to negotiate a lease with another downtown building and plans to relocate in about a month.
Desmone’s plan included demolishing the three-story mezzanine on the Commerce Street side of the building, where the food court is located; building a skylight in the roof that would create natural light all the way down to the ground floor; a parking lot in the basement; and a place to buy baked goods, produce and other foods on the ground floor.
The firm’s proposal also calls for the restoration of the archways on the Federal Street entrance and remove the canopy; improving the Phelps Street entrance; a rooftop restaurant as well as an observation deck on the roof; one-bed, one-bathroom apartments; and space for innovative businesses.
The city purchased the building in November 2004 after Phar-Mor, a national retail store company, went out of business. The property was the Phar-Mor Centre, the company’s corporate headquarters. Before that, it was the flagship location of Strouss’ department store for decades, closing in 1986.