YOUNGSTOWN — Even though the city is not actively looking for 20 Federal Place redevelopers, the state awarded a $10 million historic preservation tax credit for the vacant downtown Youngstown building with the federal government providing $14 million in tax credits.

The Thursday announcement of the $10 million by the state took city officials by surprise.

Even those close to the project were unaware Desmone Architects, which was initially leading the redevelopment effort and has since only been involved in project management of remediation and partial demolition work at the building, had reapplied for the state tax credit.

Hunter Morrison, the city’s planning consultant, said city officials weren’t aware Desmone, a Pittsburgh architectural firm, had reapplied for the funding.

“It’s a pleasant surprise,” he said of Thursday’s announcement. “It’s a red-letter day for the city. This is a very big deal.”

Eric Booth, Desmone’s president, said his firm reapplied for the state tax credits in September for the building at 20 W. Federal St. without first telling city officials.

Under state historic tax credit rules, a government entity can’t apply for them. That can only be done by a private company. The city agreed in 2022 to allow 20 Federal Place LLC, which is under the Desmone umbrella, to apply for the funding as the building’s “renter.”

“The city didn’t know, but we’re the only one who can apply,” Boothsaid. “We reapplied for the credits. We can transfer the credits to another entity or we can develop it ourselves or find a partner. We’re leading the effort to find a private development that will fund the project.”

The $10 million in state tax credits is the maximum amount that can be given under this program. The 20 Federal project was one of only three in the state to receive the maximum amount Thursday.

Also, Booth and Morrison said the state has changed the tax credit program starting next year to give a maximum of $5 million for a project so the timing of the award was ideal.

The application estimates the cost of the entire 20 Federal Place project at $82,137,690, according to information provided by the Ohio Department of Development.

The high cost of the project — with one estimate as high as $96.2 million — had left Mayor Jamael Tito Brown and other city officials wary of redeveloping 20 Federal Place, a city-owned building that is currently undergoing asbestos abatement and partial demolition thanks to a $6.96 million Ohio Brownfield Remediation grant the city received in June 2022.

That project to the 332,000-square-foot building is expected to be finished in February 2024, Morrison said.

The historic tax credit application filed by Desmone permits minor changes to the project proposed by the company, but it can’t be drastically altered if the grant money is to remain with the building, Booth said.

The application called for work to the exterior of the building to reinstate its historic storefront configuration, masonry repairs and window replacements with the former interior arcade / food hall area restored. The project includes about 157 rental units — though that amount can change — above first-floor retail, second-floor offices and a parking lot in the basement, according to ODOD.

In addition to the ongoing abatement, a city contractor is also filling in the basement that is below the sidewalk in front of the building and demolishing a three-story addition at the rear of the building on West Commerce Street that included the former office of the city’s buildings and grounds department, near the old food court. That project started in April.

The city evicted all of the tenants at the building in September 2022 with two exceptions. It had to pay $25,000 to a Subway sandwich shop franchisee in May to settle that lawsuit.

A Mahoning County Common Pleas Court judge on Dec. 6 upheld an Aug. 23 magistrate decision that the city could evict Carrier Services Group, a telecommunications company, from the building. The only outstanding issue in that case is the city returning the company’s equipment and possessions and potential damages. A Wednesday hearing in the case was canceled.

Having the building vacant and for the period of time it’s been that way helped get the $10 million tax credit from the state as occupancy when the first application was filed left the project just shy of being funded, Booth said.

Morrison said: “By February, we’ll have an empty, clean building with all of the asbestos removed. It takes a lot of the uncertainty out for developers. Developers will be able to see what they have to work with. Desmone has done a fine job. They know the building intimately and they’ve done a phenomenal job. It’s great news for the city. It’s a key and important building to anchor the Federal and Phelps (streets) district, which is the strongest retail section downtown.”

Because of the $24 million in tax credits and the $6.96 million brownfield grant, the project becomes significantly more attractive to investors and redevelopers, Booth and Morrison said.

“We’ve been talking to a lot of investors and pension funds and they said, ‘Get the state portion and we’ll believe what you’re saying,'” Booth said. “It’s now going to be a lot easier because the amount of money into it would be less and less to investors.”

Morrison said the tax credits “absolutely makes it easier to find developers. It’s a huge tool to help the city redevelop the building. First thing is to catch our breath and then we’ll invite developers for an inspection in February or March. We’ll be working on finding a developer in the first quarter of next year. We’ll be reaching out to people who have had an interest.”

Doug Rasmussen, president and CEO of Steadfast City Economic and Community Partners, the St. Louis company hired by the city to provide counsel for the building, said: “This is a huge deal. You’ve got $10 million from the state that is leveraging $14 million in federal tax credits. It will be meaningful with a fully vacated and remediated building in February. Christmas has come early. We need to continue to evaluate interest in development going forward. This will make it more possible.”

Also, Desmone said it will reapply next year for a state Transformational Mixed-Use Development tax credit, worth about $7 million. It didn’t receive that funding before because there wasn’t enough money invested in the building, Booth said.

Jim Ambrose, Desmone’s former director of business development who was involved in the early stages of the project, said the state and federal tax credits “are incredible. That’s a historic win for Youngstown. It’s the momentum the city needs for this project. It will open up a lot of investment opportunities.”

Ambrose left Desmone in September 2022 to open Tipping Point, a local real estate development company.

“What an impressive job by Desmone to reapply for the money,” he said.

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 several decades.

The city has unsuccessfully tried to sell the building in the past.