Limbian Attacks 20 Federal Accord | News, Sports, Jobs
YOUNGSTOWN — The city’s chief legal officer has sharply criticized the company working on the redevelopment of 20 Federal Place less than three weeks after the company helped secure a $6.96 million state grant for construction work. remediation and demolition in the downtown building.
In a letter to Mayor Jamael Tito Brown on Thursday, Chief Legal Officer Jeff Limbian wrote that he had numerous issues with Desmone Architects, the Pittsburgh firm working on the redevelopment, particularly with plans to give it a 40-year lease. at 50 years on the city-owned building.
“The proposed lease agreement is inadequate in that it does nothing to protect the assets of the City of Youngstown,” Limbian wrote in the letter to Brown requested by the mayor. “In fact, the proposed lease agreement actually puts the assets of the citizens of Youngstown at incredible risk.”
This letter came the same day Desmone submitted an application to the state for a $7.4 million tax credit for the Transformational Mixed-Use Development Program.
Limbian wrote of the mixed-use grant application, the Legal Department “cannot and will not legally give the go-ahead to transfer this lease to the board for review or to the board scrutiny for approval unless and until the city’s assets are protected.
Desmone was instrumental in drafting the application that won the city a $6.9 million grant from Ohio’s Brownfields Remediation Program.
This grant was announced on June 18 by state officials and hailed by Brown at the time as playing “an essential role in activating the redevelopment” of the city-owned 20 Federal Place.
The project estimate is $74 million.
Jim Ambrose, Desmone’s business development manager, said of Limbian’s letter, “I don’t know why this decision was made. It does the opposite of what the (MOU) stated. We appreciated our collaboration with the city of Youngstown and our regional partners. We have tremendous momentum. »
In a letter Friday to city officials and others, Ambrose wrote that Limbian’s letter contained “inaccurate information” and “if our region does not demonstrate that we are mutually advancing economic development, do we think really that the state and the (Ohio Department of Development) will take any future public/private applications from the Youngstown area seriously?”
The 20 Federal Place project is on the agenda of a meeting of the council’s Community Planning and Economic Development Committee on Tuesday that Ambrose plans to attend.
Ambrose wrote, “We are pushing for this project to be successful and hope there will be an early resolution to fix Youngstown’s appearance at outside investment opportunities ahead of” Tuesday’s meeting.
In order to qualify for the mixed-use tax credit, a “special purpose entity” had to be created with Desmone as the head leaseholder under an entity called 20 Federal Place LLC. This agreement for 20 Federal Place to be the head leaseholder/owner of the building is set forth in a memorandum of understanding first approved Nov. 29 by the Board of Control, comprised of Brown, Limbian and the CFO of the city, Kyle Miasek.
Limbian expressed his concerns to Brown about giving up control of the building as well as what Desmone was doing to find private funds for 20 Federal Place.
He listed numerous “problems” he had with the rental agreement, such as it was “contrary to public order”, “gives the tenant complete control (of) the property”, “the tenant can leave at any time without a single dollar of their own money having all been spent”, the lease expires at the end of 2072, the rent is $100 per year and Desmone and the LLC can terminate the agreement early, but the city does not have this option.
Ambrose said Desmone spent approximately $500,000 in time and resources on this project.
Limbian also wrote that Desmone is just “an architectural firm” and that “there is a distinct lack of benchmarks in the proposed lease agreement”.
Although Limbian did not call an end to his collaboration with Desmone, he wrote that his memorandum of understanding with the city has expired.
“The late receipt of this draft lease does not allow sufficient time to review the above issues,” he wrote. “The City of Youngstown and Desmone will continue to attempt to negotiate a lease term favorable to the interests of the City of Youngstown. However, the city will move forward with the demolition and remediation of 20 Federal Place. There remains great interest in the project and the City of Youngstown is in close contact with all interested parties.
While Desmone’s memorandum of understanding expired on June 30, the initial agreement approved November 29 by the Board of Control states that Desmone and 20 Federal Place LLC have “the exclusive right for 365 days to pursue tenant commitments , private capital providers, lenders and other public funding”. Resources.”
Ambrose said he had been trying to reach Brown and Limbian since June 29, when he provided them with a draft master lease and received no response from either.
The Vindicator obtained a copy of a letter from Daniel Killinger, president of National Real Estate Development, a company with a portfolio of more than $1 billion of properties under development, expressing “interest in pursuing an investment” on the 20 FederalPlace.
“Subject to receipt of all necessary internal approvals, (the company) is sincerely interested in making the financial commitment necessary to make this project a reality,” Killinger wrote.
If the project received the mixed-use tax credit, he wrote, “National Development will use our relationships to secure other government funding and the construction loan required to complete this project. Together, the equity loan and the construction loan would amount to approximately $26 million.
In a bid to secure the mixed-use grant, a number of organizations — including Western Reserve Building Trades, Youngstown Business Incubator, Western Reserve Port Authority, Mahoning County Commissioners and four city council members — wrote letters of support for the project.
The municipal administration did not write a letter.
The redevelopment project could create 679 full-time construction jobs in the first two years and have a direct economic impact of $91 million, Ambrose said.
The city would receive about $821,000 in annual taxes when the project is complete, he said.
Desmone also plans to apply for tax credits through Ohio’s Historic Preservation Tax Credit Program. Projects that earn historic state tax credits are eligible for federal tax credits. A head lease agreement is required to be eligible for these funds, Ambrose said.
Ambrose wrote in Friday’s letter that the state appropriation would be $8 million and the federal government’s would be $7 million.
“All of these incentives are administered by the Ohio Department of Development and are a competitive process,” he wrote. “The region must have a positive reputation that will support private investment in economic development.”
Desmone’s plan included demolishing the three-story mezzanine on the Commerce Street side of the building, where the food court is located; build a skylight in the roof that would create natural light down to the ground floor; underground parking; and a place to buy baked goods, produce, and other food on the ground floor.
The company’s proposal also provides for the restoration of the arcades at the Federal Street entrance and the removal of the glass roof; improving the Phelps Street entrance; a rooftop restaurant as well as a rooftop observation deck; one-bed apartments; and a space for innovative companies.
The city purchased the building in November 2004 after Phar-Mor, a national retail store company, ceased operations. The property was the Phar-Mor Center, the company’s headquarters. Prior to that, it was the flagship location of Strouss Department Store for decades, closing in 1986.
The city has tried unsuccessfully to sell the 332,000 square foot building in the past.
The remediation work at 20 Federal Place will take at least 12 months.
The City will work with the building’s tenants to find alternate locations for their businesses during construction. The building is less than 40% occupied.
The city must spend more than $1 million a year to operate the building, Limbian said.
Warren’s Downtown Development Group was the only company to submit a formal proposal for the redevelopment of 20 Federal Place by the June 1, 2021 deadline. Desmone provided a proposal on June 16 after the city gave it an extension.
Downtown Development withdrew from the study last July after Mark Marvin, its president and owner, expressed concern about the maintenance management of the building and the lack of market rate rent paid by several tenants.
This left Desmone as the only interested party.