City OKs Lease Agreement for 20 Federal Project
YOUNGSTOWN, Ohio – Youngstown officials are pleased with the agreement reached with a potential developer for 20 Federal Place, Law Director Jeff Limbian said.
The city’s Board of Control, during a special meeting Monday afternoon, approved a holder of leasehold interest agreement with 20 Federal Place LLC for the city-owned property.
The limited liability company shares the Philadelphia address of National Real Estate Development, which has expressed interest as a potential redevelopment partner for the $74 million project.
The real estate firm was brought into the project by Desmone, a Pittsburgh architectural firm the city has been working with to redevelop the downtown Youngtown building.
“We believe it’s a very good prenuptial agreement,” Limbian remarked following the meeting. “With the benchmarks and the safety measures, the law department and of course the entire administration is happy moving forward that there are safeguards to protect the city’s assets.”
Monday’s signing of the master lease agreement is “an important and critical step forward in being eligible to apply and helping secure key components of the project financing, including the upcoming application for state historic tax credits,” said Doug Rasmussen, CEO and managing principal of Steadfast City Economic & Community Partners.
Steadfast City began working with the city on 20 Federal in 2020 under a grant awarded by the Appalachian Regional Commission. Project developers are eyeing $25 million in federal and state historic preservation tax credits.
The master lease agreement sets forth the following deadlines for 20 Federal Place LLC:
- Sept. 30: Submit an application to the Ohio Department of Development for the state historic preservation tax credit program and designate a development entity for the property.
- Dec. 31: With the designated development entity, submit a proposed and restated memorandum of understanding that further describes the terms and conditions for the pursuit pf the project, and enter into a development agreement with the city – which the development entity also would be a party to – consistent with the terms of the amended and restated memo of understanding, whereby the city and developer agree to undertake the project in exchange for city assistance to be identified in the development agreement, both by Dec. 31.
- July 1, 2023: Submit construction drawings for the project in accordance with the submission made in connection with the 20 Federal Place request for proposals.
- Oct. 31, 2023: Provide evidence that it has secured financial commitments necessary to complete the project.
- Feb. 28, 2024: Agree to close on financing sufficient to undertake the project in accordance with the proposal and commence construction on the project.
Failure to perform any of the tasks – which the agreement identifies as project milestones – would be an “event of default,” which could result in the city terminating the lease.
The lease also provides for a $100 annual lease payment to the city.
The lease is in effect retroactive to July 7, when 20 Federal Place LLC applied to the Ohio Department of Development for about $7.5 million in transformational mixed-use tax credits. The state extended the deadline for the city to enter into a lease agreement with the LLC to Monday because city council was in summer recess, Finance Director Kyle Miasek said.
City officials had expressed dissatisfaction with an earlier leasehold agreement that was proposed in early July.
Limbian was unsure why Desmone suggested that the LLC have the same address as National Real Estate Group but viewed it as a “positive sign” that the real estate entity “is interested in becoming the developer entity.”
Copyright 2024 The Business Journal, Youngstown, Ohio.