ProMedica plans to relocate 700 administrative employees to downtown Toledo into a new waterfront headquarters the health-care company wants to create by renovating the vacant Water Street Station Steam Plant and occupying part of the adjacent KeyBank building on Summit street, The Blade has learned.
The move to a new campus created with the two buildings along the Maumee River — which would include consolidating employees from the health system’s Richards Road corporate headquarters, office space elsewhere in Toledo, and also from some locations outside the city limits — would be the largest influx of jobs downtown in decades.
Randy Oostra, ProMedica president and chief executive officer, told The Blade the company’s purchase and renovation of the Steam Plant could cost up to $40 million and begin in 2016.
The YMCA and JCC of Greater Toledo could also partner with ProMedica to build a public downtown fitness center as part of the campus on the ground-level of the KeyBank building, Mr. Oostra said.
Mr. Oostra said ProMedica, the largest employer in the Toledo metropolitan area, wants to bring employees who are scattered over “a large number of locations” under one roof into a signature building that would enforce its brand while developing the downtown riverfront area into a modern-looking, campuslike setting.
“We thought if we could potentially put together the Steam Plant and KeyBank that would create the right-sized facility we would need to relocate 700 jobs,” he said.
An artist rendering of the two buildings shows ProMedica’s name on the KeyBank building and its logo on the Steam Plant. A new overhead walkway connects the two buildings.
The 119-year-old Steam Plant, formerly owned by Toledo Edison Co., has sat vacant for nearly 30 years. The health-care company would create a multifloor, modern-looking office building inside the former power plant and would share the KeyBank building with the banking industry titan for the foreseeable future, officials with both firms said.
ProMedica plans to preserve the architectural elements of the Steam Plant and possibly add retail businesses.
“You stand there at the river front, you look at the Steam Plant … and it’s a great unused space,” Mr. Oostra said.
KeyBank to stay
Jim Hoffman, president of KeyBank’s Michigan/northwest Ohio district, has no plans to leave its downtown building after 32 years in the same location but favored the ProMedica plan for downtown.
“You don’t get opportunities like this very often so we had to say ‘OK, what will work here?’ ” Mr. Hoffman said. “Fortunately, we have had excess space in the building for a long time.” KeyBank will occupy one of the four floors and ProMedica would use the others. The bank “would never move out of downtown Toledo,” he said.
Mr. Hoffman credited Mr. Oostra for vision to help revive downtown with the planned move.
Toledo Mayor D. Michael Collins said the move would redefine Toledo’s downtown, which is plagued with vacant historic structures, such as the Spitzer Building, the Nicholas Building, and the Fiberglas Tower.
“We have a downtown that at one point in time was the center of this entire corridor of northwest Ohio and southeast Michigan, and today it is a skeleton of what it used to be for a variety of reasons,” Mayor Collins told The Blade.
“I felt if things came together, we had the seeds to change the city of Toledo far into the future and bring the city of Toledo back to a position of recognition it so deserves in terms of its history and traditions,” the mayor said. “At the advent of Toledo in its heyday, the banking industry was really the fortress that created downtown Toledo. ... I feel we can possibly reinvent the future of Toledo with the health-care industry.”
Jeffrey Kuhn, ProMedica’s chief legal officer and chief construction & property management officer, said nearby parking for 700 employees has been one of the biggest hurdles for the project.
Mayor Collins said shortly after becoming mayor last month that he ordered the suspension of the $5 million renovation and expansion of Promenade Park, pushed by former Mayor Mike Bell, because it may be needed as part of ProMedica’s downtown campus.
Mr. Oostra said an underground parking structure is envisioned in the expanded portion of Promenade Park, adjacent to Summit Street on the site of the former downtown Federal Building. He said the garage would be landscaped to blend in with the riverfront park and provide parking for people coming downtown for riverfront entertainment and festivals.
Mayor Collins said he was looking for financial help from the state government’s capital budget to pay for the garage.
In October, 2013, nearly $2 million worth of improvements to Promenade Park started as the second phase to former Mayor Bell’s plan to transform the green space with walkways and recreational areas.
The first phase, which began in July, 2012, with workers hauling huge amounts of soil to the old Federal Building site adjacent to Promenade Park and the Steam Plant, cost $386,000. The price tag for the final phase, which was to included a stage, concert lawn, pavilion, and a water splash pad, was never determined. Mayor Bell last year said the city would need private funding for those added amenities.
Taxes for 700
ProMedica officials could not immediately estimate the payroll taxes that 700 employees would generate or how many would move downtown from outside Toledo.
“Funding will come from multiple sources, including the sale of existing ProMedica-owned properties acquired over the past decade to accommodate its growing business operations and work force, and by applying for potential historical tax credits,” a statement from the company said.
Incentive packages are commonly used by government to retain or attract businesses. Last year, Toledo City Council and the Bell administration approved the city’s share of a multimillion-dollar incentive package to keep Owens Corning and its 1,250 employees in the city.
The city’s $7 million package keeps the Fortune 500 company in downtown Toledo until at least 2030 instead of possibly leaving when its lease on its headquarters expires in 2015. The Toledo-Lucas County Port Authority approved up to $8 million in bonds for improvements to OC’s waterfront downtown building and a long-term lease extension.
Restrictions in the federal historic tax-credit program stalled conversion of the Steam Plant into a fitness center, a health clinic, and 67 market-rate apartments by its owner, Toledo developer David Ball.
Mr. Ball, whose downtown Toledo historic redevelopments include the Ohio Building, the Gardner Building, and the Hylant Building, teamed up with former Ohio State and NBA basketball player Jimmy Jackson to obtain the Steam Plant from the city in 2005. Redevelopment plans initially called for a separate condominium development in addition to apartments in the existing building.
In 2008, the city filed a lawsuit demanding that Mr. Ball’s and Mr. Jackson’s firm, Water Street Station Development LLC, start development work immediately or return the property deed to the city. Mr. Ball refused, citing the local housing market’s downturn as the reason for the delay. Later that year, he pared back the project’s plans and subsequently cut ties with Mr. Jackson. Mayor Bell ordered the city's law department to drop the lawsuit shortly after he took office in 2010.
Since announcing his own ambitious plans for the steam plant in May, 2012, Mr. Ball said he hit a roadblock in getting $5 million in state and federal tax credits he needed to make the project financially feasible.
Among the issues that put the project in limbo for Mr. Ball were the National Park Service’s restrictions on proposed exterior alterations that Mr. Ball wanted for conversion of the former industrial building into apartments.
Mr. Ball said the Park Service, which administers the federal tax-credit program, balked at his plans to construct balconies on the structure’s east wall, which overlooks the Maumee River, and installation of windows for residential units along the north wall facing Imagination Station.
His most-recent mixed-use development was going to include a new downtown location for the YMCA and JCC of Greater Toledo and a 4,000-square-foot health clinic operated by the University of Toledo Medical Center, the former Medical College of Ohio.
At the time Mr. Ball’s project was unveiled, YMCA officials said the facility on Summit Street, next to the old Riverside Hospital in North Toledo, would move into the renovated Steam Plant’s first floor, offering members a view of the river.
The YMCA recently signed an agreement to sell the Summit Street Y building to a charter school, pending the city approval of a special-use permit. Completion of a renovated steam plant by ProMedica appears unlikely before the YMCA’s potential departure from the building on Summit in 2015.
Mr. Ball said he would have continued working on converting the historic building into apartments if ProMedica had not offered to acquire it. He said the momentum in demand for downtown Toledo housing has shown that residential use will work, but the hospital system’s plans for the building will have a larger, more far-reaching impact in downtown redevelopment.
“When you have a company with the quality of ProMedica and the jobs they can bring, there is no question that this will have a bigger, substantial impact to our downtown,” he said. “Housing will continue to grow and there will be more housing demand with more jobs. This ends up being a better catalyst to create housing. Nobody loses in this deal.”
Mr. Ball said he has rejected offers for the property because potential buyers lacked viable plans.
“We have done everything possible to this building physically to have it ready for construction without jeopardizing any tax credits,” he said.
Mr. Oostra stressed that ProMedica is in the early stages of its plans for the building, but said the company would retain the Steam Plant’s historical aspects, including the two smokestacks that tower over the Maumee.
He and Mayor Collins envision a synergy between ProMedica and downtown residential developments as well as planned projects, such as a $30 million proposal to renovate the nearby vacant Berdan Building into 115 apartments. That project also got public assistance when council last year approved giving the developers $2 million from the U.S. Housing and Urban Development Neighborhood Stabilization Program 2.
Mayor Collins said the state needs to assist with an incentive package for ProMedica.
“We need to get the message down to Columbus that we are not the fourth wheel on a tricycle, and we need money coming out of Columbus to assist with this,” the mayor said. “We cannot write a check for a parking [garage] today.”
Mayor Collins said he expected reaction locally and in Columbus to ProMedica’s announcement today would be overwhelmingly positive.
“This is a game-changer for Toledo,” the mayor said. “It will help redefine this city.”
Staff writer Mark Reiter contributed to this report.