Erie Street Market, the historic building at 237 S. Erie St., has been a drain on taxpayers for a decade, the mayor said.
The city of Toledo has closed its deal to sell the historic Erie Street Market.
Thursday’s sale comes more than three months after Toledo City Council agreed to sell the building to IBC Inc. for $600,000, though the city walked away with about $186,500 from the sale after deductions.
The historic building at 237 S. Erie St. has been a drain on taxpayers for a decade, Mayor Paula Hicks-Hudson said, defending the sale despite the reduced revenue.
“We are reducing our liability on the building,” she said. “This was a business decision to help reduce our costs as well as have a building put into full productive use.”
IBC, a known owner of downtown real estate, including the Spaghetti Warehouse restaurant, offered the city $1.2 million for the market. But the deal calls for placing $600,000 in an escrow account for the company to use for repairs and improvements. That reduced the real purchase price to $600,000.
The city netted $186,500 at closing after several other deductions were made, including $54,000 for utility costs for the space leased by Libbey Outlet. The outlet’s lease with the city waives utility costs.
Also, $20,000 was deducted for the cost to install utility submeters; $13,000 was deducted for environmental assessment work completed by IBC on behalf of the city, and $326,500 was deducted for the value of a lease with Sustainable Local Foods.
Bill Burkett, Toledo’s economic development commissioner, said Sustainable Local Foods asked to be released from its lease but the city refused.
Sustainable Local Foods, which was growing produce inside the Erie Street Market, operated there rent free for the first 18 months of its lease. It left the building abruptly in about August without having ever made a lease payment.
The company moved to Indianapolis but still owes Toledo for a $100,000 enterprise development loan carrying a 4 percent rate. It was originally a 10-year loan but since the company left the city limits, the city demanded it to be repaid in one year. The company made the first payment of $8,515 this month, Mr. Burkett said.
After the company left Ohio, the Department of Metropolitan Development in Indianapolis awarded it $500,000 in community development block grant funds toward the cost of transforming a warehouse there into an indoor, hydroponic, urban farm.
Mr. Burkett asked if the company was using the block grant money allocated by Indianapolis to repay its Toledo debt. John Bartholomew, a spokesman with the Department of Metropolitan Development, said officials are monitoring how the company spends the grant money. To get the grant funds, the company has to spend the money and seek reimbursement and submit receipts to the city, Mr. Bartholomew said.
James Bloom, chief business developer for Sustainable Local Foods Inc., could not be reached for comment.
In July, Mr. Bloom said the had company invested “hundreds of thousands of dollars” in the Erie Street Market with the intent of buying it.
When Toledo asked earlier this year for proposals from prospective buyers, the first company to respond was Swan Creek Development LLC, which was listed as a “to-be-formed” company. It offered $114,000 along with promises to create 11 jobs within two years. Swan Creek Development members included Mr. Bloom and Jim Johns, a consultant for that firm.
IBC Inc., the eventual buyer, of 300 Phillips Ave., is a partnership of Leo Deiger of ProPak Industries and Gary Marck of Marck and Associates.
“Our first priority will be to make any necessary upgrades to the building to put it into proper condition for the Libbey Outlet, Sustainable Local Foods, and the Farmers Market,” the IBC proposal to the city said. “The ultimate goal, again, would be the re-purposing of existing structures and revisiting the potential for developing the Swan Creek River Walk with market-rate apartments and mixed-use opportunities.”
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