The City of Toledo has sold a slew of properties so far this year, putting the Bell administration firmly on track to meet at least one of its budgetary goals.
To balance its desperately strained 2011 budget, the city banked on selling $4.85 million worth of city-owned assets. With more than four months to go before the end of the year, the city has raised $4.3 million toward that goal. Pending sales of three city-owned parking garages and two smaller properties will bump that number to $6.3 million, Deputy Mayor Steve Herwat said.
"We're trying to do what we say we're going to do and we're trying to repair our budget," Mayor Mike Bell told The Blade. "We're still in economic tough times in our nation, so we will continue to think outside the box and come up with creative ways to move our city forward."
Most publicized and controversial of the city's land deals has been the sale of the Docks restaurant complex and 69 acres of the Marina District in east Toledo to Chinese investors. The Docks sold for $2.15 million, but Mr. Herwat said the funds were used to pay off debt on the property and do not count. The Marina District sold for $3.8 million.
The city has agreed to sell three parking garages to the Toledo Lucas-County Port Authority for $15 million. Of that money, $11 million will be used to pay off debt for improvements made to one of the garages, and the acquisition and demolition of the Toledo Sports Arena, Mr. Herwat said. Also, $800,000 will be set aside for further improvements to the garages that were promised as part of the deal with the port authority, the deputy mayor added. After transaction costs and mandated reserve amounts, the city will be left with $2.3 million that will count toward the asset-sales target, Mr. Herwat said.
Smaller, less talked-about deals have bolstered Toledo's finances. Since Jan. 1, the city has sold parcels to four area yacht clubs, the Toledo Area Regional Transit Authority, and the Historic Woodlawn Cemetery Association. Sales of two city-owned parking lots in East Toledo are pending. Altogether, these smaller sales amount to $526,412.
Bay View Yacht Club, Toledo Yacht Club, Maumee River Yacht Club, and the Toledo Sailing Club have purchased land they had leased from the city. Councilman Lindsay Webb helped broker two of those deals. Ms. Webb said the deal enables the clubs to control what happens with the land they have buildings on and allows the city to make extra money while reducing long-term maintenance costs, she said.
"I don't think it makes sense for the city to own the land," Ms. Webb said.
The sales of the yacht-club property and the three garages does mean the loss of some small ongoing revenue streams for the city.
The boat-club lease agreements brought in $33,657 a year, and the three parking garages have earned the city around $725,000 annually, Mr. Herwat said, although he added that most of the money has been used to service debt. The deputy mayor said the windfall payments from selling the properties are a better deal for taxpayers because they allow the city to pay off debts, save on future interest payments and maintenance costs, and contribute toward balancing the 2011 budget.
Toledo city Councilman D. Michael Collins said selling city-owned real estate is the right thing to do. The sales of the Docks and the Marina District in particular will spur economic development and job creation, he said.
"I think the city is moving in the right direction," Mr. Collins said. "I commend the Bell administration for their efforts in using that resource to help accomplish fiscal sustainability."
Councilman Joe McNamara took a similar stance.
"It's great that we've hit our budget assumption. That's absolutely essential to closing the year with a balanced budget," he said.
But while the city's land sales are rolling along, some other budget projections have not hit the mark so far. Traffic fines from red-light violations are expected to come in about $100,000 below projections, and collection of estate taxes will likely be $200,000 short, city finance director Patrick McLean said.
At the same time, the city's fire department has used all of its overtime budget, spending $3.9 million as of Tuesday. That's about $400,000 more than the department's allocated overtime funds for the year.
"This is a huge challenge and a huge problem for us," Mr. McLean said. "This is the main single area where we're over."
Because of those uncertainties, Mr. Herwat said the administration is not banking on ending the year with extra money, despite the healthy income from asset sales.
"If there is a surplus at the end of the year, number one, I'll be a very happy man. Number two, 50 percent of it will go to the rainy-day fund," the deputy mayor said. "Then we'll figure out what to do with the rest."
The ongoing difficulties in other areas of the budget mean the city will continue to seek buyers for other properties it owns, Mr. Herwat said.
The largest properties for sale are 100 acres of land in Monclova Township, the former building for the Locke Branch library on Main Street in East Toledo, and the city's remaining portion of the Marina District which includes the decommissioned Toledo Edison Acme power plant and on which Dashing Pacific has a purchase option.
"Certainly any opportunity we have to sell property we don't need we're going to take advantage of. They're assets we're not using," Mr. Herwat said. "We're going to meet our goal this year but if somebody comes to us and wants to offer a fair market price for those properties we're willing to sell. There is no ceiling."
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