Downtown's Government Center could be sold

Port authority board asked about deal

Collins

THE BLADE
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The Michael V. DiSalle Government Center’s rent was doubled from $6 per square foot to $13.01.

Toledo’s Michael V. DiSalle Government Center, the high-rise building that houses city, county, and state offices, is being offered for sale to the Toledo-Lucas County Port Authority as one possible solution to a dispute about the cost of rent.

Port authority board members confirmed on Wednesday that they have been approached by the state government about acquiring the 22-story structure on Jackson Street between Erie and Huron streets.

The price could be as little as $1, but would saddle local officials with the $4 million annual operating expense, plus the cost of catching up with possible deferred maintenance.

“We’ve simply been approached just preliminarily about looking at the possibilities,” said Nadeem Salem, chairman of the port authority board of trustees. “We will evaluate to see if this is something really good for the port authority, for the community, if it’s something worthwhile. We don’t know really the extent of what the building’s going to need.”

Board member William Carroll said the building’s maintenance issues could include paint and improvements to the heating and air conditioning system.

“I know there’s a lot of deferred maintenance; I worked there,” Mr. Carroll said, referring to his tenure as director of development under former Mayor Jack Ford. 

Double the rent

Collins

The city was notified in March that the state Department of Administrative Services, which manages the building, intended to double the rent, from $6 per square foot to $13.01. The city’s 172,000 square feet would cost more than $2.2 million annually. The rent hike outraged Toledo officials who said they’ve already lost more than $17.2 million to cutbacks in state funds since 2011.

Gerken

The building was previously managed by the Ohio Building Authority, but Gov. John Kasich put it and other government buildings under the control of the Department of Administrative Services.

The building costs the state’s administrative services agency $4.3 million a year, including the cost of depreciation, or $3.97 million without depreciation, according to the department.

Toledo Mayor D. Michael Collins said the city could take over the building, but Lucas County Commissioner Pete Gerken said he was not interested in the county becoming the owner. Both men said moving the government offices out of the building was an option.

“We would consider going out with a [request for proposals] to make a move. However, I think it would be in the best interest of the city, county, and state to remain where we are because another vacancy downtown would not have a positive impact,” Mayor Collins said. “If the city of Toledo were to acquire ownership, renting out space to private companies would certainly be a consideration.”

Mr. Gerken said he was aware that the state agency had asked the port authority to take the building.

“That frees the DAS from doing things they are not good at — running buildings,” Mr. Gerken said. “DAS is full of constrictions and they cannot even consider leasing space to the public. They can only lease it to government agencies.”

Mr. Gerken said he told agency officials that the county would release a request for proposals for office space, up to 100,000 square feet for the county and up to 250,000 square feet to accommodate both the county and the city. 

Moving out

One agency has plans to move out, although the move was not prompted by the rent dispute. The Lucas County Board of Elections is preparing to consolidate its headquarters from One Government Center and its warehouse and storage in two other buildings into one building, at 616 Jefferson Ave., also known as One Lake Erie Center.

“The board of elections has three different locations — four if you count the early vote center, and the cost of four different locations doesn’t seem efficient,” Mr. Gerken said. “There still has to be a final lease signed and the board of elections officers have to be signatories of that lease.”

County administrator Laura Lloyd Jenkins previously said it would cost nearly $350,000 to renovate the building and move the office staff and the computer servers used to count votes and calculate election results from One Government Center to One Lake Erie Center. That building is owned by Eyde Construction Co., according to county records. 

Looking for a solution

Randall Howard, Department of Administrative Services chief of performance and results, confirmed the agency is interested in selling the DiSalle government center as one possibility.

“The state’s control of the building right now is based on share-and-share-alike of the operating expenses we incur in operating the building,” Mr. Howard said.

The most recent rental rate offered to the city and county is $9.18 per square foot, which would just cover the operating costs, he said.

“We are still looking for a solution and we are optimistic that cooler heads will prevail,” Mr. Howard said.

He said the rates paid by the county and city in early 2013 were unusually low because both were given credit for overpayments from the previous fiscal year. It was unclear how much credit the state gave the tenants or how they overpaid in the previous year.

Jennifer Leymaster, the state agency’s chief financial officer, said the state would have to subsidize the cost of the building’s operation by $1 million a year if the city and county continued paying the previous rental rates. Ms. Leymaster said the agency is not allowed to make a profit on the building. The building has about 463,000 square feet.

Governor Kasich’s spokesman Rob Nichols said the state is not trying to divest itself of property.

“This is very specific to One Government Center and done for only one reason, to help appease people unhappy with the current situation,” Mr. Nichols said.

The building was designed by the late renowned architect Minoru Yamasaki, who also designed the former World Trade Center towers in New York and two buildings on the campus of the University of Toledo Medical Center and College of Medicine and Life Sciences, formerly known as the Medical College of Ohio.

Ground was broken in 1981 under Republican Gov. James Rhodes and the $61 million structure was occupied beginning in April, 1983. The facility was first named for Mr. Rhodes, but it was renamed in 1986 during the Democratic Gov. Richard Celeste administration in honor of former governor and Toledo Mayor Michael DiSalle.

Port authority board members Bernard “Pete” Culp and Jerry Chabler confirmed they have been asked to consider the building acquisition, but said they await details.

“Until we get some numbers of what it takes to maintain and operate that building, the security issues, there’s nothing to discuss. Maybe we’ll find out the numbers don’t work even if they give it to us for a dollar,“ Mr. Culp said.

“If it’s favorable to all parties involved, it’s something we should look into,” Mr. Chabler said. He advised against a general dispersal of government offices.

“I would hope that the one-stop-shop concept at the Government Center is not jeopardized if the governmental agencies start locating in other buildings. That concept was one of the main reasons the Government Center was built 30-some years ago,” Mr. Chabler said.

Contact Tom Troy: tomtroy@theblade.com or 419--724-6058 or an Twitter @TomFTroy.

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171 or on Twitter @IgnazioMessina.