Port Authority agrees to buy One Government Center from state for $1

Michael V. DiSalle Government Center, also known as One Government Center, in downtown Toledo on May 4, 2015.

The Toledo-Lucas County Port Authority has a tentative deal to acquire One Government Center from the state of Ohio.

After closed-door discussion Thursday morning, the port’s board of directors approved a resolution to buy the building from the Ohio Department of Administrative Services for $1, on the condition that Toledo and Lucas County agree to extend their current five-year leases to 10-year terms.

The deal provides for state agencies to continue to occupy 225,000 square feet of office space in the building — a 10 percent reduction from its current occupancy — and pay $8.95 per square foot for the first five years followed by annual escalation for five more years.

The state also would have right of first refusal to buy the 22-story building back from the port authority during the first 10 years.

John Szuch, the port board’s chairman, said after the vote — unanimous except for an abstention by board member Andrea Price — that the port authority was the right buyer for a building the state had been trying to sell for years.

“There really isn’t another logical buyer,” he said. “The building is in better hands with a quasi-public agency. There were private developers who were interested, but then the rents would have gone up.”

While not explicitly endorsing an extension of the city’s lease, Toledo Mayor Wade Kapszukiewicz said he supports the port’s acquisition of the building.

“We work well with the port authority and they are an important partner,” he said in an email Thursday to The Blade. “Paul Toth (the port’s president and chief executive) reached out to me today, and we are reviewing the details. The port authority is a great ally and if this moves forward, it will be another aspect of our partnership.”

Pete Gerken, president of the Lucas County Commissioners, called the port’s acquisition of the building “welcome news” and committed the county to “immediately negotiating a long-term lease that works well for both parties.”

The building, also known as Michael V. DiSalle Government Center, currently houses offices for about 1,500 state, county, and city workers. It was built in 1983 at a cost of $61 million, the debt from which has since been retired.

“The port authority is uniquely positioned to own and manage One Government Center for the good of the community,” Mr. Toth said in a statement prepared after the vote. “By adding One Government Center to our facility portfolio, we are able to keep the building in local government hands, provide stability to its current tenants, and, most importantly, keep the occupancy costs low for the governmental entities occupying the building.”

The building is accompanied by a 350-space parking garage. The port authority previously bought three other garages from the city and manages them through ParkSmart.

The port authority had previously discussed buying the complex from the state starting in 2014, but those talks foundered.

In June 2015, Toledo City Council authorized negotiations for the city to take over the building with the stipulation that the city would take on deferred maintenance, including window repairs and work on its heating and air-conditioning system. But that proposal fell apart in early 2017 when the city and state couldn’t agree on the maintenance plan.

Mr. Toth said the port authority had the building inspected after resuming negotiations with the state last year.

“We think it’s in good condition,” he said.

Mr. Szuch, meanwhile, said $1.2 million the state recently spent on repairs was a factor in why the port agreed to take on finding new occupants for 25,000 square feet in the building. Had the port been willing to reimburse the state for its repair outlay, he said, the state’s leasehold would not have changed.

Mr. Toth said he anticipates no trouble filling that space because a Toledo-Lucas County Health Department office will soon have to move to make way for construction at the federal courthouse “and there are other governmental entities that could go in.”

State legislation authorizing the building’s sale is on the verge of expiring, the port president said, so the port and state will need to close on the transfer by next month.

Contact David Patch at dpatch@theblade.com or 419-724-6094.