The state of Ohio is pressuring Toledo and Lucas County for more rent money for office space downtown, which could cost city taxpayers an unexpected $1 million to cover what is owed for the second half of 2013.
Neither the city nor the county is technically behind in rent for space at One Government Center because the Ohio Department of Administrative Services hasn’t billed for rent since July 1, officials said.
The Collins administration said officials from the state agency want the rent more than doubled retroactively, from $6 per square foot to $13.01. Annual rent would shoot up to more than $2.2 million for the city's 172,000 square feet if its forced to pay the higher amount.
“We don’t have a lease to say we should pay more,” said Bob Reinbolt, Toledo’s chief of staff. “Good business practice says you should tell your tenants before you raise the rent.”
Further complicating the matter is the city and county’s lack of ownership in the building, although both paid for 30 years on the bonds that financed construction.
“We believe we have some ownership in the building since we paid off the bonds,” Mr. Reinbolt said.
Mayor Collins said after the bonds were paid off in December, 2007, the city and county were supposed to pay operational costs, minus profits from the parking garage and cafeteria, based on percentage of occupancy.
The city paid $1.36 million in 2006 and it was decreased to slightly more than $1 million in 2013, city records show.
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.
Beth Gianforcaro, a spokesman for that department, confirmed that the city has no unpaid rent bills from the state but that rent has been billed for the state’s fiscal year, which began on July 1, 2013.
“When the state finalizes a [state fiscal year] 2014 rental rate, DAS will bill all tenants in the DiSalle building for their occupancy, including the city of Toledo,” Ms. Gianforcaro said. “The delay in issuing rent bills is due to the complexity of converting from one method of recovering building operating costs to a different method. The state’s federal auditor directed DAS to change the method by which it recovers the cost of running state buildings, including the DiSalle building, from a multiyear look-back to an estimated look-forward based on current-year costs.”
Lucas County Commissioner Pete Gerken said the county had also not been billed and was approached about a higher rate.
“I think it’s all part of negotiations,” Mr. Gerken said.
Neither the mayor nor Mr. Gerken threatened moving out of One Government Center, but both acknowledged that as an option.
The asking price for Class A office space downtown, including costs like utilities, is $18.50 a square foot, said real estate agent Sam Zyndorf of the Toledo office of Signature Associates.