Toledo to pay $1 to incur $7 million in debt

By Maggie Thurber | Dor Ohio Watchdog

The city of Toledo has decided that adding $7 million in debt would be a good thing, especially because it’s only going to cost them a dollar to do so.

Yes, the city is going to pay $1 to incur $7 million in additional debt. What a bargain!

Sure, they’re getting a building in the deal, but it’s in such bad shape that the estimated cost of doing the necessary repairs is around $7 million. And that doesn’t count the projected 4 percent increase in costs each year that repairs are delayed.

The State of Ohio owns the Michael V. LaSalle building in downtown Toledo. It houses some 1,500 employees of various government offices including those who work for Toledo and Lucas County. It was built in 1983 at a cost of $61 million and named after LaSalle, who was elected governor in 1958.

It’s known to locals as 1 Government Center, which is the address, or the Ivory Tower, due to its white facade. The mayor’s office is on the top floor in the southeast corner with expansive views of the city.

The tenants all pay rent to occupy the 575,250 square feet of space. It has a parking garage, a newsstand, carry out store and a cafeteria. It costs about $4 million a year to operate.

The tenant handbook says:

“It is the responsibility of all employees and contractors to utilize this building in a manner so that it may be passed on to succeeding generations of Ohio citizens as the monument to Ohio that it now represents.”

The Ohio Department of Administrative Services, which is responsible for the building, wants to sell it. And no wonder. They haven’t exactly maintained it as they should.

A facility assessment report published in October said the building needs $7 million in repairs and maintenance ranging from replacing the deteriorated planter boxes that serve as a vehicle barrier to the front entrance to replacing the roof within the next five years.

City officials say they’ll save money by buying the building. They won’t be paying rent to themselves and they hope the other tenants will stay and continue to pay enough rent to cover the maintenance costs.

So how much do the tenants pay in rent? Is it enough to cover both the $4 million annual operating costs and the $7 million in repairs?

That’s a good question.

A public records request sent to DAS on July 14 asking for the names of the tenants and the rent paid has gone unanswered, despite follow-up requests by Ohio Watchdog.

Ohio public records law says that public agencies have a “reasonable” amount of time to produce requested records. Two weeks seems a reasonable time to provide what should be readily available information.

Without that key piece of information, how are Toledoans supposed to decide if they should support the city’s plan?

That’s not the only issue.

Toledo does not have a good history of buying and managing property.

The city-owned Erie Street Market has been mostly empty with Libbey Glass Factory Outlet only regular tenant. The Marina District went dozens of years without any action until a group of Chinese investors decided to buy it 2011. They have five years to develop the property under a buy-back provision with the city.

Then there is the city’s Capital Improvement Plan fund. Toledo hasn’t been able to balance its budget in years and transferred money from the CIP to the general operating fund to cover every day expenses.

If they use the entire amount budgeted for transfer in 2014, they’ll be close $90 million that’s been raided out of the CIP fund, which usually pays for street repair and other capital items — including buildings.

In 2012, the city put a recreation levy on the ballot because they said they didn’t have enough money to maintain city parks. Voters defeated the measure. If the city doesn’t have money to maintain the things it already has, where will it get the money to maintain something new?

The city knows rents will have to increase. The City Council unanimously voted to set aside $418,000 in this year’s budget to cover the expected increase in rent for 2014.

What guarantee would Toledoans have that all tenants will accept a rent increase and not move to cheaper offices?

If the city will actually save money by purchasing a building and $7 million in debt, it needs to prove it to the taxpayers before saying yes to the state.