YOUNGSTOWN – The city’s board of control today plans to enter into a contract for up to $25,000 with a Cleveland firm to provide legal services related to the potential development of 20 Federal Place, a nine-story downtown building.

The board of control approved a nonbinding memorandum of understanding on Dec. 18 with Bluelofts Inc., a Dallas, Texas, redevelopment firm, “not to extend beyond Oct. 15, 2025, to finalize a ground lease agreement and P3 (public-private partnership) structure and financially close the bonds and commence construction.”

Under the proposal, Bluelofts is teaming with Madrone Community Foundation of Berkeley, California, which would own the building through a nonprofit charitable organization. The city, which owns 20 Federal Place, would retain ownership of the ground underneath the building.

Because the proposal is so “unique,” city Finance Director Kyle Miasek said it was important to retain outside legal counsel to help the city navigate it.

“It’s outside anything I’ve worked on or the law department,” he said. “I want to make sure under this redevelopment agreement that what we’re doing is correct. We want to make sure the city is not at risk. The administration and council need to be comfortable.”

The board of control today plans to hire Bricker Graydon LLP, a Cleveland law firm, and specifically work with attorney Colin J. Kalvas. The contract is for up to $25,000. The board can approve contracts for up to $25,000 without approval from city council.

If the contract exceeds that amount, the administration would have to go to city council for additional funding.

Kalvas helped the city in 2023 restructure a $700,000 loan borrowed in 2016 from the city by the owners of the downtown DoubleTree by Hilton hotel. The hotel agreed to convert its loan into Property Assessed Clean Energy financing and pay back the money owed over a 25-year period. Before that, the hotel owners hadn’t paid back any of the $700,000 loan.

The city on Jan. 16 paid $24,363 to Zonda Advisory, with an office in Dallas, to conduct a market feasibility study for the potential 20 Federal Place project.

Bluelofts is proposing a $57 million project at the building at 20 W. Federal St. and will use the results of the study to finalize development plans.

The study was initially supposed to be finished in February. Miasek said Wednesday that the study should be done in about two weeks.

“It will help with the financial model to look at what the market can bear and can the project be supported based on the study,” Miasek said.

Bluelofts’ most-recent proposal in December, which could change based on the study, is to build 100 apartments to house 180 people in one-to-three-bedroom units with 43 of the apartments being affordable / workforce housing at 80% median income rent, as well as 30,000 square feet of commercial space, a small wellness center, and e-commerce and mini-warehouse space on the first two floors for smaller businesses.

The project also calls for 62 parking spaces in the basement.

Bluelofts’ proposal is to start construction in October and be finished around June 2027.

The building has $10 million in state historic tax credits and $14 million in federal historic tax credits that expire at the end of 2025 if a project at the building isn’t started by then.

The tax credits were awarded in December 2023 to Desmone Architects, the Pittsburgh company that was initially leading the building’s redevelopment. Desmone was retained to serve as the project’s architect.

The project’s plans have undergone changes since Bluelofts was the only firm to submit a proposal to the city for 20 Federal Place by the Sept. 16 deadline.

Bluelofts was initially going to work with a different nonprofit organization on the P3 to build 112 units, with half being affordable / workforce housing, at a cost of $50.85 million.

While Bluelofts is working on redeveloping properties in Texas, Georgia and Missouri, it has only completed one project, the former Ohio Bell headquarters, now called The Bell, in Cleveland, which was redeveloped into 367 apartments with some retail and commercial space available.

That happened after Bluelofts’ initial partner faced foreclosure on the property and another developer stepped in.

The city purchased 20 Federal Place in November 2004 after Phar-Mor, a national retail store company, went out of business. The property was the Phar-Mor Centre, the company’s corporate headquarters.

Before that, the 332,000-square-foot building was the flagship location of Strouss’ department store for many decades.

There were 19 tenants, taking up about 20% of the building, before eviction notices were sent in July 2022. Some tenants were given an extension before leaving, but the building has been completely vacant for more than two years.

A city-hired contractor finished a $7.4 million asbestos abatement remediation and partial demolition project in October – after lengthy delays – at the building. The city received a $6.9 million state grant for the work.