Did you know that when you shop at Kroger in Athens 10 percent of the profits from your purchases goes to Ohio University? That’s because OU still owns, and rents to nearly 40 businesses, most of the land on the southern side of East State Street, generating hundreds of thousands of dollars for the university each year.

FROM AVIATION

Before East State Street became the commercial hub of Athens it is today, the southern side of the street was home to the Ohio University Airport. In 1943, the university acquired the airport, which was used as early as the 1930s for the Civilian Air Patrol, and eventually for the university’s aviation training program.

When the new highway for Route 50/33 was planned in the late 1960s, the university decided to relocate the airport to property off Route 50 near Albany, leaving the former airstrip abandoned and open for development. And developed it was.

Among the bustle of businesses, the Athens Community Center and the Route 33 bypass, it may be difficult to tell that the area once housed an airport, but there are buildings from the former airport still being utilized today. Have you ever noticed that some buildings along East State Street resemble airplane hangars? That’s because some of them were, including Don Wood Automotive’s Hyundai dealership and the city-owned service garage in front of the Athens Community Center.

In 1970, the city of Athens obtained about 45 acres of the former airport — which now houses the Athens Community Center, the city pool and surrounding recreation areas — from the state of Ohio. At that time, the city of Athens traded the former Athens High School football stadium off Mill Street to Ohio University for the East State Street land. Ten acres of the land that the city acquired was sold to make way for the Route 33 bypass.

Along with the land, the city also acquired six buildings on the property, including two airplane hangars, a house and three other buildings. A third hangar was relocated to OU’s new airport, the Gordon K. Bush Airport, which opened in 1971.

At the time of the land swap, then-Athens Mayor Raymond Shepard intended to use one of the hangars as a substation for the Athens Fire Department to serve the eastern end of town. Instead, the two hangars were used for a community recreation center and a city garage. The current community center was opened in 2000 and the hangar that housed the old recreation center was demolished in 2003. The remaining hangar on city property continues to be used as a city garage.

Just west of the former airport was the Athens County Engineer’s Depot, which was sold to private developers several years ago when the depot was relocated to Routes 50 and 690 in Canaan Twp. The old depot is now home to the Holiday Inn Express, CVS, Verizon, and Harmony Chiropractic and Wellness Center.

That property, as well as the city’s property, is the only land along the south side of East State Street from Home Street to Lowe’s that is not owned by Ohio University. And the university makes quite a chunk of change from rental revenue from the businesses located there. In fiscal year 2011, Ohio University collected $501,017 in rental income from East State Street businesses alone.

TO COMMERCIALIZATION

The westernmost portion of East State Street owned by the university, and the first to be commercially developed, houses Bob Evans and Baymont Inn and Suites. Bob Evans paid $22,500 in rent to the university in fiscal year 2011.

OU collects revenue from Baymont Inn and Suites in two forms — rent and a percent of its income. In addition to the $24,000 rent Baymont paid to the university in fiscal year 2011, it also gave the university $42,000, which accounts for 5 percent of the business’ revenue exceeding $500,000 a year — a stipulation built into its rental agreement with OU.

Also giving up a portion of its profits to Ohio University as part of its lease agreement is Kroger. OU and Kroger have an agreement in which Kroger provides 10 percent of its net income to the university in addition to its rent. In fiscal year 2011, that percentage of income yielded $170,000 for the university.

Kroger was one of the first tenants on OU land and is the main anchor tenant in the strip mall on OU property referred to as The Athens Center. That shopping plaza currently includes Long John Silvers, Rent-2-Own, Pizza Hut, Abrio’s, Dollar Tree, Game Stop, Cato, The Shoe Department, Fiesta Salons, Nutrition Pit, AT&T, Kitchen Creations, People’s Bank, Sears, Sherwin-Williams, Goodwill, the Social Security Administration, Ponderosa, and Monroe Muffler and Brake.

The Athens Center was developed by Chesapeake Realty and the rent from the entire strip mall was $159,513 for fiscal year 2011 — less than the university received from Kroger’s profits alone. The university has a 40-year lease with Chesapeake that began on March 1, 1996.

Phil Goldsberry served as Athens’ service-safety director from 1972 to 1981 — the early years of commercial development along East State Street. In an interview last week, Goldsberry said Kroger was located in several buildings around Athens before it settled in its current location, including on Carpenter Street where Family Dollar is now, across from Jackie O’s on Union Street, in the current Social Security Administration office on East State Street and across East State Street in the plaza that is now home to Big Lots.

Ohio University collects most of its rental income from another, newer shopping plaza developed by Continental Realty, which includes Walmart — a big-box store that generated a lot of controversy in the community when it was being developed.

Bringing in just over $295,000 in rental revenue for fiscal year 2011, the Continental Realty development includes Walmart, Lowe’s, Ruby Tuesday, Burger King, Staples, Hibbett Sports, Petland, Aaron Rentals, Advance America, Regis, Saturday’s, China Panda Restaurant, Mattress Warehouse, Gran Ranchero and Mountain River Physical Therapy. This business area also has a 40-year lease with the university, which began in 2000.

THE ROAD TO GROWTH

Walmart wasn’t the only East State Street project residents objected to over the years. There was much uproar over the widening of East State Street to accommodate the growing business district.

According to Goldsberry, around 1978, the city proposed widening East State Street to handle more traffic from retail shops on the northern side of the street. He said residents were opposed to cutting down a line of crabapple trees on the south side of the road in order for it to be widened. Traffic counts on East State Street at the time were 19,000 per day, qualifying it for state grants, Goldsberry said.

The total cost projection to widen East State back then was around $850,000, said Goldsberry. Athens City Council and city residents were divided on the project, which was put on the ballot to be decided by city residents. Athens voters rejected it in what Goldsberry described as a close vote.

When the street was finally widened from three to five lanes in 2003, Goldsberry said the project ended up costing 10 times more than if it had been done when it was initially proposed in the late 1970s.

Long-time Athens City Councilwoman Nancy Bain said many residents felt that the development along East State Street was making Athens too suburban.

“The sentiment was, ‘We have a charming downtown. Why suburbanize?’” Bain said. Although many people were opposed to Walmart coming to Athens, Bain said once East State Street was zoned for commercial use, there was nothing the city could do to prevent businesses from setting up shop in the city.

Bain said she feels the downtown Athens area has really diminished since the overwhelming development of East State Street. She said she thinks people became more accepting of the widening of East State Street because they were sick of being stuck in traffic on the former three-lane street.

Bain said that former Athens Mayor Ric Abel deserves a lot of credit for spearheading the widening project, which she described as one of the great accomplishments of his administration.

HOW THE RENT IS SPENT

So now that Ohio University’s property on East State Street is nearly completely utilized by business, how does the university use that rental income?

According to Mike Angelini, associate vice president for finance at OU, funds from property the university rents used to go into OU’s general fund. Recently, however, OU has started to use that money to reinvest in its rental properties, Angelini said.

It’s not just a significant slice of East State Street that the university owns, but other property in and outside of Athens. All of OU’s rented property brings in more than $1.1 million in revenue each year. This does not include the university’s 1,773 acres of tax-exempt land in Athens County used for academic and housing purposes.

“Over the past year, we’ve tried to lessen that reliance from the general fund in the interest of maybe putting some of those dollars back into the real estate,” Angelini said.

He said the funds are invested back into the properties OU owns such as the West Union Street Office Center, formerly known as the HDL Center. Although the university has offices in the building, it also rents space to several businesses and agencies.

“For us to collect those rents, we need to keep those properties up-to-date,” Angelini said.

The university’s rental income will also be used to fund a portion of the new ladder truck being purchased by the city of Athens for $1.03 million. OU has agreed to contribute $50,000 each year for the next five years toward the purchase, making its total contribution $250,000.

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