Tuesday, August 21, 2007
YOUNGSTOWN — For the third time in a row, the city will borrow money for one year to pay only the interest on the $11.9 million it spent to fund its portion of the Chevrolet Centre rather than take out a 20-year loan that would permit it to pay principle and interest.
The city doesn’t want to commit to a long-term loan, said David Bozanich, its finance director. That’s because the city may be able to generate revenue through economic development projects in the upcoming 12 months to lower than $11.9 million figure, he said.
The interest rate on the one-year loan will be higher than the 6.35 percent it is paying now. That current loan expires Sept. 7 and it cost the city $755,650.
The new interest rate would probably be in the mid to upper 6-percent range, and the city would have to pay somewhere in the low $800,000 amount to cover the interest, Bozanich said.
Global Entertainment Corp., the Phoenix company managing the city-owned facility, is guaranteeing $600,000 a year to the city toward the interest payment.
The city had to borrow the $11.9 million in 2005 for its portion of the $45 million facility.
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