One-year loan to pay only interest on debt

The city hasn’t paid a penny toward the principal of an $11.9 million loan for the center.

By DAVID SKOLNICK

CITY HALL REPORTER

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 principal 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 that $11.9 million figure, he said.

“When we go long-term, we want to reduce the amount of the principal,” he said.

The interest rate on the one-year loan will be higher than the 6.35 percent the city 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.

The first one-year loan, from Sept. 8, 2005, to Sept. 7, 2006, had a 6.5 percent interest rate and cost the city $773,500.

Global Entertainment Corp., the Phoenix company managing the city-owned facility, is guaranteeing $600,000 a year to the city toward the interest payment.

Borrowed $11.9 million

The city had to borrow the $11.9 million in 2005 for its portion of the $45 million facility. Most of the money to build the financially struggling center came from a $26.8 million federal grant.

The city had expected to receive $2 million earlier this year from the state’s capital budget to reduce its debt to $9.9 million, but that money never came through.

The use of a third one-year loan means the city has contributed nothing to erase the $11.9 million debt it has on the center.

A proposal to give the go-ahead to that third one-year loan will be considered Wednesday by city council.

Also Wednesday, council will discuss Mayor Jay Williams’ plan to place the city’s park and recreation commission under the control of the city administration. The city charter gives the commission autonomy.

Williams said a variety of problems at the commission — including poor management, poor worker morale, problems implementing projects and higher-than-average workers’ compensation claims — shows that it needs additional oversight.

Proposal

Williams wanted city council to approve legislation Wednesday that would put a charter amendment on the November ballot to overhaul the commission. But that was when he thought the deadline to submit a charter amendment was this Thursday.

The actual deadline is Sept. 7. Williams then said late last week that council could approve the legislation at its Sept. 5 meeting. But council’s next regularly scheduled meeting is Sept. 19.

Williams say he would like council to either consider his proposal Wednesday or hold a special meeting before Sept. 7 to act on it.

Also on council’s Wednesday agenda are ordinances from Williams to create the position of human resources director, which would pay $66,707 a year and report to the law director, and to move six Civil Service Commission jobs to the law department.

Wanting to make sure the civil service commission is comfortable with the change, Williams said he may ask council to postpone a vote on those ordinances.

skolnick@vindy.com