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$300K due on Covelli loan by Sept. 2
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Youngstown finance director David Bozanich
YOUNGSTOWN
The city must make a $300,000 principal payment by Sept. 2 toward the $11.9 million it borrowed in 2005 to help fund the construction of the Covelli Centre.
City officials learned Monday from the Squire Sanders law firm, its bond counsel, about the payment.
Members of city council said they knew Youngstown would have to start making payments on the principal next year through a 20-year or 25-year loan.
But the news of the $300,000 payment by September came as a surprise.
Finance Director David Bozanich said he’s known for a few months that the city might have to make a principal payment in September.
Bozanich said he wanted to postpone making a principal payment on the loan until early next year, when he hoped the city would be on better financial footing.
“We were trying to push it to 2012 and see if financing would be better,” he said.
But Bozanich said an attorney with Squire Sanders informed him that by September, state law requires the city either make the $300,000 payment on the principal and borrow money to pay the interest on the debt (this year’s payment was to be about $670,000); or take out a long-term loan to pay off the $11.9 million.
Paying the principal gives the city more time to find those interested in providing the money for the loan, Bozanich said.
City council members said they found out from Bozanich on Monday about the payment.
“I don’t know why they didn’t bring it up till” Monday, said Councilman DeMaine Kitchen, D-2nd.
Bozanich said he wasn’t trying to hide the information, but if the city had decided on a long-term loan, the payment wouldn’t have been necessary.
Also Monday, Bozanich said the city will receive $240,000 as soon as council votes to accept it as a settlement to a 12-year lawsuit.
That money would cover most of the $300,000 Covelli principal payment, Bozanich said.
The city has agreed to that settlement with the former owners of the Wick-Pollock Inn on Wick Avenue.
The former hotel owners, Pollock Inn Restoration Associates, received $800,000 from the federal government in 1987 to improve the facility, which has been closed since 1998.
To get the federal money, the company was to pay $400,000 to the city. The case has been tied up in the courts for 12 years.
Council’s finance committee agreed to support legislation at the next council meeting to accept the $240,000 settlement.
Also Monday, council’s finance committee agreed to have the city administration seek proposals for the food-and-beverage contract at the Covelli Centre.
The city administration wants to replace Centerplate as the food-and-beverage vendor with JAC Management, the firm that handles the facility’s day-to-day operations.
JAC probably would have a two-year contract with an option of probably another two years, Bozanich said.
As part of the recommendation, local restaurants would be permitted to have some ability to sell food at the center, primarily at outdoor events.
The move could increase the facility’s revenue by about $100,000 annually, city administrators say.
Council wants to open the process to seek proposals from any company interested in this, and see if it can get a better deal.
The administration agreed to seek proposals, and will do so after council approves legislation allowing it to do so.
The administration then would give companies about 30 days to submit proposals, and then hire a company 30 to 60 days later, Bozanich said.
The city would have to pay about $450,000 to Centerplate to buy out the remainder of the company’s 10-year contract, which expires September 2015.
Meanwhile, council’s finance committee will recommend legislation to the full council to permit the board of control to seek proposals and sign a contract with a firm to manage the city-owned 20 Federal Place office building.
The city pays $266,560 annually to DeVicchio & Associates to manage and clean the building as well as make repairs.
That four-year contract expires June 1. If a deal isn’t in place by then, the city will retain DeVicchio on a month-to-month contract.
Council members wanted to eliminate or reduce that contract and have city administration officials manage the facility. City administrators said Monday they don’t have the expertise and the staff for the job.