Goodyear global HQ project to get financial help

By Stephanie Warsmith

and Rick Armon

Akron Beacon Journal

For months, rumors abounded that the Goodyear Tire & Rubber Co. global headquarters project was in jeopardy, with a private developer unable to secure financing because of the recession.

Now, however, the project appears to be progressing, with an equity firm in New York City agreeing to invest $98.5 million and the state of Ohio tossing an additional $10 million into the $160 million deal.

Construction on the seven-story, 639,000-square-foot headquarters is expected to start in March. And, Goodyear is committing to staying in Akron for 25 years, rather than the 20 years that was originally discussed.

“We’re finally going to be there,” said Adele Roth, Akron’s development manager, who has been working on the project.

Then she knocked on wood.

Her gesture was symbolic of the difficulty of this massive project, which helped keep Goodyear in Akron and spared 2,900 jobs, but started at a time when the economy was tanking.

Roth, though, said she’s more excited — and positive — about the project than she’s been since 2007, when agreements were first signed by the multiple government entities involved.

Both Akron and Summit County council members discussed the project’s revised plans during recent committee meetings and are expected to vote on legislation outlining their commitments to the project Monday. Akron council members also were to discuss the project during a retreat this weekend.

“This has been a long time coming,” said Councilwoman Kelli Crawford, who represents Ward 10, which includes Goodyear. “We’re excited to see it happen.”

Councilman Mike Williams, though, cautioned that council members need to have more time to discuss and study the revamped plans before voting on them.

“I think it’s important for us to read and then pass an agreement of this magnitude,” he said, noting that council members received the legislation an hour before the committee meeting. “That does not reflect poorly on Goodyear. We’re just doing our jobs.”

Roth told council members the Goodyear project is being divided into segments, with the next segment focusing on the new headquarters, which will be built on land owned by Goodyear in a building that will connect to the company’s technical center.

The Summit County Port Authority, an independent economic development agency, will issue $98.5 million in taxable bonds for the project that will be purchased by Angelo, Gordon & Co. The private-equity firm will hold title to the Goodyear property and lease it to the port authority, which will sublease it to Goodyear. The lease payments made by Goodyear will be used to pay off the bonds.

The headquarters deal has been estimated at $160.2 million, with state, county and city loans and grants, and sales tax savings making up the difference between the private financing and the total cost of the deal. The construction of the actual headquarters has been pegged at $126.3 million.

Goodyear will not put any upfront money into the project, according to a financing document. The deal won’t go forward until Goodyear signs the lease agreement, said Chris Burnham, president of the port authority.

That isn’t expected to be a problem because the company has been pushing hard to move forward with the project, said Jason Dodson, chief of staff for Summit County Executive Russ Pry.

The deal is similar to the financing arrangement for Bridgestone Americas’ new tech center, which is under construction.

Angelo, Gordon & Co., based in New York City, was established in 1988 and manages $23 billion in investments. The company, according to its website, capitalizes on “situations not in the mainstream of investment opportunities. We creatively seek out opportunities that allow us to remain a leader in alternative investments.”

Industrial Realty Group (IRG), the developer that was unable to secure the private financing for the headquarters, will remain the developer and property manager for the headquarters and overall Goodyear project.

The city’s commitment to the headquarters will include:

Tax-increment financing (TIF) that will cover the cost of the repayment of two state loans totalling $25 million. A TIF freezes the value of the land before any improvements are made. Taxes on the land are paid as if the land had never been developed, with the increased value of the property put back into the project.

The State Controlling Board will vote Monday on the two state loans — one for $15 million and another for $10 million. The $10 million loan is new and helped push the project forward, Burnham said.

The repayment of a $5 million state loan. The state won’t charge Akron for five years. After that, the city will have 15 years to pay the loan at 2 percent interest.

The city will repay the loan with “nontax revenue,” possibly TIF, depending on what happens with the project during this time, Roth said.

The previous deal called for the county to invest $15 million in a parking facility. But now, $10.2 million will be used for the construction of the headquarters, with the remainder used to renovate the current technical center.