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Youngstown council agrees to $2M loan to downtown hotel developer
YOUNGSTOWN
City council agreed to have the municipality loan $2,050,000 to the owners of a proposed downtown hotel with $750,000 of it forgiven and the remainder borrowed without interest under certain conditions.
Council’s vote Wednesday on the two separate loans came as somewhat of a surprise as city administrators said only two days earlier that they’d ask the legislators to wait to hear the proposal at a special meeting next week before a Dec. 21 vote on the financial package.
Mayor John A. McNally said he and members of his administration spoke with council Monday and Tuesday about the urgency of finalizing the plan for Youngstown Stambaugh Hotel LLC, a subsidiary of the NYO Property Group, as soon as possible.
“Council was comfortable with the plan and decided to move ahead with it” Wednesday, McNally said.
The company is building the $35.4 million, 130-bed DoubleTree by Hilton hotel at the vacant Stambaugh Building at 44 E. Federal St.
Dominic J. Marchionda, NYO’s managing member, said the company will close between Dec. 16 and 20 on two loans that will fund a majority of the project.
If the company doesn’t close by Dec. 30, he said it would lose $9 million in historic tax credits – $5 million from the state and $4 million from the federal government – that are paid after the project is done, he said.
Also, the hotel must be finished by Dec. 30, 2017, to get those tax credits, Marchionda said. The plan is to have the project done by November or early December of next year, he said.
Of the two loans approved Wednesday by council, one has the city loaning $2,050,000 to Youngstown Stambaugh Hotel LLC at no interest for 30 months with $750,000 of it forgiven if paid back on time.
The company would use the historic tax credits to repay the loan.
The other loan is for $700,000 to be paid back up to 10 years. There is no interest if the loan is repaid in three years and interest goes to 6.5 percent if it takes longer than three years to pay back.
The city money is coming from water, wastewater and environmental sanitation funds for that type of work at the site, said T. Sharon Woodberry, director of the community planning and economic development department.
The city loaned $2.6 million last year to Wick Properties LLC, also an NYO subsidiary, to help it finance a $16 million, 52-unit rental and extended-stay facility at Wick Tower at 34 W. Federal St.
The final payment on that loan was paid last month, McNally said.
Interior demolition and asbestos abatement work to the Stambaugh Building began in July with heating and cooling improvements starting soon, Marchionda said.
The company has abandoned plans for a 15-year, 100-percent real-property tax abatement that must be approved by the city school district, Marchionda said.
“I would have liked the 100 percent on the abatement, but it couldn’t be met so we’re no longer seeking it,” he said.
Instead, city council will consider at its Dec. 21 meeting a 10-year, 75-percent abatement that doesn’t need to be approved by the school district.
The 100-percent abatement would have saved the company $305,183 in property taxes annually for 15 years.
The 75-percent abatement would save the company $228,887 annually and have it pay $76,296 a year.
Also Wednesday, council agreed to create a fund of up to $12 million to pay for a downtown amphitheater and riverfront park.
The project’s first phase with the park and amphitheater at the former Wean United Building site on South Phelps will cost about $8 million to $9 million, said city Finance Director David Bozanich.
The fund would get money from the following sources: a $4 million, 20-year loan from its Community Development Block Grant; $5 million from the city’s water, wastewater and environmental sanitation funds; and the rest from sponsorships including naming rights, Bozanich said.
The design contract for the project is expected to be awarded in early 2017 with work beginning in late spring and done by late summer or early fall, he said.