City Won’t Seek 100% Tax Break for Hotel Project
YOUNGSTOWN, Ohio – Youngstown will not seek approval from the Youngstown Board of Education to provide a 100% tax abatement for 15 years to the developers of a new hotel downtown, city officials confirmed Monday.
Instead, the city will offer a 10-year, 75% tax abatement to Youngstown Stambaugh Hotel LLC, which is converting the Stambaugh Building, 44 Federal Plaza East, into a DoubleTree by Hilton hotel. Youngstown Stambaugh Hotel is a partnership of downtown developer NYO Property Group.
Mayor John McNally said the city provided the required statutory notice to the school board Dec. 2 that it would offer the lower abatement to the developer. Under state law, the city has to provide the school board notice of the abatement 14 days before any action going before City Council.
Discussions were underway between NYO and the school board in recent weeks regarding a potential gift by NYO to the school system to induce school board members to support the 100% abatement, which would have saved the project $300,000 in taxes annually.
Those discussions “have not come to fruition” and the city was comfortable with the 75% abatement, McNally said.
The 100% abatement is dead, confirmed T. Sharon Woodberry, the city’s director of community planning and economic development, said.
“We will not pursue that,” she continued. “The discussions were promising in terms of trying to work out an agreement with the school board but there was an issue of timing. We couldn’t continue to delay putting forth our agreement in terms of all the incentives the city would provide.”
NYO has to meet an end-of-the-year deadline to get its financing for the hotel project in place under the terms of state and federal historic preservation tax credits it was awarded for the hotel project, she said.
McNally said he expects to have the tax abatement legislation for council’s Dec. 21 meeting.
Tomorrow night, council will consider two loans totaling $2.75 million to support the hotel project, a bridge loan of up to $2.05 million and a $700,000 term loan. Funds from both loans would be eligible for environmental sanitation and water and wastewater improvements related to the project, according to the legislation.
The bridge loan would be secured by the federal and state historic preservation tax credits NYO received for the project. Of that loan, which is being offered at 0% interest, $750,000 could be forgiven if certain conditions are met, including full repayment of the principal within 30 months of the loan closing.
The term loan is being offered at 0% interest for the first 36 months of the term and 6.5% interest for the balance of the 10-year term. “So, we are encouraging them basically to pay it back in three years and there would be no interest,” McNally said.
During discussions over financing with NYO, the city “was desirous of being taken out of the loans as soon as possible, just to reduce the risk where possible,” Woodberry said.
Because of the time crunch, McNally said he hoped council members would approve the loan package this week and has reached out to members to address any questions they might have.
“If it doesn’t pass this week we would probably ask them to convene a meeting next week just to keep the process moving,” he said.
Pictured: Some work is already taking place inside the Stambaugh Building to convert it into a hotel.
Copyright 2017 The Business Journal, Youngstown, Ohio.
Published by The Business Journal, Youngstown, Ohio.
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