Port Authority OKs Bond Financing for Hotel Project
VIENNA TOWNSHIP, Ohio – The Western Reserve Port Authority voted to move forward Wednesday with assisting NYO Property Group’s redevelopment of the Stambaugh Building in downtown Youngstown as a hotel.
The port authority’s board of directors voted to enter into a capital lease structure with the developer and to issue property-assessed clean energy – or PACE – bonds to finance energy efficiency improvements to the building.
NYO formally announced in November 2014 that it would convert the downtown building into a hotel bearing the Doubletree by Hilton brand. Earlier that year, the developer was awarded a $5 million Ohio Historic Preservation Tax Credit to support the project. When it was first announced, NYO said it hoped the hotel would open by the end of this year.
“It’s a very complicated capital stack,” Anthony Trevena, executive director of the Northeast Ohio Development and Finance Authority, WRPA’s economic development division, said. “You’ve got your senior lender. You’ve got these tax credits for the site.”
According to a project summary posted by the developers online, “The total pre-development cost is estimated at $34 million.”
The WRPA board authorized issuing up to $4 million in the PACE bonds, which it is funding in conjunction with the Development Finance Authority of Summit County.
Trevena characterized approval of the capital lease authorization as a “formality action item.”
The port authority had approved entering into a capital lease arrangement with NYO at a previous meeting, he said. Since the port authority is using the Summit DFA’s bond counsel for the PACE bonds, Roetzel & Andress, rather than the firm it usually works with, Trevena decided to use the same firm on the capital lease component.
As part of the capital lease deal, which would provide NYO tax savings on the project, the board approved authorizing the issuance of bonds totaling $32 million.
“It’s all connected to the ground lease. That’s the potential of how much that project could be,” Trevena said. “We basically become a project owner, if you will.”
From all indications, NYO has lined up the necessary financing for the project, said T. Sharon Woodberry, Youngstown’s director of community planning and economic development.
“We are continuing to keep conversations open with [Dominic] Marchionda,” NYO’s managing partner, she said. “We need to make sure that we have a good understanding of the financial stack and where the funding sources are coming from.
“We are looking forward to step in to address a gap in what’s needed to make the project move forward,” Woodberry continued. “Once we’ve gotten a good handle on what that number is, then the city can offer a specific number in terms of what we can provide in assistance.”
The PACE bonds require the city of Youngstown to create an energy district for the project. Mayor John McNally said Wednesday afternoon he does not anticipate “any huge hurdles” when the necessary legislation comes before City Council.
Additionally, the port authority approved issuing up to $2 million in bonds to for Pittsburgh Institute of Aeronautics’ expansion of its hangar at Youngstown-Warren Regional Airport. The two-story, 8,500-square-foot addition will add primarily offices and classrooms to the building where PIA’s local campus is based.
The board also approved an airport use and operating agreement and an air services agreement related to Aerodynamics Inc.’s upcoming launch of daily service.
The airport use and operating agreement replaces the two-year agreement that the port authority approved in in September 2014, which is due to expire in October, said Dan Dickten, director of aviation at the regional airport. That agreement covers what incentives ADI receives, what its space is and what gate it is using, he said.
The air services agreement concentrates on the revenue guarantee the airline receives, he continued. The airline will invoice monthly based on its profits or losses. “If they’re below 5% of profitability we have to make up the difference,” he explained. “If they’re over that, then we get a credit toward that.”
ADI is conducting “proving flights” this week, Dickten said. Ticketing would have started yesterday but the U.S. Department of Transportation didn’t want sales to begin until the proving flights were completed.
“We missed the load night. Load nights are Tuesday nights,” he said. ‘Now it’s going to have to be next Tuesday.” Ticketing would then begin on the global distribution system May 1 on sites such as Travelocity and Orbitz.
Pictured: NYO Property Group’s rendering of how the Stambaugh Building would look at night once it is converted into a hotel.
Copyright 2024 The Business Journal, Youngstown, Ohio.
