Council OKs Energy Special Improvement District to Help Hotel
YOUNGSTOWN, Ohio – Legislation authorizing the creation of an energy special improvement district encompassing the Doubletree by Hilton Youngstown Downtown will benefit the hotel’s owners and encourage more downtown development, city officials said.
Council members, during their first meeting of 2023, voted for a resolution approving the creation of the Youngstown Energy Special Improvement District and ordinances “to proceed with the acquisition, construction and implementation of certain public improvements” in the city in cooperation with the Youngstown ESID and levying assessments to fund the improvements.
Youngstown Stambaugh Hotel LLC, the partnership that developed and operates the $32 million downtown hotel, is looking to refinance with better financial terms, Kyle Miasek, city finance director, said.
The hotel’s owners are not behind in payments to their private lenders, he said. They are behind on payments for financing provided by the state as well as on the $700,000 they borrowed from the city, but are talking to both parties about potentially renegotiating terms, he acknowledged.
Through Property Assessed Clean Energy – or PACE – financing, a borrower can borrow money from a PACE lender for energy efficiency improvements. These include products and activities that reduce or support the reduction of energy consumption, allow for the reduction in demand or support the production of clean energy, as well as improvements involving geothermal, solar thermal or solar photovoltaic technologies.
The funds are paid back to the borrower through assessments added onto the property tax bill and collected by the county twice annually in structured equal installments. Those funds are then paid to the city, which then are paid back to the PACE lender.
“It’s something we’ve been talking about or researching for years,” said 1st Ward Councilman Julius Oliver, whose ward includes the hotel.
City documents show the hotel partners have spent $11,764,055 for energy efficiency improvements at the property, which opened in 2018. The district can be created after the improvements have been made, Miasek said. The district and assessment also remain attached to the property, and not the owners.
The proposed plan calls for a maximum assessment of $30,706,510.50, to be paid twice annually for 25 years in maximum average installments of $614,130.21, with the first payment due Jan 31, 2024.
The district also will take fees from the payments for legal and other costs associated with the program.
Miasek identified the designated lender as Stonehill Strategic Capital LLC, according to a draft agreement. The arrangement offers a couple of advantages.
“It allows the county to be the collector of those funds,” Miasek said. “It is under better lending terms than what they could potentially see with private equity lending,” Miasek said.
The Energy Special Improvement District is governed by a board of at least five directors, including the municipal executive, each participating political subdivision or an employee involved with its planning or economic development functions; an appointee of each legislative authority of each participating political subdivision; and an appointee of one of the participating subdivisions that is an economic development or finance professional who has an active role in all of the participating subdivisions.
Miasek pointed out that such a district puts the controlling lender at the local level rather than an out-of-town entity. Because the assessment is treated like a tax, repayment comes ahead of other entities of any private financing.
“So it is ultimately the county that has first rights on that hotel,” he said.
Once the committee is in place, other projects in the district could apply for PACE financing. Any new project would need to be presented to the committee. They would then make a recommendation to Mayor Jamael Tito Brown, who with a council member could sponsor an agreement.
“It opens the door for more projects,” Oliver said. “It basically comes in a perfect time.”
Copyright 2024 The Business Journal, Youngstown, Ohio.