DoubleTree Developers Seek Extension on Bridge Loan
YOUNGSTOWN, Ohio – The development group behind the partnership that developed the DoubleTree by Hilton downtown hotel is seeking an additional six months to repay a $2.05 million bridge loan the city extended for the project.
City Council this week will consider the request, made by Mayor Jamael Tito Brown, to extend the repayment date from 30 months following closing on the loan to 36 months. The loan was to cover “eligible improvements” related to environmental sanitation and the water and wastewater systems in the Stambaugh Building.
The float loan is part of the complex financial stack for the $32 million project. The project received $4 million in federal historic preservation tax credits and another $5 million in Ohio historic preservation tax credits.
“The reason for this request is due to a seven-month delay in approval of our tax credits, which is the source of the repayment of the loan,” said David Rizzuto, director of operations for Pan Brothers Associates Inc., New York. Pan Brothers partnered with NYO Property Group, Youngstown, on the redevelopment of the century-old office building as a hotel.
Originally expected to be approved by March 31, the federal and state tax credits both have been approved as of this month, Rizzuto reported.
In December 2016, City Council approved the bridge loan to Youngstown Stambaugh Hotel LLC at zero percent interest. If the $1.3 million in principal was paid within the original 30-month period, the remaining $750,000 would be forgiven as a grant.
“If not repaid timely, it is part of permanent debt and there is no grant,” Rizzuto said.
Other sources of funding are an $11.5 million conventional construction loan, $4 million in federal historic preservation tax credits and another $5 million in Ohio historic preservation tax credits.
According to the original legislation approved by council at its Dec. 7, 2016 meeting, the loan is secured by a second lien position on the tax credits and a first lien position on funds from an operating reserve account in the amount of $500,000, which will be held by First Commonwealth Bank – another one of the financial partners in the project – “or another similarly situated financial institution.”
City officials have “graciously agreed to present our request” for the extension to City Council, Rizutto said. “We truly appreciate their consideration based on the delays we encountered in securing the tax credits.”
If approved, the legislation would extend the repayment date from June 2019 to December of that year.
The hotel opened in May.
UPDATE: City council voted Oct. 17 to extend the loan payment due date by six months.
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