‘Last Piece of Puzzle’ for $30M Hotel Project
YOUNGSTOWN, Ohio – Financing will close within 12 days for the proposed DoubleTree by Hilton hotel, following City Council’s approval of $2.75 million in loans for the project, developer Dominic Marchionda said.
At last night’s meeting, council approved a $2.05 million bridge loan and a $700,000 term loan for the project, which will involve converting the Stambaugh Building into a 130-room hotel.
“Such a relief – it was the last piece of the puzzle,” said Marchionda, managing member of NYO property group.
The project, first announced two years ago, will cost more than $30 million, he said.
A hotel has been “severely lacking in the city for a long time,” Second Ward Councilman T.J. Rogers said during the finance committee meeting that preceded the council session. Rogers chairs the finance committee.
The bridge loan would be secured by federal and state historic preservation tax credits NYO received for the project. Of that $2.05 million loan, $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.
City Finance Director David Bozanich characterized the city’s exposure in the project as “limited” compared to the other parties investing in the project. “We’re pretty much the smallest lender for the project,” he remarked.
Financing for the project needs to be in place by Dec. 30 to prevent federal and state historic preservation tax credits awarded to the project from expiring. The project was awarded $9 million in historic preservation tax credits. According to those terms, it needs to be completed by Dec. 30, 2017.
Financing could close as soon as Dec. 15 or as late as Dec. 19 or 20, Bozanich told the finance committee. He described Dec. 30 as the “drop-dead date” to close on the project.
According to T. Sharon Woodberry, the city’s director of community planning and economic development, NYO anticipates the hotel will create at least 21 direct jobs, a figure she described as “very conservative,” plus another 32 spinoff jobs.
Hard construction costs for the project should total $26 million to $27 million, about $10 million to $11 million of that labor, Marchionda said. Laborers working on the project pay city income tax.
Interior demolition and abatement work is underway and is about 80% completed, he said. Sample rooms required by Hilton should be completed during the second quarter of 2017.
Woodberry said the administration would seek a property tax abatement for the project at council’s Dec. 21 meeting,
The city informed Youngstown City Schools Dec. 2 that it would ask council to approve a 10-year, 75% abatement on new property taxes resulting from the project.
Discussions with NYO and the district centered on a 100% abatement over a 15-year period.
“Unfortunately, it was taking too long,” Marchionda said. NYO was offering internships for students, jobs and scholarships, he said. “They weren’t ready to commit and we had to move on.”
The developer praised the city for its efforts to assist the project. In communities like Youngstown, “The key is you have creative minds and programs where we all work together, and a prime example is the Wick Tower,” he said.
The bridge loan the city provided for the Wick Tower, which NYO converted into apartments, served as a model for how to assist the developer with the Stambaugh Building project, Mayor John McNally said.
“I’m excited about this project. I’ve learned over the past couple of years that these projects take time to come together,” McNally said.
“It gets a lot of work to get these done, a lot of teamwork,” he added. “It’s a public-private partnership, which I think we’re seeing over time is what works best here in downtown Youngstown.”
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