Youngstown City Council Approves Hotel Refinancing Deal
YOUNGSTOWN, Ohio – A deal to refinance $845,128 in debt that the owners of the DoubleTree by Hilton Downtown Youngstown owe the city was approved on a third reading Wednesday evening.
The agreement to refinance the loan taken by Youngstown Stambaugh Hotel LLC in 2016 – originally for $700,000 – will be taken up by the city’s Board of Control on Thursday morning after a 5-1 vote by City Council approving the deal. Councilwoman Samantha Turner, 3rd Ward, cast the sole dissenting vote on the legislation, as she did at a special council meeting a week ago.
The conditions of the loan agreement mirror those made to the hotel owners’ $4.9 million loan from the Ohio Water Development Authority, which required the city to adopt the same terms.
Under the new terms, the debt would accrue interest at a 2%-year annual rate over a 25-year term. The hotel owners would pay interest-only payments of $8,451.28 semiannually, July 1 and Jan.1, for the first five years, then make twice-yearly payments of $25,738.88 for 20 years.
The partners had not made any payments on the original loan and just recently made a payment to the city based on the new terms.
Legislation introduced at City Council’s March 16 meeting was referred to its finance committee for members to get additional information.
“It benefits all of us. It benefits the entire city,” Councilman Julius Oliver, 1st Ward, said. He doubted that downtown would be experiencing the economic development activity now taking place – including Steelite Iinternational’s announcement that it would relocate its headquarters from New Castle, Pa. – or that other hotels would be looking at downtown Youngstown if the DoubleTree wasn’t here.
Turner reiterated her defense of her vote against the agreement, arguing that the city should have negotiated better repayment terms.
“We’ve been more than generous with the hotel,” she said. “The state can stand to not see their money, but a city like ours, we have way smaller margins. We really need to be mindful of that. When we have developers coming into our city, we can’t afford for them not to do what they’re supposed to do.”
Oliver acknowledged the initial sentiment he heard when he would discuss the situation with his constituents was that the city was bailing out the hotel. That skepticism changed to support for the hotel when he explained how it benefited everyone in the city, including in the residential neighborhoods.
“This is about the citizens and what they need and not worrying about the owners,” he said.
Also during the meeting, council members approved authorizing the Board of Control to enter into a third contract with Steadfast City Economic & Community Partners to provide technical assistance and strategic counsel on projects including but not limited to the 20 Federal Place redevelopment project.
Two weeks ago, the city approved a nearly $7 million contract with Daniel A. Terreri & Sons Inc. to perform demolition and environmental remediation work at the city-owned building. That work should start April 17, Finance Director Kyle Miasek said.
Through St. Louis-based Steadfast, the city has resubmitted its application for state historic preservation tax credits, and in June will be resubmitting its application for Transformational Mixed Use Development tax credits, Miasek said. Through Steadfast, the state informed city officials that Youngstown “just missed” being chosen for the state historic tax credits last year because of a backlog of prior-year projects.
“They suggested that we reapply, given the project met all the criteria,” he said. “So we are very optimistic that the project will be awarded by those at the state level” and thereby qualify for the federal tax credit, he added.
The state tax credit would be worth between $5 million and $8 million, and the federal tax credit would be worth at least $10 million, he said. The TMUD credit would be worth about $7 million. He also anticipated that the remediated building would be more attractive to potential development partners.
Copyright 2023 The Business Journal, Youngstown, Ohio.