Youngstown Defers DoubleTree’s 14 Missed Payments
YOUNGSTOWN, Ohio – City leaders blamed the COVID-19 pandemic for the reduction in business that put the owners of the DoubleTree by Hilton Youngstown Downtown behind on its payments.
At a special meeting Thursday morning, the city’s Board of Control deferred payment of 14 missed payments on a $700,000 term loan it extended to Youngstown Stambaugh Hotel LLC, which redeveloped the Stambaugh Building as a 125-room hotel operating under Hilton’s DoubleTree brand.
A payment of $73,806.09, which includes interest and penalties on the 14 installments missed beginning with December 2019, will now be included in the balloon payment due at the end of the loan in December 2026.
The deferral is part of an agreement the city approved that allows the hotel’s ownership to renegotiate with lenders FCB Bank and the former Chemical Bank, now known as TCF Bank. The two banks and the city were participants in the $32 million capital stack assembled to fund redevelopment of the downtown building.
Approved in late 2016, the term loan was structured over 20 years at 6.5% interest, said the city’s interim finance director, Kyle Miasek. No payments were required for the first three years of the loan and the first of 60 monthly payments of about $5,200 was to be made in December 2019. A balloon payment of $546,000 was to be paid in December 2026; with the deferment, the payment is now $619,806.09.
“COVID-19 has hindered operations over at the hotel just like it has across the country, and the hotel has struggled with making payments to its two largest creditors,” Miasek said.
“There’s no one that’s not hit by this pandemic,” said Mayor Jamael Tito Brown, who serves as chairman of the board of control.
City officials could not say why the hotel partnership had not paid the term loan installments that were due prior to the business contractions spurred by the pandemic. Business shutdowns nationwide largely began in March 2020.
Business in 2020 was down 30% from the prior year, reported Steve Mitchell, general manager at the DoubleTree. Business overall is improving, with weekend traffic recovering better than weekday, which largely depends on business travel that remains down.
“We can see the light at the end of the tunnel. We’re just not at the end of the tunnel yet,” he said.
The effect of the pandemic on businesses like the hotel was why Brown said he emphasized the importance of passing a COVID-19 stimulus bill on a recent call with U.S. Sherrod Brown, D-Ohio.
The city also provided a $2.05 million bridge loan in 2016 to support the project that originally was to be paid in 30 months, with $750,000 to be forgiven if the loan was repaid by the due date. Citing delays in the approval of $9 million in federal and state historic preservation tax credits, the partnership requested a six-month extension and paid the $1,055,350.77 owed in December 2019, with the $750,000 forgiven as per the agreement.
Representatives of the hotel ownership did not respond to requests for comment.
Copyright 2021 The Business Journal, Youngstown, Ohio.