A portion of the city's nontax revenue would provide for a float loan.
By DAVID SKOLNICK
VINDICATOR POLITICS WRITER
YOUNGSTOWN -- City officials say they want to do all they can to help the parent company of the Youngstown SteelHounds, the minor league hockey team that will be the main tenant at the city's downtown arena.
One way to assist Blue Line Hockey LLC would be a no-interest loan of up to $2 million to help the Central Hockey League team with operating expenses.
City council approved an ordinance Wednesday allowing the board of control to approve such a float loan, if it's needed. Blue Line wouldn't have to pay interest on the money borrowed for up to 18 months.
"We go to every business and ask what we can do to help them," Mayor George M. McKelvey said.
McKelvey said Herb Washington, Blue Line's president, may not need the money.
"This city will do everything it can to help Mr. Washington succeed," McKelvey said.
The money for float loans comes from 50 to 60 nontax city revenue sources including court fines, parking meter fees, investment income, park and recreation fees, and rent from buildings owned by the city. Nontax revenue sources raise about $6 million to $7 million annually for the city.
To obtain a float loan, a company needs an irrevocable letter of credit from a bank. After the 18 months are up, the city is reimbursed the full amount of the loan by the bank that issued the letter of credit. There is no risk to the city because the loan is guaranteed by the bank, McKelvey said.
The float loan is interest-free, but the recipient has to pay an amount equal to about 2 percent interest for certain closing costs and processing fees.
The city has approved $12 million in float loans to companies during the past 15 years with great success, McKelvey said.
"Float loans are one of the many tools we offer businesses," he said. "We feel we have the best incentive program in the country."
Council also approved a similar ordinance Wednesday to loan as much as $250,000 to Ansaso Inc., which operates the Santisi Wholesale Foods facility on Mahoning Avenue.
On the council floor, Councilman Rufus Hudson criticized The Vindicator and an article written in another publication regarding the SteelHounds' float loan.
Hudson, D-2nd, said he was "offended" by the articles and said they suggest city council was "doing something illegal, immoral or unethical."
After the meeting, Hudson said the tone of Wednesday's article in The Vindicator was negative. The councilman also complained about the tone of the headline -- "Vote due on SteelHounds' float loan" -- and said there's never been a front-page, above-the-fold article in the newspaper about any other float loan.
Hudson said he was bothered that the article mentioned that Washington hadn't paid the CHL a $1 million entry fee as of two weeks ago.
However, the article in question doesn't mention that, and quotes CHL President Brad Treliving as saying Washington is current on his schedule to pay the fee.
In Wednesday's article, Treliving said the float loan would be the first time, to the best of his knowledge, that a government entity gave a no-interest loan to a CHL team for operating expenses. Government entities have paid to improve facilities for CHL teams, he said.