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Financial deal OK’d for Erie building



Published: Tue, August 30, 2011 @ 12:07 a.m.

photo

The Vindicator (Youngstown)

Erie Terminal in downtown Youngstown

Company gets $2M loan, $350K for apartments

By David Skolnick

skolnick@vindy.com

YOUNGSTOWN

The city’s board of control approved a financial package — including a $2 million low-interest loan and $350,000 for water utility expenses — for the company converting the vacant Erie Terminal building into a 65-bed apartment complex.

The board had a special meeting Monday to approve the agreement with Erie Terminal Place, a Poland company owned by Dominic Marchionda, who also owns U.S. Campus Suites.

“It’s a great project that continues the link between downtown and the university,” said city Finance Director David Bozanich, a member of the board of control.

The 7,800-square-foot, 88-year-old building is at 112 W. Commerce St., near Youngstown State University’s $34.3 million Williamson College of Business Administration, which opened last year.

Erie Terminal Place is spending about $9 million on the project with housing on the upper five floors of the six-story building for YSU graduate students and upperclassmen as well as young professionals, Marchionda said.

The first floor will include Friends Roastery, a caf and coffee-roasting shop, and a couple of other food/beverage businesses, Marchionda said.

“This is a huge investment for downtown,” said T. Sharon Woodberry, the city’s economic-development director.

The city’s financial package includes:

A $2 million, 12-month loan with an interest rate of 0.25 percent.

Under conditions of the city loan, Erie Terminal Place received a $2 million irrevocable letter of credit from First National Bank. If the company defaults on the loan, the city would receive the money borrowed from the bank.

U.S. Campus Suites borrowed $2 million in 2009 from the city for its $8 million, 114-unit Flats at Wick student-housing complex near YSU. The company repaid the loan in 10 months.

$350,000 for water utility expenses.

A waiver of all building, and water and wastewater permit fees, which is about $16,000.

A 12-year, 100-percent real property-tax abatement.

The savings from the abatement won’t be known until the project is done and Mahoning County assesses the value of the property, Woodberry said.

The company also will receive $3.22 million in state and federal historic-preservation money after the project is finished. The project has to be done by October 2012 to receive that money.

Despite some delays in starting work at Erie, the project should be done by the second quarter of next year, Marchionda said.

Marchionda’s company finalized the purchase of the vacant commercial building for $740,000 on Thursday, buying it from USA Parking Systems. USA Parking purchased Erie for $375,000 from the city in June 2007.


Comments

1ytownsteelman(616 comments)posted 2 years, 7 months ago

Hey City of Youngstown. You are not in the savings and loan business! Why not do those things that city governments are supposed to do? Maybe pave some streets, replace some aging infrastructure, hire some cops etc. You know, the mundane things that only a city govt. can do. Banks are created for financing private ventures.

If they already have a line of credit from National City, then why do they need to borrow money from you?

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2mcluvin(72 comments)posted 2 years, 7 months ago

Hey Ben Bernanke, it's called an incentive. Last time I checked I hadn't noticed any banks offering $2 mill loans at .25%. Its short term for start up costs. The City doesn't loose much interest because it's only for a year. They are guaranteed the money and make 2.75% on the income tax from construction jobs in that year.

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3southsidedave(4709 comments)posted 2 years, 7 months ago

Interesting how more development keeps taking place in the "dead zone" downtown!

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4pgurney(246 comments)posted 2 years, 7 months ago

I wish some of this development would spread out, especially into the Southside! South Avenue needs a shot in the arm.

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5johnyoung(231 comments)posted 2 years, 7 months ago

Hey Mr. Trump ! er I mean McLuvin:

Since you are such a development wizard and by the sound of your post you evidently know how the city puts these deals together, please tell me what the $350,000 in water revenue will be used for. I'm pretty sure this building and all surrounding buildings have had water service for at least the past 50 years, so there is no need to extend infrastructure, and anything inside the building is the owner's responsibility. So what is the water revenue being used for ??

I wonder how the ratepayers, especially those outside of the city feel about subsidizing this deal to the tune of 350K. If the water dept. has an extra 350k lying around, maybe they should try replacing some of their old water mains that spring leaks every 15 minutes.

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6georgejeanie(731 comments)posted 2 years, 7 months ago

If this housing for YSU and young professionals does not work out, then we create another section 8 housing warehouse for the poor, drug addicts, alcoholics and all other social scum. This guy can not lose.

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7JJ(28 comments)posted 2 years, 7 months ago

It's a long term gain for the city of Youngstown, as a 12 year tax abatement is issued to provide a short term incentive to rebuild downtown. The investment and economic development brings people to reside in the downtown area, spend money, and support the local businesses. Youngstown was not built in a day and it did not deteariate over night although it may seem like that, and it surely won't be rebuilt overnight. Built you can see pockets and development happening and I can only say I truly commend and applaud those who are investing in the city , they will have a long standing legacy of bringing the city back!

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