Hotel loan payment to be deferred again
YOUNGSTOWN — The downtown DoubleTree by Hilton hotel owner has gone nearly two years without making a payment to the city on a $700,000 loan, but the board of control will for a second time this year allow it to defer the amount owed until December 2026.
The agenda for today’s board of control meeting includes an item permitting Youngstown Stambaugh Hotel LLC to not give the city $121,895 for 23 delinquent monthly payments, plus interest, the company owes from December 2019 to last month.
This is being done because the bank that Stambaugh owes the most money to has agreed to again restructure its loan, said city Finance Director Kyle Miasek, a board of control member.
“This is a positive thing that they’re able to strike a better deal” with the bank, he said.
The loans owed to two other lenders are significantly greater than the $700,000 the city gave Stambaugh nearly five years ago, but because the city loaned the money, it is required to sign off on the restructuring, Miasek said.
The other option would be to foreclose on the mortgage, but that would trigger a default on the bank loans and result in a court case, Miasek said. The city doesn’t support that, he said.
Under this agreement, Stambaugh’s “senior lender (FCB Bank) has agreed to forbear from enforcing its rights and remedies under the senior loan documents until Dec. 3, 2022, in exchange for borrower’s compliance with certain conditions,” according to the board of control agenda item.
Daniel Sweeney, a Cleveland-based attorney representing Stambaugh, said he was not able to comment.
Stambaugh Hotel LLC is a partnership between Pan Brothers Associates of New York City and Dominic Marchionda of Poland. The two have created several different companies for other downtown properties.
A state audit last week called for $7.8 million in findings for recovery against Marchionda and others, including James Pantelidis, Pan’s co-founder and principal, connected to the improper use of city money and the failure to pay back state loans on three projects.
They are the Flats at Wick student-housing complex, and the Erie Terminal Place and Wick Towers, both of which are downtown housing buildings.
The biggest finding was $6.5 million against Marchionda, Pantelidis and Wick Properties LLC, which had the two as managing members, for an unpaid Ohio Development Services Agency energy loan from Sept. 25, 2013, with interest, to help fund the construction of Wick Towers.
Youngstown Stambaugh Hotel LLC borrowed $700,000 from the city in December 2016 from the water, wastewater and environmental sanitation funds and received a three-year no-interest deferment.
The company was supposed to make monthly $5,219 payments, starting in December 2019 for the next seven years, which includes a 6.5 percent interest rate.
But the company hasn’t made a single payment, which was at 23 and counting as of October. It owes $121,895 as of October.
In February, the board of control approved deferring the amount owed until December 2026 as Stambaugh was in the process of restructuring its loans with FCB Bank and Chase Bank.
Stambaugh was to make a $546,435 balloon payment to the city in December 2026. The $121,895 would be added to that.
The hotel at 44 E. Federal St. cost about $32 million to build with at least $20 million borrowed. It opened at the former Stambaugh Building in May 2018 and was the first downtown hotel in the city since 1974.
It isn’t known when the company will start paying the money it owes the city or if it will ever pay it.
The city also agreed in December 2016 to a separate loan of $2.05 million from its water, wastewater and environmental sanitation funds to the company. Of that amount, $750,000 was to be forgiven if paid back in 30 months. But in October 2018, city council agreed to extend the loan and the forgiveness to December 2019 as Stambaugh was refinancing its debt.
Because of issues with state audits questioning the legality of using money from those three restricted funds for economic development projects, the city stopped giving money to Stambaugh in 2018, and the total amount loaned was $1.8 million.
The company paid that loan on Dec. 30, 2019, and the $750,000 was forgiven.