Staff file photo / R. Michael Semple People line up outside the Covelli Centre––– in this file photo. Youngstown officials say it appears the city is on track to pay off the $11.9 million debt it incurred nearly 18 years ago to cover its portion of the downtown arena’s construction costs.

YOUNGSTOWN — The city will make its final payment in January 2024 on an $11.9 million loan it took out in 2005 for its portion of the Covelli Centre construction.

The loan will be paid five months earlier than previously planned, which will save the city about $70,000 in interest, said Kyle Miasek, its finance director. “It’s a great accomplishment to have this debt paid off,” he said.

The city initially was going to make the 2023 principal payment on the loan in June and then the final payment in June 2024 as it has made annual principal payments in June or July of each year in the past.

Miasek said he recommended the payments be made in January of 2023 and 2024 to eliminate about $70,000 in additional interest payments.

“Instead of 24 months, we’ll pay it off in 18 months,” he said. “This way we save money on interest payments, particularly because we don’t know what the interest rate will be for 2024.”

City council will vote Wednesday on legislation to make a $1.7 million principal payment next month rather than next June. The interest rate will be 4.125 percent, Miasek said.

After the January payment, the city will owe $1.7 million on the $11.9 million loan it borrowed in 2005 for the center. That payment would be made in January 2024, Miasek said.

The city also paid $1.7 million last June as part of a plan to eliminate the debt over a three-year period.

The $1.7 million amounts are the largest principal payments the city has made for the facility.

Before that, the city paid $1.46 million in 2021 and $900,000 in both 2019 and 2020.

The money to pay the debt comes from the 5.5 percent admission tax the city receives on every ticket sold for events at the center as well as the building’s operating surplus and property taxes the city receives that are specifically meant for its debt service payments, Miasek said.

After the loan is repaid, the city will use the money made at the center to make improvements to the building, he said.

The city borrowed $11.9 million in 2005 to pay its portion of the center’s $45 million overall cost. Most of the construction expenses were covered by $26.8 million in federal grants obtained in 2000 by then-U.S. Rep. James A. Traficant Jr.

The city paid nothing in principal until 2011 — only interest during those early years.

The 4.125 percent interest rate is considerably higher than the 1 percent the city has paid annually for the past three years.

While interest rates have increased, the 4.125 percent the city will pay next month is lower than what it was during those years it made no principal payments. For example, the interest rate in 2007 was 6.88 percent so the city paid $818,720 in interest alone that year.

The interest rate in 2011, the first year the city paid toward the principal, was 5.34 percent.

It has decreased since then. It was 1 percent in 2012, 1.5 percent in 2013, 1.65 percent in 2014, 1.9 percent in 2015, 1.75 percent in 2016, 2.44 percent in 2017, 3.24 percent in 2018, 3.1 percent in 2019 and 1 percent in 2020, 2021 and this year.

dskolnick@vindy.com