Council to vote on helping with DoubleTree hotel’s bank debt
Downtown DoubleTree in arrears for about $30M
YOUNGSTOWN — City council will consider legislation today to help the owner of the downtown DoubleTree by Hilton hotel to refinance bank debt, incurred in making energy-efficient improvements, through a program that allows it to pay what is owed over 25 years from the hotel’s property taxes.
Council discussed the proposal at length at a Tuesday finance committee meeting.
Councilwoman Samantha Turner, D-2nd Ward, said while she supports the hotel she first wants to further discuss the creation of an Energy Special Improvement District, which allows the debt to be transferred to payments through property taxes.
The finance committee recommended Tuesday that council approve three pieces of legislation today to create the ESID, approving the energy-efficient work at the hotel and levy assessments to assist the property owned by Youngstown Stambaugh Hotel LLC, which is run by Pan Brothers, a New York City company.
Also, Dominic Marchionda of Poland, who once was a prominent downtown property developer, is listed as the corporation’s statutory agent on business documents on file with the Ohio secretary of state.
David Rizzuto, Pan Brothers’ director of management, didn’t return telephone calls Monday and Tuesday seeking comment.
Other property owners who qualify can join the ESID once it’s established, city Finance Director Kyle Miasek said.
The owners of the hotel at 44 E. Federal St. owe an estimated $30 million in loans for the building. The hotel opened in May 2018 at the Stambaugh Building and was the first downtown hotel in Youngstown since 1974.
The company has refinanced its loans a number of times and also owes $700,000 to the city.
Under this program, created by the state, Youngstown Stambaugh Hotel would be able to convert its loan into Property Assessed Clean Energy financing and pay back the money owed over a 25-year period.
Council’s legislation allows the hotel owners to borrow up to $30,706,510.50 with a lending institution through the PACE program paying off the loan and getting it repaid over 25 years. If the full $30,706,510 is borrowed, Youngstown Stambaugh would pay $614,130.21 to the PACE lender twice per year for 25 years.
The city has to create the ESID board as a pass-through for the payments and wouldn’t be responsible if the hotel owner defaults, Miasek said. The program gives the company a longer period to repay the loan, he said.
The hotel owner has spent $11,764,055 on energy-efficiency improvements, according to council legislation.
“The reason the owner is doing this is they are refinancing all of the construction loans,” Colin J. Kalvas, an attorney with Bricker & Eckler in Columbus, said. Bricker and Eckler would have a member on the city’s ESID board.
If council approves the creation of the board, it needs city board of control approval, and the agreement could come together 30 days after that, said Miasek, a board of control member.
NO LOAN PAYMENTS
Not only has Youngstown Stambaugh struggled to pay its traditional loans, but it hasn’t made a single payment on a $700,000 loan it received from the city in December 2016 from water, wastewater and environmental sanitation funds.
The business had three years of no interest and was supposed to start repaying the loan, with a small amount of interest, in December 2019.
The board of control twice in 2021 agreed to postpone the start of the payments.
At the time of the last deferment, the business owed $121,895 to the city for 23 missed payments. It now owes an additional 15 at a cost of about $80,000.
Back in November 2021 during the second deferment, the $121,895 was added to a $546,435 balloon payment it is supposed to make to the city in December 2026.
Meanwhile, a November 2021 special state audit called for $7,866,389 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 $6,576,378 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.
None of that money has been paid back.
Marchionda pleaded guilty to four felony counts of tampering with records, all occurring Oct. 6, 2011, admitting he used false invoices to get money from Youngstown for the Erie Terminal Place project to pay bills he owed for Flats at Wick, which was sold last April for $5.1 million at a sheriff’s sale. Marchionda defaulted on a $5.5 million loan forcing the sale.
He was sentenced Sept. 3, 2020, to five years of probation and 1,250 hours of community service.
Also today, council will consider three pieces of legislation to spend money from its American Rescue Plan fund.
The largest amount is $1.5 million for the demolition, abatement of asbestos and site clearance of structures. It will fund work to take down about 100 to 125 vacant houses.
City council in December 2021 agreed to spend $8 million from its ARP allocation toward demolition, but Youngstown received a $5.3 million state grant to demolish 473 vacant houses.
Council will vote on paying $95,040 to Pecchia Communications for communications planning, counsel, writing, editing and media relations related to ARP, and $50,000 to Direction Home of Eastern Ohio to provide technical assistance to seniors using technology.
Youngstown received $82,775,370 in ARP funding and has allocated about half it, though most hasn’t been spent.