YOUNGSTOWN – With the DoubleTree by Hilton hotel experiencing financial problems, the Supervisory Board has agreed to allow its owner to defer money currently owed to the city until December 2026.
The city did not want the hotel to fail.
The board of directors voted Thursday at a special meeting in favor of reaching a deal with Youngstown Stambaugh Hotel LLC, the owners of the downtown hotel, to defer payment.
The company borrowed $ 700,000 from the city in December 2016 and was supposed to start making monthly payments of $ 5,219 for the next seven years starting in December 2019. But the company, which borrowed the money at a rate 6.5% interest, did not make any of the 14 payments. he owes the city.
He owed the city $ 73,806.09 in January, which also included a small penalty on unpaid interest.
âThe hotel has struggled to make payments to its two major creditors and to the city,â said Kyle Miasek, interim chief financial officer and member of the oversight board.
The company is restructuring its loans with FCB Bank and Chemical Bank, he said.
Miasek said, “The economy and COVID-19 have made hotel business difficult.”
The pandemic began in mid-March 2020, as Stambaugh had not made a payment from three months before.
Mayor Jamael Tito Brown, chairman of the control board, also blamed the problem on the pandemic.
âPeople don’t stayâ in hotels, he said. âThey stay at home.
It’s unclear when the hotel owners will start making monthly payments to the city.
THE ONLY HALL IN THE CITY
The hotel in the old Stambaugh Building, 44 E. Federal St., cost about $ 32 million to build with at least $ 20 million borrowed. It opened in May 2018 and is the only hotel in town.
The board agreed Thursday to allow the hotel owner to add the $ 73,806.09 he owes to a lump sum payment of $ 546,435.29 he is expected to make in December 2026.
The city didn’t want the hotel to default on their payments, so they accepted the postponement, Miasek said.
The city loaned the $ 700,000 of its water, wastewater and environmental sanitation funds to Stambaugh in December 2016 and gave the company a three-year interest-free deferral. The loan was split with 40 percent each for water and wastewater, with the remaining 20 percent coming from environmental remediation.
It was one of two loans granted by the city to the owner of the hotel in December 2016.
The other was $ 2,050,000 from the same three funds, distributed in the same way, of which $ 750,000 returned if repaid within 30 months. In October 2016, the city council agreed to extend the loan and forgiveness until December 2019, as the hotel company was refinancing its debt at that time.
But due to issues raised by state audits over the city’s use of money from the three funds for economic development projects, Youngstown stopped donating money to the hotel in 2018. and the total amount ended up being around $ 1.8 million.
The company repaid this loan on December 30, 2019 and the $ 750,000 was canceled by the city.