YOUNGSTOWN — The downtown DoubleTree by Hilton hotel owner hasn’t made a single payment to the city on a $700,000 loan, and the board of control is expected today to vote to allow it to defer the amount owed until December 2026.
Youngstown Stambaugh Hotel LLC, which owns the hotel, borrowed the money from the city in December 2016 and received a three-year no-interest deferment.
Starting in December 2019, the company was supposed to make monthly $5,219 payments for the next seven years, which includes a 6.5 percent interest rate. The money came from the city’s water, wastewater and environmental sanitation funds.
But Youngstown Stambaugh Hotel LLC hasn’t made any of the 14 monthly payments.
As of January, it owed the city $73,806.09 with a small amount of that including a penalty on the unpaid interest.
The company is in the process of restructuring its loans with FCB Bank and Chemical Bank, according to the board of control agenda.
The board consists of Mayor Jamael Tito Brown, Law Director Jeff Limbian and Kyle Miasek, interim finance director.
“They are renegotiating their current debt structure and under the terms of the financial agreement the city has to give its consent and we’re doing that,” Miasek said. “We’re doing this because the administration and the community wants to see a successful hotel in downtown Youngstown.”
David Rizzuto, an official with Pan Brothers Associates, one of the principal owners of the hotel company, couldn’t be reached Wednesday to comment.
The hotel at 44 E. Federal St. cost about $32 million to build with at least $20 million borrowed.
The board of control today is expected to approve a proposal to enter into consent, waiver and deferment agreement with the company.
The agenda items states: “The hotel and the banks have asked that the city consent to the modification of the hotel (bank) loans and to waive any potential default on the city’s loan.”
It also states: “The city has insisted that rather than the city loan continue in default, with missed past due payments, that those payments be deferred to the end of the loan and added to the balloon payment, including late fees and interest. The balance of the balloon payment is due in December 2026.”
That balloon payment was initially $546,435.29 without adding the $73,806.09 from the 14 missed payments.
There’s no indication when the hotel company will start to make payments to the city.
The hotel at the 113-year old Stambaugh building opened in May 2018. It is the first downtown hotel since the Voyager Motor Inn on Market Street closed in 1974.
The city also agreed in December 2016 to a separate loan of $2,050,000 from its water, wastewater and environmental sanitation funds to the company. Of that amount, $750,000 was to be forgiven if paid back within 30 months. In October 2018, city council agreed to extend the loan and the forgiveness to December 2019 as the hotel company was initially refinancing its debt.
Because of issues with state audits questioning the legality of using money from those three funds for economic-development projects, the city stopped giving money to the company in 2018 and the total amount loaned ended up being $1,805,350.77.
The company paid that loan on Dec. 30, 2019, and the $750,000 was forgiven.
Today’s breaking news and more in your inbox
— to www.vindy.com