Developers of Levis Commons, the contemporary retail and residential complex in Perrysburg, got approval yesterday to access up to $177.5 million in bond money for a 175-room hotel and two more planned retail and residential centers - Town Square and Preston Place - at the 400-acre site.
The Toledo-Lucas County Port Authority board approved the bond packages yesterday for the next phases at the Levis Commons campus along the west side of State Rt. 25 between I-475 and Roachton Road.
The Town Center at Levis Commons has been open for more than a year and offers a variety of upscale retail shops, restaurants, and a movie theater complex. Owens-Illinois Inc. announced last year it will move its corporate headquarters out of One SeaGate in downtown Toledo - its home for all but seven of its 102 years - and into its Levis Development Park off the northwest side of the Levis Commons development by Sept. 30.
Larry Dillin, the owner of the Levis Commons land and president of Dillin Corp., which is developing the property, said the port authority action pushes the project 1 1/2 years ahead of schedule. With public improvements in place, he said, the area can be more effectively marketed to retail investors.
"It really jump-starts us in both areas of the Levis Commons project. It's really a financing vehicle, but it's not without risk," he said of the bonds. "What lots of developers do is they may develop a property and flip it and move on. The way we're structuring [the bond package], it ties me to the project for a lengthy amount of time."
Though the port authority approves floating the bonds, it is not responsible for repayment. Bond purchasers, who get the benefits of the authority's high bond rating, are on the hook if something goes wrong.
Some of the money raised through the port authority-sanctioned bond sales would pay for public improvements, such as streets and sidewalks, which one port board member acknowledged would be indirectly supporting O-I's move out of downtown Toledo.
"Nothing here is designed to facilitate the move of O-I to Wood County," said port board member R. Michael Frank, who is the finance committee chairman.
That sidewalk-and-streelight money would be paid back by creating two special taxing districts at the complex. Perrysburg City Council has to approve the taxing districts, and plans to take the issue up June 6.
The bond packages were approved in three parts: $7.5 million, $20 million, and $150 million. Each package would be backed in a different way, and the port authority, if all three bond packages were used, would earn up to $330,000 in closing fees, plus yearly commissions.
The port board hopes the action yesterday was a prelude to future business with Dillin Corp., which plans to roll out plans for its $100 million-plus Southwyck Shopping Center development in the coming weeks.
"We want to establish a relationship here that is not a single relationship, but an ongoing relationship," said Jerry Arkebauer, the port authority's finance director.
Mr. Dillin said he is still researching whether to access the $150 million in bonds, which would be sold on the open market to pay for the hotel and other privately owned structures and which would net the port authority a $250,000 fee.
Part of the reason is those millions might be available from private investors and wouldn't have to be borrowed by selling bonds, he said. "We're still evaluating the opportunity that has been created for us to use those funds," he said.
Mr. Dillin said he plans to access the $20 million, which is backed by land at the site and would be graded by the bond market. That sale would net the port authority a $40,000 fee plus $10,000 a year. He also plans to use the $7.5 million, which is backed by the state's Northwest Ohio Bond Fund and administered by the port authority. That would net the port authority $40,000 and a half-percent of the outstanding balance each year.
If Mr. Dillin and other developers at the project accessed the $150 million pot of money, they would escape paying sales tax on construction material because under that scenario, the port authority would technically own the buildings.
The port authority would not be on the hook for any of the money if there was a default, Mr. Arkebauer said.
Even so, Mr. Frank voted against the $150 million package. He said he has been uncomfortable with the port authority's practice of owning buildings on paper so developers can escape sales tax.
"I don't know that it's really part of the charter of the port authority to be the owner of retail," Mr. Frank said. "We are owning it in order to give someone a tax deduction. It looks to me like we are loaning out our tax-exempt status.
"This mechanism may be legal, but it may not be wise public policy," he added. "The idea of economic development is to increase your tax base, not decrease it."
Mr. Arkebauer said that he disagreed because the hotel and convention center property and others that might use some portion of the $150 million would provide 500 jobs and payroll taxes. It is a legitimate and legal economic development incentive to spur business and growth, he said.
Board member G. Opie Rollison said the incentive allows the port authority to compete with larger banks.
"We can't compete with Fifth Third or Huntington bank. There's a tax advantage to doing business with us," he said. "That's a philosophical issue for us with every project."
Contact Christopher D. Kirkpatrick