Willing to gamble they can get a better deal from Owens Corning, several members of a high-profile public board delayed a vote until this morning on whether to give up at least $18 million in future income to stop the firm from abandoning its headquarters.
Today, the Toledo-Lucas County Port Authority will again be asked to agree to the give-away - now with just hours to spare before the bankrupt company says it must put together a plan or start making plans to move out of its home.
At stake is not only another vacant downtown building, but the community losing a key low-interest business loan fund for five years and the port authority losing $6 million in income over the next 13 years.
But nearly all the board members were angry that they were told that they had to decide during a quick evening meeting whether to give away one of the agency's biggest future cash cows.
“The board basically has its back to the wall. It's unconscionable,” said member Carty Finkbeiner, a former Toledo mayor who helped put the original OC deal together.
While Mr. Finkbeiner led the charge against inking the deal last night, three other board members were uneasy too. Because only seven members showed up to last night's special meeting, board rules required all seven to agree to the deal for it to become official.
The port authority staff had pushed for the measure's passage, arguing it was the best deal the agency could get in the complicated negotiations.
Because OC is bankrupt, it has the ability to get out of the lease for the $100 million headquarters it built in 1995. With creditors demanding OC lower expenses, and a bankruptcy judge overseeing the firm's actions, OC said it must reduce its payments for the building or move to much cheaper space in metro Toledo.
The bulk of OC's payments go to a group of about a dozen large investors who bought $85 million in bonds to finance the building, and OC is now asking them to lower their payments.
OC has said it must file court papers today for a workable plan or it will turn its focus to finding a new home before its November payment.
The port authority enters into the mix because it was the key middleman in that deal, and so far has collected $1.4 million in fees. The agency stands to gain $1.6 million more through 2015. After that, it could net at least $18 million more in rent and fees through 2030. But if OC leaves, the port loses all that future revenue. And because a small part of the OC deal was funded by the low-interest loan fund, it would go into default.
Under OC's proposal, the port would keep the $1.6 million through 2015 but potentially give up the rest. Jim Eckert, the firm's real-estate director, said it's crucial to show the dozen large investors that others are sacrificing to lower OC's costs.
While the difference would be at least $18 million in net revenue, Mr. Eckert said that's misleading because about $5 million of that difference is really interest payments on refinancing remaining debt.
He said the agency would really lose about $13 million - a total that, counting in expected inflation, equals about $1.5 million in today's dollars.
“It's a lot better deal than the bondholders are getting, I will tell you that,” Mr. Eckert said.
But Mr. Finkbeiner and other board members said they want more. They want the firm to promise to use Toledo Express Airport more and, if the firm becomes very profitable again, to find some way to repay the community for its sacrifice.
“OC should recognize that we love them,” Mr. Finkbeiner said. “But they should love us.”
It's unclear just how to show the love in a deal, but members said they were hoping for answers from David Brown, OC's chief executive officer. He rearranged his schedule to come to today's meeting to pitch the deal.
The port authority would be the last local hurdle for OC.
Toledo City Council agreed yesterday to extend OC's lease options until 2075 on the land. OC said it needs that to show creditors that the money spent on the building is worth it because the firm can stay there through most of this century.