Toledo City Council last night authorized the sale of $8.2 million in notes plus a number of permanent improvements for the $20 million public portion of the riverfront Marina District planned for the city's east side.
Developer Larry Dillin, who has committed to the creation of a $320 million private development - including condos, apartments, restaurants, and a hotel - for the Marina District, said the project would not materialize without that public-works project.
"This has been the easy part - putting together the public financing piece," Mr. Dillin said. "Now we have to put together the private financing."
The public part includes a riverside road and waterfront park area - complete with spray fountains, a performance space, a boardwalk, and docks.
Council last night approved eight ordinances affecting the project.
The issuance and sale of bonds was approved 10-2 with Councilmen Frank Szollosi and Michael Ashford voting against.
Both councilmen said the deal leaves the city exposed to too much risk and taxpayers could end up paying the debt service on the notes and general obligation bonds that will be sold for the development.
"The city is facing an $8 million deficit and we have become a private bank," Mr. Ashford said. "Usually, a developer walks in with a letter of credit."
Councilmen Mike Craig, whose district includes the Marina District, said he was confident the plan shielded the city from picking up the tab.
"The exposure to the city is very, very minimal," Mr. Craig said.
As the financing plan is structured, Mr. Dillin must secure a letter of credit to cover the $8.2 million before the city would issue those notes.
He said the complicated financing plan protects the city.
"If we don't get the letter of credit, it does not move forward," Mr. Dillin said. "When we do move forward, the protection that the city has, if the economy continues to falter, and not one person moves into those apartments, my letter of credit will be used to repay those notes."
The debt service is expected to be about $704,000 a year for 20 years.
The money to pay that debt will come from assessments on the private developments in the Marina District.
Council voted 10-2 to approve a development agreement and sell 58 acres in the district to Mr. Dillin for the private development. Mr. Szollosi and Mr. Ashford voted no.
Originally, Mr. Dillin was to receive those 58 acres for free. Instead, he is paying the city $3.6 million.
Mr. Dillin also must make payments to an escrow account from which the city could draw money should he default on any payments and place the city in the first lien position for the property.
Mr. Szollosi said the assessments would not apply to 10.5 riverfront acres of the 58 acres Mr. Dillin is purchasing.
"So if the project goes south, the bank would get those riverfront acres and we would get back the other 47.5 acres and who is going to pay the assessments on that property then," he asked.
Mr. Dillin acknowledged last week that attaining a letter of credit has become increasingly difficult.
He will apply the letter of credit to just two parcels - a hotel and residential development, rather than six parcels, as was a previous plan.
Council voted 11-1 to approve a construction management and agency agreement between the city and Dillin Riverfront Properties Inc. Mr. Szollosi voted no.
The remaining five ordinances, which were all approved unanimously, dealt with the construction of a clock tower, streets, curbs, storm water sewers, and other improvements.
The total 125-acre district is bounded by the Maumee River, Front and Main streets, and
The city plans to use $3.9 million out of a $5 million loan from the State Infrastructure Bank to construct all the main roads in the Marina District. The remaining $1.1 million will be used for riverfront improvements.
Contact Ignazio Messina at:
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