The administration of Mayor Mike Bell has a tentative deal to sell part of the Marina District for $3.8 million, but a loan out of Columbus used to build a roadway there could more than cut those proceeds in half for Toledo.
In a worse-case scenario, the city would be stuck with a $2.8 million bill for the loan.
City Law Director Adam Loukx said Toledo has an "unconditional guarantee" from developer Larry Dillin to repay $2.8 million from the State Infrastructure Bank taken out in September, 2008, but at the same time, the city has asked the state to forgive the loan.
"It is the city's loan and he guaranteed that if we drew on the loan, he would pay it back, and there is an agreement between him and the city," Mr. Loukx said. "We were granted the loan early on in the project. … It is a matter that is unresolved, but as far as the sale, it is of no importance."
The city could have taken up to $5 million but only drew $2.8 million, according to a payment schedule released yesterday by the city.
Mr. Dillin, up until the end of the Finkbeiner administration, was expected to buy a significant portion of the former industrial land and transform it into a mix of housing, restaurants, and retail stores.
On Dec. 11, 2009, Mayor Carty Finkbeiner sent Mr. Dillin a "notice of termination" in which he wrote, "The city will expect Dillin to honor all repayment guaranties," however, the letter does not specifically mention the State Infrastructure Bank loan.
The loan, which was used by the Finkbeiner administration to build the mile-long Riverside Drive, was a part of Mr. Dillin's last financing and development plan approved by the city for him to buy and build up the riverfront property.
But Mr. Dillin never came through with the agreed-upon $3.6 million in exchange for 58 acres at the site.
Now, 30 months after the loan, the Bell administration announced last week that Dashing Pacific Group Ltd., the Chinese investor-owned firm that has purchased the Docks restaurant complex, has agreed to pay $3.8 million for nearly 69 acres at the Marina District.
Even though Mr. Dillin won't benefit from the roadway for a development of his own, the city says he is still responsible to pay that money back.
"Is it fair? Is it right? That is for someone else to judge," Mr. Loukx said.
Deputy Mayor Steve Herwat said if Mr. Dillin does not repay the money, the city will be liable.
"We are not going to be asking Dashing Pacific to pay for this because they are not buying the road. It remains a public right-of-way," Mr. Herwat said.
"The other avenue that is being pursued is we have had a conversation with [the state] for forgiving the loan," he said. "We explored this under the Strickland administration to get that loan forgiven."
Mr. Dillin, who is out of the country on business, could not be reached for comment.
Cheryl Hardy, a spokesman for Dillin Corp., confirmed Mr. Dillin has been negotiating with the city regarding the loan.
"The city contracted with the State Infrastructure Bank and then Larry provided a back-up signature for that loan, and then he contracted with the city," Ms. Hardy said.
Councilman D. Michael Collins and former councilman Michael Ashford on July 7, 2009, voted against a development agreement with Dillin Riverfront Properties Inc., Mr. Dillin's business.
At the time, Mr. Collins said, "I want it to be successful, but the risk to the city that we will embrace should Mr. Dillin fail to repay the State Infrastructure Bank loan is too great."
Mr. Collins said yesterday it appears that he was correct.
"When I said that, at the time those were my exact reasons," he said. "I hate to say, 'I told you so,' but unfortunately many of the votes I have been involved in have the potential to be 'I told you so.' "
The loan carries a 3 percent interest rate. The first payment of $204,689 is due March 2, 2012.
In addition to the loan, Mr. Dillin's plan included using a $4.9 million grant from the Ohio Cultural Facilities Commission for the development of the Riverfront Park portion -- what he wanted to be a publicly funded waterfront park area with multiple amenities. The $3.6 million from Mr. Dillin was supposed to be the required matching money for the grant.
Scott Prephan, a Perrysburg real estate broker and the local representative for Dashing Pacific group, did not return telephone calls seeking comment.
Contact Ignazio Messina at: firstname.lastname@example.org or 419-724-6171.