It’s now being said by the Bell administration that the lack of a $2 million Brownfields Economic Development Initiative (BEDI) doesn’t matter that the former fiberglass tower project by the Eyde company should be able to proceed with a Section 108 HUD Loan. (according to a Blade article). Councilmen Joe McNamara and Adam Martinez have submitted legislation that would repeal legislation passed at a Special Council Meeting of June 29, 2010:
351-10 Authorizing an amendment to the 2010-2015 Consolidated plan; Tower on the Maumee; HUD 108
352-10 Authorization to participate in HUD 108 and BEDI grants for the Tower on the Maumee
Ten members of council were present, Martinez, McNamara, Waniewski, Webb, Ashford, Brown, Collins, Copeland, Craig, Ludeman voted yes on both ordinances.
In May 2010, a majority of council members did not support the use of Section 108 money for the “Tower on the Maumee” project. Then in June 2010, it changed when the BEDI entered the picture as far as council supporting the process of the Eyde’s seeking the BEDI. It was made fairly clear by last June’s notes that the BEDI was a key element and what made it more possible than without the BEDI. Areas of emphasis are mine …
Dean Monske of the City’s department of development said, they walked away a month ago and had no heartburn over the decision that we were not going to move forward, the mayor made it very clear he did not want to be on the hook for any projects especially with the history of some of the past projects that we are still paying money on. This council made it really clear they did not want to proceed.
Councilman Joe McNamara asked the key to this is that the Section 108 funds opens up the BEDI funds correct?
Mark Briggs, the consultant HUD recommended that was hired by the Eyde company said that was correct and the amount of the BEDI is 2 million dollars. McNamara then clarified that the BEDI would pay the interest on the 108? Briggs said yes that’s true then went into details as to the interest rates and how the process works as far as financing, that depending on the interest rate they could have money left over.
McNamara asked for the worst case scenario for the City of Toledo in this deal, Briggs said the worst case scenario for the city would be not the first 7 years since those interest payments would be covered, the City would be required to pay the annual debt service for the remaining 13 years, for about a million dollars a year in payments but they would own the building.
McNamara said if the risk is low so he doesn’t understand why private sector would not fund this, he gets why they want the loan, but if the risk is so low, why wouldn’t the private sector want this? Mark Clouse, Eyde’s chief financial officer and general counsel, said the use of the BEDI grant to cover the first seven years and the low interest rate is the difference between what could take place in the private sector. The seven year time frame is necessary since this is a challenge, it’s the second tallest building in the city. The building also has to be designated as a historical structure, there are a variety of pieces that need to all be in place to have this happen, the new market tax credits, the BEDI, without any one of these pieces the project won’t work. If they don’t take the first step now, the rest can’t happen.
Without the BEDI, the project appears to be the same as it was in May when it did not have the support of Council or the Bell administration. Why the Bell administration is now supporting this without the BEDI is not clear.