AKRON (May 15, 2009) — After funding issues delayed Goodyear's plans to build a new Akron headquarters, the project is finally back on track.
Akron City Council and Summit County Council have approved PNC National City Bank's agreement with the Summit County Port Authority to purchase $17.2 million in taxable development revenue bonds to finance the first phase of the Goodyear Riverwalk. The project will include the renovation and reuse of Goodyear's Akron facilities to create a retail town center, offices, an industrial park and residential components.
Under the agreement, the Port Authority will loan the money generated from the sale of bonds to Industrial Realty Group L.L.C. (IRG), which will then purchase Goodyear's headquarters, Goodyear Hall, the Goodyear Tech Center and other company properties. The tire maker will continue to lease the facilities for five to 10 years.
An initial financing agreement approved by the Akron City Council in March would have made the city and county obligated to pay back $7.4 million of the Port Authority's loan to IRG if it were to default in three years when the bonds matured.
The private purchase of the bonds will result in a lower interest rate for financing, assure that the bonds will be sold in an uncertain market and reduce Akron's financial obligation should IRG default, said Terry Albanese, chairman of the Akron City Council's economic development and job creation committee, in a release on the city council's Web site.
“The city and county negotiated private placement of the bonds with PNC related to the acquisition of Goodyear property for redevelopment, and we received a better rate than we initially anticipated,” Ms. Albanese said. “PNC provided a 4.25 percent interest rate, whereas the prior interest rate would have been closer to 7 percent.”
The previous financing agreement assumed a $1.5 million annual debt service payment, which would be taken from the Goodyear lease payment and paid directly to U.S. Bank. Under the new agreement, the annual debt service payment will be $2.1 million, but the amount left to be owed after three years will be under $13 million, compared with about $15.5 million under the previous terms.
Goodyear's $900 million headquarters project was initially scheduled to begin last fall, but the economic crisis and credit freeze left the company unable to find a private lender to help finance it. The company said it is “pleased to see the continued progress on the Riverwalk project” and “appreciates the efforts of the City of Akron, Summit County and the Port Authority to reach this agreement.”