Feb. 12--A $65,000-a-year payment has been approved.
There's also a land swap, involving county government and the area's largest hotelier.
And Erie County Council -- after weeks of often bitter public debate -- approved a loan guarantee of up to $60 million, clearing the way for a new 191-room hotel adjacent to the Bayfront Convention Center.
At the end of a furious day of maneuvering on waterfront development, County Council on Tuesday night voted 4-2 in favor of the debt guarantee, which in recent weeks became one of the most contentious political issues seen locally in years.
Voting for the guarantee were Council Chairman Kyle Foust and Councilmen Edward T. DiMattio Jr., Phil Fatica and Jay Breneman.
Councilwoman Carol Loll and Councilman Andre Horton voted against it. Councilman Fiore Leone, recovering from surgery on Monday, was absent. The meeting was moved to Courtroom H at the courthouse to accommodate the crowd of more than 100 people. Council's vote took place after more than an hour of public comment.
The guarantee, requested by the Erie County Convention Center Authority, allows the authority to use county government's high-grade debt rating to save nearly $20 million in interest costs on either a long-term capital bond or bank financing to pay for the hotel.
Council members debated the issue for weeks. But a council majority was not secured until Tuesday morning, when the Erie County Convention Center Authority unanimously approved giving the county $65,000 a year in exchange for the loan guarantee over the life of the 30-year bonds needed for the hotel project, or an estimated $2 million.
That payment -- referred to by officials as a "credit enhancement" -- secured "yes" votes from Breneman and Fatica on Tuesday.
Breneman, in recent days, had pushed for a payment from the Convention Center Authority and said his support was contingent on getting one.
"I am satisfied with the terms negotiated with ECCCA for payment to offset the risk taken by Erie County taxpayers in guaranteeing the bond," Breneman said Tuesday.
Fatica added, "The key thing for me is we came to an agreement, and worked out something for both sides."
Loll didn't agree. "The taxpayers have unanimously said they don't want to be put in this position," she said.
The Convention Center Authority wants a new publicly owned, publicly funded hotel and parking garage adjacent to the Bayfront Convention Center on the Sassafras Street Pier. The authority secured a $25 million state grant for the project, in addition to the millions saved on financing.
County government would be at risk for repayment only if the authority defaulted on its loan.
The hotel could be open as soon as 2016.
In another move crucial to Tuesday's developments, the Convention Center Authority agreed to give the county a parcel of land, valued at $250,000, at the northeast corner of State Street and the Bayfront Parkway, so the county can swap that parcel with land that private developer Nick Scott Sr. owns near the county's Blasco Library.
His company, Scott Enterprises Inc., led opposition to the debt guarantee, claiming that a second publicly guaranteed hotel would hurt the Sheraton's revenues and that there is no reason to put taxpayers at risk when a private developer is willing to build nearby.
Scott Enterprises has also proposed Harbor Place, a $150 million waterfront development about one-half mile east of the Convention Center. The Scott project includes at least one hotel and would mostly be privately funded, though it is seeking a $12 million state grant.
The swap appealed to County Executive Kathy Dahlkemper, who has been looking for land for more parking, the Convention Center Authority said.
The authority bought the parcel in 2002 for $170,000 from a private landowner at a time when development of a convention center focused on the Scott-owned land along the bayfront.
The parcel is a little less than one-half acre and is assessed at $190,900, though the Convention Center Authority valued it at about $250,000.
Dahlkemper said that while Tuesday's moves "didn't satisfy everybody," she is comfortable with what has been negotiated and with County Council's vote. Dahlkemper said she believes the Convention Center Authority and Scott projects will be successful.
"I really believe both projects can move bayfront development along the way we all want," Dahlkemper said. "The county really thinks the risk is very minimal now. The Convention Center Authority has its project at a place now where it will move forward. And the Scotts are moving forward."
Nick Scott Sr. said at Tuesday's meeting that while he was disappointed with the deals worked out Tuesday, Harbor Place will go forward.
County Council's Horton, meanwhile, asked his colleagues to postpone a vote. Horton said he would not support having the county guarantee the debt on the hotel unless the Erie County Convention Center Authority enters into what he called a community benefits agreement "that details the project's contributions to the community and ensures community support for the project."
Horton spoke about his opposition to the project for about 10 minutes Tuesday morning during a news conference.
"This process was a flawed process," he said. "This process hasn't been open. It has been run through business people, and the elite. No one engaged the communities in the surrounding areas. The people who live closest to the project live in some of the poorest neighborhoods in the area."
Horton, whose district includes the bayfront, said County Council "needs to be fiscally responsible" when determining the future of the proposed hotel.
"This is a large risk that the taxpayer will be taking on," he added. "Very few people will be able to afford a $250-a-night room, let alone a $150-a-night room."
The Convention Center Authority sought and received a similar guarantee -- for $48 million -- from county government in 2005 for the 200-room Sheraton Erie Bayfront Hotel on West Dobbins Landing, which is connected to the Convention Center by an overhead walkway.
That hotel and the planned hotel would be exempt from property taxes.
KEVIN FLOWERS can be reached at 870-1693 or by e-mail. Follow him on Twitter at twitter.com/ETNflowers.
(c)2014 the Erie Times-News (Erie, Pa.)
Visit the Erie Times-News (Erie, Pa.) at www.GoErie.com
Distributed by MCT Information Services