Aug. 23--A bank loan, not a long-term capital improvement bond, might finance the new Courtyard by Marriott and parking garage planned for the Bayfront Convention Center property.
The Erie County Convention Center Authority on Friday talked about the possibility of pursuing bank financing, with the help of investment bank and asset management firm Piper Jaffray, because of favorable interest rates and the fact that a $25 million state grant earmarked for the project could be used to pay off any debt over a shorter period of time.
The authority had considered securing bond financing for the project, with a possible term as long as 30 years. Either way, a debt guarantee of up to $60 million for the project, approved by Erie County Council in February, would still apply, said accountant Joe Maloney, who advises County Council on financial issues.
The debt guarantee helps the authority get a lower interest rate. Chuck Iverson, the Convention Center Authority's director of finance and administration, said the interest rates for bank funding would likely fall somewhere between 2 percent and 3 percent.
The county would only be on the hook for repayment if the Convention Center Authority defaulted on its loan.
"It allows them a little more flexibility, and the interest rate is favorable," Maloney said.
A Piper Jaffray representative, Peter Phillippi, met with the authority on Friday. He put the total project cost at $53.4 million, including construction, land value, fees and contingencies.
The 191-room hotel would account for $45.8 million of that cost, Phillippi said. The parking garage would cost $7.6 million. Both would be located just west of the Convention Center, 1 Sassafras Pier, in an area that is currently an employee parking lot and a loading area.
Roger Richards, who heads the authority's Strategic Planning Committee, said Friday he would like Piper Jaffray to help the authority explore bank financing. "Because of the size of this project, we're going to be able to attract a lot of banks," Richards said.
The authority would like to lock up its financing by October, Richards said, and also break ground on the project sometime that month.
As part of the county debt guarantee deal, the Convention Center Authority agreed to pay the county $65,000 a year, or nearly $2 million total.
The Convention Center already is connected to the eight-story, 200-room Sheraton Erie Bayfront Hotel by an overhead walkway that's open to the public. That hotel was also built with the help of a county-backed debt guarantee.
KEVIN FLOWERS can be reached at 870-1693 or by e-mail. Follow him on Twitter at twitter.com/ETNflowers.
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