Dayton and CityWide officials said the city’s actions prevent Tech Town from having a burdensome level of debt service.
The city also will receive a chunk of revenue from the arrangement, officials said.
“It’s good for them, good for us, and allows for the stability of the campus and its growth,” said Brian Heitkamp, CityWide’s chief operating officer.
The Creative Technology Accelerator opened in 2009. The 42,000-square-foot building at 711 E. Monument Ave. was the first building constructed at Tech Town since the Entrepreneur Center opened in 2000.
CityWide, the developer of Tech Town, used a $2.86 million loan from the Ohio Department of Development to help construct the accelerator building. The original loan is between the city of Dayton and the state.
Under the loan agreement, the city would have to start repaying the loan after five years and would have 10 years to complete repayment. CityWide would reimburse the city for the principal, interest and fees.
Dayton started paying back the loan this year but allowed CityWide to delay reimbursing the city until 2016.
Then earlier this month, Dayton City Commissioners voted to extend CityWide’s repayment period to 12 years instead of 10.
“This is simply a restructuring to allow for the repayment,” said Shelley Dickstein, interim city manager.
CityWide will pay $3.6 million through 2027, or about $25,023 per month.
The occupancy rate at the Tech Town is ramping up, but the development can only support so much debt service, especially since it has other loans to repay, Heitkamp said.
Postponing the first payment until 2016 helped stabilize the development, and spreading the payments over two extra years will save CityWide $30,000 to $40,000 per year, even though the total payment will be greater, he said.
“They basically allowed us to amortize it over 12 years instead of 10 years, and they get to keep all the fees and interest on the extra two years,” Heitkamp said. “They’re making money.”
Extending the term creates better cash flow for management of Tech Town, and the city will be reimbursed for the principal, interest and fees, said Chris Lipson, economic development specialist with the city of Dayton.
The city will earn about $250,000 in additional interest because of the 12-year term, assuming it takes CityWide the full 12 years to repay the loan, he said.
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