Port Authority Approves Bond Financing for Racino
VIENNA TOWNSHIP, Ohio -- A $60 million bond deal for the new Hollywood Gaming at Mahoning Valley Race Course may well be be the largest one that the Western Reserve Port Authority ever executed, its executive director said.
The port authority’s board of directors approved issuing the non-recourse bonds, which will provide financing for just under half of the expected $125 million cost for Penn National Gaming Inc.’s project, during a special meeting late Monday. Construction on project is under way following a ceremonial groundbreaking in late May, with a summer 2014 opening planned.
“For the port authority, it shows the expanse of what we can do, that in addition to some of the smaller deals that we’ve done in the past that we can also do deals for the larger companies,” said Rose Ann DeLeon, executive director of the port authority.
Unlike counties and cities, port authorities don’t have debt capacity limits, she explained. “That’s because we can issue revenue bonds, and what that means is before we can issue a bond, a source of the payment has to be identified,” she continued. The port authority can either go to the capital market with the bonds or, in many cases, do a bond placement with the borrower. “The risk is to the bond buyer at the end of the day, so we are basically indemnified against basically everything, including environmental,” she said.
Proceeds from the bond sale will be used to construct the project’s fixed assets including the track, stables, parking lots and other buildings. Under the terms of the financing, Penn National will provide a ground lease to the port authority for the project site in Austintown, the former Centerpointe Business Park off Route 46. The authority will in turn lease the land and constructed facilities back to Penn. Lease payments will provide for the repayment of the bonds. The rate for the bonds is not expected to exceed 4%, she said.
At the end of the 10-year lease, Penn National will be able to purchase the property for a nominal fee, she added.
“We really like the idea of working with a local organization to arrange the financing. It was something that made sense for us and the port authority was very eager to provide the financing. So it’s a win-win,” said Bob Tenenbaum, Penn National spokesman, during a phone interview following the meeting.
“The culmination of this deal clearly demonstrates that the Port Authority has the capacity and capability to spur economic development and job creation in our region,” said Scott Lynn, chairman of the port authority, in a statement issued following the vote. “We appreciate having the opportunity to work with Penn National and we’re confident our partnership with them will generate a great deal of interest in the innovative financing tools we can use to help new and existing companies grow and prosper in the Mahoning Valley.”
The port authority is in discussions regarding several other financing projects, and has a proposal out to a “major company that is looking to relocate to the Valley,” DeLeon said. “We put a proposal together along with the state of Ohio. They’re reviewing that now,” she said. The port authority also is working with Boardman Township to potentially finance energy improvements at Southern Park Mall, as well as a company in Youngstown for a “sizable energy improvement project.”
PennNational, based in Wyomissing, Pa., launched a website last weekend allowing individuals to be notified as positions become available (READ STORY).
The racino project will feature a thoroughbred racetrack, 1,001 enclosed trackview seats, video lottery terminals, dining and entertainment, and is expected to create 1,000 direct and indirect jobs, and construction is expected to create another 1,000 jobs.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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