VIENNA - Described as possibly the largest financing project ever undertaken by the Western Reserve Port Authority, board members on Monday approved a $60 million bond issue that will help fund development of a local racino.
Under terms of the financing, the board that oversees operations at the Youngstown-Warren Regional Airport will issue up to $60 million in revenue bonds that will be used to develop the Austintown site. The port authority will, in turn, lease the land and constructed facilities back to Penn National Gaming, the company that will operate a thoroughbred racetrack and video lottery terminal. Construction on the "Hollywood Slots at Mahoning Valley Race Course" at the site near Interstate 80 and state Route 46 is already under way with a 2014 opening planned.
The 10-year lease agreement will involve a trust through Huntington Bank, according to the agreement negotiated on behalf of the port authority by port Executive Director Rose Ann DeLeon.
Interest rates on the deal are locked in at 4 percent or lower, and lease payments by Penn National will provide for repayment of the bonds.
Penn National officials have said they intend to use the funds to construct the fixed assets associated with the new race course including the track, stables, parking lots and other buildings.
At the end of the 10-year lease, Penn National will have the option to purchase the property back from the port authority at a nominal fee providing all the bonds have been paid and everything is in good order, DeLeon said.
Calling it a win-win, DeLeon said, "I think for the port authority, it shows the expanse of what we can do in addition to some of the smaller deals that they have done in the past."
She said any financial risk is assumed by the bond buyer, resulting in little or no risk to the port authority.
Penn National Gaming spokesman Bob Tenenbaum has described the plan a "good business decision," and said previously the company was pleased with the opportunity to work with the Western Reserve Port Authority.
"It works well for us, and we like the idea of being able to work through a local organization for part of the financing."
The deal is expected to close next week.
The board voted 5-0 to pass the resolution at a special meeting Monday, with three board members absent. Voting yes were board president Scott Lynn, Richard Musick, Patrick Pellin, James Floyd and Don Hanni III.
"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," said Lynn.
Other financing projects already in talks through the port authority include work with a company looking to relocate to the Mahoning Valley and funding for energy improvements at Southern Park Mall in Boardman, DeLeon said.
Penn National will invest an additional $65 million in construction of Hollywood Slots at Mahoning Valley Race Course, which will include up to 1,500 video lottery terminals along with thoroughbred racing. The project is expected to create more than 1,000 construction jobs and 1,000 permanent jobs upon completion.
The financing arrangement is not a new idea for Ohio port authorities.
A similar deal is being worked out with a racino site in southwestern Ohio between the Warren County Port Authority and the operators of the Miami Valley Gaming & Racing near Dayton. In that deal, the Warren County Port Authority announced plans to construct the track, grandstand, barn, concession area and parking lot. In exchange, the racetrack owners, Churchill Downs and Delaware North, provided $1 million title insurance, $800,000 closing costs, a 35-year land lease with $1,001 annual rent.