Financing Deal on New Goodyear HQ Agreed

On Monday Akron and Summit County authorities in Ohio signed off on a new financing deal for the Goodyear Riverwalk project. The financing is a major step towards an estimated $900 million project that includes a new global headquarters for Goodyear Tire & Rubber Co., retail and office space and a hotel in East Akron. National City Bank has agreed to buy $17.2 million worth of bonds issued by the Summit County Port Authority and backed by the county and city, thus kick-starting the plans. The project was unveiled in late 2007, and was a major factor in keeping Goodyear and its 2,900 jobs in Akron.

County and city leaders announced the National City Bank agreement last week, saying that the bank investment is an indication of the strength of the project and region. “When you get bank financing, you need to move on it,” county finance and budget director Linda Phelps said of the quick vote.

According to the agreement, the county and city will back the bonds in case of a default. Both governments must set aside more than $1 million a year to cover any default during the life of the 10-year bonds — or until other private financing is found. The port authority plans to issue the bonds for private developer Industrial Realty Group, which will buy the current Goodyear properties and begin renovating them. Two rental payments by Goodyear — amounting to about $36.8 million a year — will be used to pay off the bonds. The annual debt service on the bonds is $2.1 million.

California-based IRG announced this year that it couldn’t find private financing to start the project because of the souring economy and turned to the port authority for help. IRG, which will put up Goodyear properties as collateral, also is in charge of building the new headquarters.

The interest rate on the bonds will be no more than 4.25 per cent the first three years. After that, the rate could jump as high as 12 per cent based on economic formulas. The interest rate could have been 6 per cent or higher if the bonds had been sold on the open market, officials said.

Stuart Lichter, IRG founder, president and senior managing partner, has said he expects to begin renovating Goodyear’s buildings this summer. The construction of the headquarters complex will depend on when private money becomes available, he has said.