Nationwide Arena loan overhauled
The Franklin County Convention Facilities Authority signed off Tuesday on restructuring a loan that Nationwide made to it in 2012 to finance the public purchase of Nationwide Arena.
The authority will pay Nationwide a lump sum of $51.5 million in 2029, using annual surpluses from the operation of the Hilton Columbus Downtown, the 532-room hotel constructed with $160 million in authority-issued bonds in 2010.
When the city and Franklin County orchestrated the purchase of the arena through the authority in 2012, officials said that only casino tax revenue would be used to repay the loan and there was no obligation to ever provide any other sources of revenue in the event of any shortfalls.
But the authority has now put itself on the hook to repay Nationwide, which had to rely on casino revenue under the previous agreement that never materialized in sufficient amounts.
Authority officials said after the vote they have no concerns that the new deal could put the Greater Columbus Convention Center’s finances at risk.
“No, none,” said Sally Bloomfield, the authority board chair.
The authority hired HVS, an international consultant in hotel valuations headquartered in Westbury, New York, to project hotel revenue based on predicted rates and occupancies.
“They don’t have a worry, and neither do I,” Bloomfield said, adding the hotel has outperformed since opening in 2012, “knock on wood.”
However, the HVS projections note “significant assumptions,” including that the hotel — set to roughly double in size with a new, authority-financed, 28-story, $220 million tower set to open in 2022 — will be well-managed, maintained and appropriate efforts to market it will be made.
“It just means that we will not be able to pay off hotel debt as quickly ... as we hoped to do if we had not done this,” said Don Brown, the authority’s executive director. Paying off debt puts the authority in a better financial position during economic slowdowns, he said.
The Dispatch reported Jan. 17 that the debt restructuring is part of a larger deal to repay Nationwide for the arena loan in which the city of Columbus also gave Nationwide $65 million from a unique property-tax fund.
The city signed the new deal Oct. 31 — the same day that Nationwide sold 21 acres of land west of the Huntington Park baseball stadium, ending an 11-month standoff that stood in the way of building a new Arena District stadium for Crew SC.
The city never responded to a Dispatch inquiry about whether it agreed to the deal in order to get the land.