By Joe Pinchot
Herald Staff Writer
Local officials received word Tuesday the developer of a Hermitage retail complex has met the conditions for a tax incremental financing plan guarantee and will close on the deal, said Jill Newcomer, assistant secretary and treasurer of Mercer County Industrial Development Authority.
“Conditions have been met, everything’s ready to go,” she said
Levey & Co., Akron, is building a $17.6 million retail development anchored by a Kohl’s department store at the Shenango Valley Freeway and South Hermitage Road.
The developer said the costs of making public improvements for the development – most notably, widening the freeway between Dutch Lane/Maple Drive and South Hermitage Road and installing a traffic signal serving its development and the Glimcher development across the freeway – was prohibitively expensive, and asked for the TIF.
Mercer County, Hermitage commissioners and Hermitage School Board agreed to divert 69 percent of new property taxes generated by the development for 20 years to pay off a loan MCIDA plans to take out on behalf of Levey.
Levey would make its property tax payments, but the taxing bodies would send 69 percent of the proceeds to pay off the loan.
As part of the TIF, Levey asked the state for a $5 million guarantee, which was expected to drive down the interest rate on the loan taken out by MCIDA.
The Commonwealth Financing Authority approved the guarantee in July, but set conditions concerning Levey’s financial position, the use of the TIF proceeds, mortgage placement and an appraisal.
MCIDA was asked to verify the accuracy of the financial numbers provided by Levey, and hired an outside agency to run them.
“I’m guessing they accepted that,” MCIDA President Douglas Riley said last week.
A closing date, where the contracts for the guarantee will be signed, has not been set, Newcomer said.
“I would think they would try to do that in a week or two,” she said.
After the closing, MCIDA will borrow about $3.7 million from Somerset Trust Co. at a rate of 3.99 percent.
At the time of discussions with the taxing bodies, Levey had said it believed the interest rate would be about 4.5 percent, and it would have to pay back $5.9 million in principal and interest over 20 years.
With a lower rate, it would appear Levey could accelerate repaying the loan, possibly shortening its term. Newcomer said she will not know what the annual payments for debt service and interest will be until at or after the closing.
Aside from Kohl’s, Levey will lease property to Darden Restaurants for an Olive Garden, and has two other outparcels and a retail shops building that will be attached to Kohl’s available for lease. Levey also is negotiating to buy the neighboring former McDonald’s property.
Levey had submitted plans for a Pep Boys auto service center on the property, but Pep Boys has since decided not to go through with the project, said city Zoning Administrator Nathan Zampogna, who had advertised a zoning hearing on the request before Pep Boys pulled out.
A zoning hearing on the size of three wall signs on the Kohl’s building will be held at 7 p.m. today in the city building.