The financing plan is now in place for The Port of Greater Cincinnati Development Authority Board to acquire and demolish the former Millennium Hotel in Downtown Cincinnati.
The Hamilton County Convention Facilities Authority (CFA) met Friday and agreed to use residual funds from the county's transit occupancy tax (hotel/motel tax) revenues as the source to pay back up to $59 million in bonds The Port will issue for the project. The CFA oversees those dollars.
The CFA Board voted 11-0 to support the financing package.
The property closing is expected on Feb. 14.
Acquiring the property will cost $36 million, and officials believe another $12 million will be needed for demolition.
Much of the transient occupancy tax covers bond payments used to expand the Duke Energy Convention Center. Any leftover money has been used to pay for expansion work at the Sharonville Convention Center, and to help promote tourism in the county.
County officials believe there's enough residual money to continue those activities, and use it to cover the acquisition and demolition of the Millennium.
CFA member Adam Gelter supported the plan, but he did express concern that pledging residual money to the Millennium transaction will limit what the CFA can borrow or do in the future.
"It's a huge risk we're taking," Gelter said. "I don't think we should be the people who are stepping in the way of this."
Member Brendon Cull said he was glad The Port is involved. Originally the CFA had considered purchasing the Millennium Hotel.
"I feel much more comfortable that The Port has been a part of this conversation," Cull said. "We're in a much better place than we were at the beginning."
The Port's borrowing is like a consumer loan with a balloon payment at the end. In this case, The Port will be making interest only payments of about $1.6 million a year through 2023. Then the debt will have to be paid off, or more likely refinanced as part of larger plan to redevelop the Millennium site.
The Port can borrow up to $59 million, but the actual amount will likely be between $53 and $54 million.
Port President and CEO Laura Brunner said earlier this month there are "a lot of moving parts," and officials are "laser focused" on Feb. 14.
Brunner said officials are still studying whether the Millennium site will be used for a new standalone hotel, expanding the Duke Center, or a combination of center expansion and a new hotel. The size for a new hotel ranges from 600 to 1,000 rooms.
Officials will travel to Columbus and Cleveland this week to evaluate convention centers and nearby hotels in those cities.
In addition, Hilton representative were expected in Cincinnati last week to meet with officials. Hilton has been mentioned as a brand for a new hotel to serve the convention center.
Brunner said a group consisting of Mayor John Cranley, city administrators, county commissioners and administrators, and representative from The Port, the Cincinnati Business Committee, 3CDC, and the Convention and Visitors Bureau will likely make the final decision on the Millennium site.
Brunner said that group will decide what, how soon and how such a project is financed. She said demolition will take at least a year to complete.
The Port's goal, if a new hotel is built, is for the facility to generate enough revenue to pay for its construction and operation. But those financial studies are still to be conducted.
Local leaders have said for years the city is losing out on convention business because of the poor conditions at the Millennium Hotel. They say a new hotel will help the city sell more conventions and benefit other hotels and businesses in the downtown area.
Mayor Cranley even publicly discouraged people from staying there.
A break came last summer, when a local developer, Vandercar, LLC, reached an agreement with the Millennium's owner to buy the property for $36 million.
Vandercar's purchase agreement included language, which allowed it to assign the contract to a public entity.
Vandercar, The Port, and Hamilton County reached an agreement in September for the Port to take that assignment.
The Millennium Hotel closed on New Year's Eve in anticipation of the upcoming sale.