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Dayton Daily News (Ohio)

 

HAMILTONOn Oct. 11, City Manager Joshua Smith hopes there will be three huge signs posted at the former Champion Paper mill, announcing "Spooky Nook at Champion Mill — opening in 2021."

City leaders are closing in on a development agreement with Spooky Nook Sports of Lancaster, Pa., which operates North America's largest indoor sports facility there, what the company calls 14 acres of sports activities under one roof. Some teams drive 3½ hours to compete in large tournaments there.

After three years of discussions and negotiations, the city and company plan to sign a development agreement that puts back into play one of Hamilton's most significant industrial complexes, the Champion mill along North B Street.

A public hearing and first reading of legislation authorizing an agreement with the company are planned for the Sept. 26 Hamilton City Council meeting, with approval of the legislation expected at the Oct. 10 meeting.

"This is something that's going to be very catalytic, in terms of our financial future," Smith said.

He expects some construction work to begin this fall, with heavy-duty movement in the spring.

THE PROJECT'S FINANCING

The Journal-News recently received an exclusive look at more detailed plans for the project's funding. They include:

Under terms of the proposed development agreement, Hamilton will provide a $5.5 million grant to the project, which will go toward financing the proposed convention center in "Mill II" of the Champion site, which is the building closest to the Great Miami River.

Hamilton will pay for $3.7 million in roadway improvements, including along B Street, and a "slip lane" that will allow traffic driving westbound over the High-Main bridge to flow without stopping northward toward B Street and the sports complex. That street spending includes pared-back improvements to sidewalks linking Spooky Nook with the developing Main Street entertainment district. But the sidewalk changes were decreased in a way that they can be easily added to with "minimal disruption" in the future.

The city, which owns its own natural gas, electric, water, sewer and storm-water utilities, will spend $5.92 million to improve utilities in the area to be able to service the project, which will become one of the city's biggest utility consumers.

Hamilton also is to loan $5 million toward the project's bricks and mortar that will be repaid over 20 years from Spooky Nook operations.

The Hamilton Community Foundation has pledged $13 million of its investment assets to help Spooky Nook secure a bank loan. Those fixed-income securities, which will remain the foundation's property, will back the loan while the foundation continues to earn interest on them, said foundation President/CEO John Guidugli.

As part of the Hamilton Community Foundation's loan arrangement, the city will lend the project $2.5 million that will be used to cover the interest expenses on the community foundation's loan during the project's construction. The city's $2.5 million loan will be repaid over 20 years.

Hamilton will make a temporary $3.5 million contribution to temporarily fund New Market Tax Credits, which allow people or corporations to get credits against their federal taxes when they invest in such projects through designated Community Development Entities. Officials are optimistic they will win the tax credits during the next round of funding, around the end of this year, and if the credits are received, the loan will be repaid. If not, they hope to replace that with money from new state tax credits "for transformational mixed-use development" that are proposed under House Bill 469, now pending in the Ohio Senate after passage by the House. If those tax credits don't come to be, the city and Spooky Nook together would make up the $3.5 million loss of credits.

A non-tax-revenue note that was borrowed in August for property acquisition and pollution will be repaid with $3.75 million in tax-increment financing created for the site. Under such a district, the property's tax value during a base year is frozen, and once new facilities are built and put on tax rolls, the amount of increased tax value is dedicated to repaying a debt.

COUNTY CONTRIBUTIONS NOT YET DECIDED

Meanwhile, Butler County government has also been asked to financially help the project, but county Commissioner Donald Dixon told the Journal-News that no decision has been made.

"We're considering it, but we've made no commitments at this point," he said.

Dixon said he expects a county decision by the end of this month.

"Based on what I've heard and read in the paper, if they can get it done it appears that there's some potential for some major stimulus to the city of Hamilton, but it all depends on how they perform in the numbers, and a bunch of other stuff," he said.

MORE: Engineers studied the traffic impact a new sports complex may have in Hamilton. Their results may surprise you.

Guidugli, of the community foundation, said board members traveled twice to the Pennsylvania facility in evaluating it and decided the project could bring significant benefits to Hamilton.

"This was a major discussion among our board," Guidugli said. "We certainly didn't jump into it lightly. We looked at it very strategically, and very carefully, and evaluated the impact on the community and our ability to do it, and what would happen if we weren't able to do it, and concluded that this was something that really would be a big enough game-changer that we felt we could support it in this way."

'COMPLICATED CAPITAL STACK'

Andy Brossart, the city's financial adviser with Bradley Payne Advisors' Sharonville office, said the "capital stack" of money sources involved with the project is quite complicated, partly because of the paper mill's historic value and the variety of funding sources.

"I've been doing this 20-some years, and this is probably the most complicated capital stack I've been involved with, in terms of the number of different pieces of information and the areas that it comes from," said Brossart, a 1991 Badin High School graduate.

People for years have been asking why the project has been taking so long. Smith said it's complicated to take a 19th century paper mill and transform it into a sports complex with hotels, restaurants, a convention center and retail stores, while trying to make use of historic state and federal tax credits, which are competitive. The project also involves traffic studies and improvements.

Meanwhile, Spooky Nook officials have been doing their due diligence, while also meeting with sports teams and leagues, working to develop relationships that will create clients for the project.

While some may wonder about the city's proposed $5.5 million grant to the project, Smith noted that if the city were to tear down the paper mill, which it bought early this decade, it probably would cost about that much to do so.

City staff said demolition costs of other major Hamilton buildings, including their environmental cleanup, were $4.9 million for Mercy Hospital; $3.17 million for Mosler Safe; and $2.6 million at Herring-Hall-Marvin Safe Co.

SPOOKY NOOK ON LEVEL OF LIBERTY CENTER

Brossart, who was finance director of the Butler County Transportation Improvement District while the Butler Regional Highway was being built, and also worked on financing for the Liberty Center development, believes the financial benefits of Spooky Nook can be similar to what the highway link to Interstate 75 has meant for Hamilton and Butler County.

According to an economic analysis performed by Tourism Economics, an Oxford Economics Company, Spooky Nook's Pennsylvania complex had $15.5 million in revenues last year, with another $5 million at the Warehouse Hotel within the sports complex. The company last year had about 150 full-time employees and as many as 450 part-time seasonal workers.

More than 1.1 million people (470,000 from outside the immediate area) visited the Pennsylvania site in 2017.

Even more noteworthy to Hamilton officials, the complex last year generated $39.2 million in off-site spending by athletes, their families and spectators, who booked almost 61,000 room nights at local hotels last year, Tourism Economics found.

The economic study found Spooky Nook's total economic impact was $99 million, 1,400 jobs, $32 million labor-income impact, plus an addition of $7 million in state and local taxes.

A few months ago, the project was estimated to cost more than $150 million. By scaling back some aspects, including a decision not to reroute B Street around the facility, officials reduced the cost to about $144 million. The decision not to move the street, including related utility savings of that non-move, sliced perhaps $7 million from project costs, Smith estimated.

Smith said the Spooky Nook project accomplishes three main goals: It leverages significant private investment. Costs of the investment are probably similar to what it would cost merely to tear down the Champion complex, where people have broken in and set fires. Also, Spooky Nook's economic impact in Pennsylvania is $99 million, the consultants found.

The project also can lift Hamilton financially in many ways, Smith said. Aside from the employment that the gigantic sports facility itself can offer, stores and restaurants will be more profitable, hiring more workers, who can find inexpensive housing in the city, he said.

There may even be many other unexpected gains, he said. With a better city economy, Hamilton's utilities may not have to write off as much as $2 million in unpaid utility bills in a year, Smith said.

"I give the city council, Joshua and their staff a lot of credit," Brossart said. "Because when you go around the state, people talk about Hamilton, and they see the difference in what's going on, and it's fun to see people come back to Hamilton who haven't been there in a long time, and they see a major change. Hopefully (the Spooky Nook project) continues on with that whole momentum."

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