Balloon Payment

So, Massillon's Mayor for Life wants to refinance the City's loan on the Hampton Inn. Massillon borrowed $2.25 million dollars from the Department of Housing and Urban Development in the form of a Section 108 loan. A Section 108 loan is normally used for low income housing, and economic development in low to moderate income areas. Apparently, downtown Massillon qualified. Our Mayor for Life believed that using tax dollars to pay a loan for a private hotel was the best use of our money. Why pave streets, fix sidewalks, and help create jobs when you can help provide a wealthy developer with his own hotel.

Massillon borrowed $2.25 million dollars about 10 years ago to pay for the Hampton Inn. We (the taxpayers) have made $2.17 million dollars in payments on the hotel. We have paid $1,645,000 in interest, and $525,000 on the principal. We still owe another $1,725,000. Our Mayor wants us to refinance the loan, because it will save us $500,000 in interest costs over the next ten years. Here is the kicker. At the end of the 20 year loan, in 2019, we will still owe a ONE MILLION DOLLAR balloon payment. Even with the proposed refinancing, the balloon payment would still be $984,000 (The Independent, June 15, 2010).

As we calculate, 2019 will be the final year of our Mayor for Life's 8th four year term as Mayor. This would be year 32 as mayor, and year 46 in city government. We are confident that he will have this minor detail sorted out by then.

If you believe that millions spent on a private hotel is an acceptable use of your tax dollars, you may wish to thank eight of the nine members of Massillon City Council. At the May 3rd council meeting, city council voted to appropriate another $211,000 for the hotel. Only Kathy Catazaro-Perry had the good sense to vote no.

Massillon's Mayor for Life has all but one member of city council believing that they have no choice, but to vote to spend our tax dollars to pay the Hampton Inn loan. If they have no choice, why is there even a vote? Of course, you don't get to be Mayor for Life by letting city council members think for themselves. Fortunately for Frank Cicchinelli, most of them are just loyal rubber stamps who approve anything the mayor wants.

Yes, they should refinance the loan. No, they never should have taken it out in the first place. Community Development Director Aane Aaby believes the hotel developers will happily chip in with the final balloon payment (The Independent, June 15, 2010). The Massillon Review is a bit more skeptical.