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County, city approve Goodyear deal

By admin Published: January 31, 2011

Rick Armon and Stephanie Warsmith
Beacon Journal staff writers

Akron and Summit County signed off Monday on a $161 million government-backed deal to build a new global headquarters for the Goodyear Tire & Rubber Co.

The project — in the works for years but held up because of a lack of financing — is expected to break ground on the city's east side as early as March.

''It's a no-brainer,'' said Akron Councilwoman Linda Omobien, who chairs the council's economic development committee. ''We're trying to keep Goodyear here.''

The county and city councils approved financing agreements Monday night that had been previously announced. Earlier in the day, the State Controlling Board also approved two loans, one for $20 million and the other for $10 million, to push the project forward.

''Retaining Goodyear as an Ohio-based company means thousands of Ohioans will keep their jobs, and Gov. [John] Kasich is pleased all parties were able to come together to make this happen,'' Kasich spokeswoman Connie Wehrkamp said in an e-mail. ''The efforts of everyone who worked on this very important project should be duplicated across the state to ensure other major company headquarters remain or relocate here.''

As part of the deal, a seven-story, 639,000-square-foot headquarters will be constructed for Goodyear and open around March 2013. In return, the Fortune 500 company has agreed to stay in Akron for 25 years and keep 2,900 jobs in the city.

''This will be a great win for Goodyear, Summit County, the city of Akron and the state of Ohio,'' a Goodyear spokesman said in an e-mail.

The company also released an updated artist's rendering of the proposed headquarters.

State Rep. Vernon Sykes, D-Akron, a member of the State Controlling Board, which approved the state funding for Goodyear, said in an e-mail Monday that the project will be ''a huge economic boost for the Akron area.''

The agreements call for the state, county and city to invest $57.2 million in grants and loans. Another $4.5 million will be realized in sales tax savings through the Summit County Port Authority, which will issue up to $100 million worth of taxable bonds.

Those bonds will be purchased by New York City-based Angelo, Gordon & Co., a private equity firm whose work includes distressed credit and financially troubled businesses. Angelo, Gordon did not return a phone call seeking comment.

Goodyear won't have to pay any upfront money for its new headquarters. Instead, it will make lease payments that will be used to pay off the bonds.

Angelo, Gordon will hold title to the property and lease it to the port authority, which will sublease it to Goodyear.

The deal differs slightly from the one announced last week. The total cost climbed by $800,000 because of additional financing costs, according to the agreement.

The headquarters itself has been estimated at $126.3 million, with additional costs for items such as IT work, security and moving.

Akron council members had questions about the revised agreement, but they were answered during a weekend retreat.

''It sounds good,'' said Councilman Mike Williams, who cautioned his colleagues last week to gain a full understanding on the new pact. ''Everyone's very supportive.''

The County Council approved the deal without comment.

Afterward, County Executive Russ Pry said: ''It's been a long time coming, and there's a been a lot of hard work done with this deal.''

The Goodyear project was announced to much fanfare in December 2007, but it languished as the recession hit and financing become harder to find.

At the time, officials revealed a project of about $900 million that involved the new headquarters, renovating the current facility and bringing in retail stores and a hotel. The headquarters were expected to be completed as soon as 2010.

The original plan called for the Industrial Realty Group of California — led by developer Stu Lichter — to hold the title to the new headquarters and renovate the current facility. But Lichter struggled to find financing for the massive project over the last few years.

IRG will continue to serve as the developer of the new facility and oversee the redevelopment at the current headquarters and other Goodyear buildings, city and county officials said.

IRG and Lichter are still an important piece in the project, said Adele Roth, Akron's development manager. She noted that Lichter brought Angelo, Gordon to the table.

It's unclear when the redevelopment will begin at the current site or what the status is of the retail plans, officials said.

Rick Armon can be reached at 330-996-3569 or Stephanie Warsmith can be reached at 330-996-3705 or Beacon Journal reporter Jim Mackinnon contributed to this report.


The new worldwide headquarters for Goodyear Tire & Rubber Co. in Akron is a $161 million deal. Here's a look at where the money is coming from and where it's going.


Summit County Port Authority bond proceeds: $99,321,450

Ohio Economic Development Contingency, Global Analyst Settlement Fund and Rapid Outreach grants: $15,000,000

Ohio Job Ready Site Grant: $2,000,000

Ohio 166 loan repaid by city tax increment financing proceeds: $15,000,000

Ohio 166 loan repaid by Akron: $5,000,000

Ohio research and development loan repaid by TIF proceeds: $10,000,000

Summit County grant: $10,200,000

Port Authority sales tax savings: $4,515,225

Total: $161,036,675


Headquarters: $126,300,000

Network systems cabling: $1,000,000

Data center reconstruction: $1,200,000

IT infrastructure: $14,900,000

Security: $3,000,000

Financing costs: $12,800,000

Moving costs: $1,000,000

Port bond costs: $503,550

Ohio loan capitalized interest: $203,125

Ohio loan closing costs: $130,000

Total: $161,036,675

Source: Summit County Port Authority financing agreement

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