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Giannoulias' office takes title of Lincoln Hotel
Next step: Selling hotel to a new owner
March 4, 2008
Illinois State Treasurer Alexi Giannoulias took a significant step toward the sale of the President Abraham Lincoln Hotel and Conference Center by effectively gaining ownership of the troubled property today.
The judicial sale, which will transfer title of the property to the state, occurred this morning at the Sangamon County Board Room in Springfield.
“This was a critical step toward ending a political and financial boondoggle that’s cost the state millions of dollars. Now that the state owns the hotel, we can market it on a national scale, sell it for top dollar to a reputable owner and recoup money for taxpayers,” Giannoulias said. The judicial sale removes the title from the borrowers and erases all liens and outstanding judgments, which makes the hotel significantly more valuable to potential buyers. A commercial auction will be scheduled for later this year.
The former owners of the hotel received a $15.5 million state-backed loan through the Illinois Insured Mortgage Pilot Program in 1982 to build the hotel in downtown Springfield. It opened in 1985 as the Ramada Renaissance but the owners quickly fell behind in making payments. Marriott International, Inc. pulled its flag in 2005.
In the last 10 years the owners made only two payments toward the loan. They currently owe $29.93 million in unpaid principal and interest and have not made any payments in the last five years, costing Illinois taxpayers more than $2,300 a day.
On January 14, Sangamon County Circuit Court Judge Patrick J. Londrigan signed a foreclosure order on the hotel. No objections were filed during the 30-day appeal process. The Treasurer’s Office has been publishing legal notices about the judicial sale since Feb. 7. According to law, the judicial sale must take place within 45 days of the first publication.
Giannoulias said the state was the highest bidder during today’s sale because no potential buyer attending the judicial sale met the state’s selling price.
“In most cases, judicial sales tend to bring out speculators who are looking for a deal,” Giannoulias said. “I made it clear that anyone coming down here today looking for a bargain basement deal was going to be sorely disappointed.”
Giannoulias added that a commercial auction gives the state ample time to market the property and allows potential buyers to visit and inspect the hotel. Shortly after taking office last year, Giannoulias urged the court to appoint a receiver to manage the day-to-day operations and finances of the hotel. Since the receiver took over in March 2007, net profits have increased substantially. From March through Dec. 2007, the hotel showed a net profit of $1.3 million, compared to just $238,000 during the same time period in 2006.
The Treasurer’s Office is handling a similar situation with the Collinsville Holiday Inn. The owners in Metro East received a $13.4 million dollar state-backed loan through the Illinois Insured Mortgage Pilot program in 1982. They soon fell behind in their payments and owed more than $31.2 million dollars in outstanding principal and interest. The owners hadn’t made a payment since 1998.
A judicial sale was held for the Collinsville property on October 18, allowing the state to gain title of the property and prepare to sell it to a third party owner later this year.
“We plan to fix up the Collinsville property and sell it as soon as we can,” Giannoulias said. “We hope to eventually do the same with the hotel in Springfield.
“Not only are state taxpayers suffering, but local residents are hurting as a result of this sweetheart deal,” Giannoulias added. “They deserve a first rate hotel that generates jobs and contributes to the financial health of the Springfield area.”
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