A bad loan off the books

News-Democrat, Belleville, IL

Published Saturday, July 5, 2008

Former State Treasurer Judy Baar Topinka is probably thinking today, "See, I told you so."

In 1995 she wanted to settle the disastrous state loan on the Collinsville Holiday Inn for $6.3 million, a fraction of what was owed. But the attorney general blocked the deal as not good enough.

Now after 13 years of legal wrangling over control of the hotel, the state sold it this week for just $5.3 million. The original loan in 1982 was for $13.4 million; the debt had reached $32 million.

Still, in our view this is preferable to the 1995 plan. In Topinka's deal, hotel owners B.C. Gitcho and Gary Fears would have gotten yet another sweet deal from the state and would have owned the hotel free and clear. This way they lost the hotel and are being forced to shoulder some of the financial burden along with the taxpayers.

Treasurer Alexi Giannoulias is vigorously going after their assets. The state has a $1.5 million judgment against them for the portion of the loan they personally guaranteed. A spokes-man said that $63,497 of that judgment has been collected, and some of their properties will be sold to satisfy the rest.

Also, the state has collected almost $1 million on letters of credit held to secure the loan and working to collect another $1.6 million letter of credit held by Regions Bank.

Add it all together plus the money the state made while running the hotel, and the taxpayers stand to recoup $10.37 million. In addition, the hotel has a respected new owner, St. Louis-based Lodging Hospitality Management, that promises $9 million in upgrades on the hotel.

It's nowhere near the $32 million that was owed. But all in all, it's not a bad ending.

  
     
 
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