State ready to close books on debt-plagued hotel

By David Mendell

Chicago Tribune, Chicago, IL

Published Wednesday, January 16, 2008

The state edged closer to ending a long-running dispute that has cost taxpayers nearly $30 million when a judge Tuesday allowed it to begin foreclosing on a Springfield hotel.

Illinois Treasurer Alexi Giannoulias said the decision means the state could take ownership of the President Abraham Lincoln Hotel and Conference Center by spring and quickly place it up for public auction.

"This was the most difficult and arduous step in resolving this debacle, which has been going on for over 25 years," Giannoulias said.

The saga began in 1982 when the state gave a $15.5 million loan to the hotel, which is owned by 80 investors, including William Cellini, a politically connected Springfield Republican. Since then, the hotel has made only intermittent payments, with the last one coming in August 2002, state officials said.

Thus, the hotel owes nearly $30 million in principal and interest, according to Giannoulias, who put the cost to taxpayers at more than $2,300 a day.

Tuesday's order by a Sangamon County judge allows foreclosure on the hotel's principal owners. A hearing is scheduled for Friday on the state's request to begin foreclosure on the remaining owners.

A lawyer for the owners could not be reached for comment Tuesday.

If the hotel owners fail to overturn the judge's order, the state will own the hotel by spring, Giannoulias estimated.

To make it attractive to bidders, the hotel would be offered free of liens and outstanding judgments, he said.

The complex legal and political dispute has spanned three decades as the hotel's name changed several times. It opened in 1985 as the Ramada Renaissance.

During the waning days of Gov. James R. Thompson's administration in 1990, the state restructured the loan to allow payments only when the hotel generated a profit. Giannoulias argued the hotel reaped significant profits in 2006 and 2007, but made no payments on the outstanding loans.

"The fact that they have gotten away with this for so long, it's an embarrassment for the state," Giannoulias said. "Talk about all the sweetheart deals and cronyism."

Last year, the state assigned a hotel management company to take over the hotel until foreclosure proceedings were resolved.