Editorial: Cleaning up bad hotel loan

News-Democrat, Belleville, IL

Published Friday, March 28, 2008

The Collinsville Holiday Inn fiasco started so long ago that a lot of people don't remember all the political wheeling and dealing that cost the taxpayers so dearly.

And maybe that's for the best. The details of how Illinois went from giving hotel investors Gary Fears and B.C. Gitcho a $13.4 million Bilk, er Build Illinois loan 25 years ago to $32.2 million in bad debt today are enough to make you cry.

Now taxpayers can focus on the future, and the fact that Illinois appears poised to finally recoup some of that money.

The state has started the process of auctioning the 229-room hotel. At least this part is being handled in a way that should benefit taxpayers.

The state treasurer's office took ownership of the hotel and has had a receiver run it since January 2007. That gave the state time to show would-be buyers the hotel's potential. Fears and Gitcho had the loan set up so they only paid on it when they made a profit -- and their books showed they rarely made a profit. But surprise, surprise, from January to November 2007 under the receiver, the hotel's profit was $586,000.

The state also has hired a private firm, Sheldon Good & Co., to conduct an aggressive marketing campaign to sell the hotel. It's in the firm's interest to attract as many bidders as possible because it will receive 4 percent of the sales amount.

Taxpayers have to hope that all this plus the hotel's excellent location off Interstate 55/70 in Collinsville will bring a good price. Safe to say, it won't be anywhere near the $32 million that's owed. But at least the state will be out of the hotel business.