Hotel could use a fresh start

Editorial

State Journal-Register, Springfield, IL

Published Tuesday, January 22, 2008

THE HOTEL now known as the President Abraham Lincoln Hotel and Conference Center probably will never shake its status as a monument to one of state government's worst business deals.

Perhaps the foreclosure order last week that will allow the state to wash its hands of the hotel was a fitting end. This was a project that came into existence amid controversy and had been at the center of controversy ever since, as the state sought repeatedly to minimize its losses on a $15.5 million loan it never should have granted.

IN ITS planning stages in the early 1980s, the hotel was viewed by many people in much the same way as its neighbor, the Prairie Capital Convention Center — as an expensive and unnecessary addition to downtown for which taxpayers should not foot the bill. The debate over putting government money into the construction of the hotel contained the same arguments that have become commonplace these days in cities where sports teams demand public financing for new stadium construction. The difference was that in this case there was no sports team with a record of feeding the local economy.

"If a hotel was really needed that badly, I would think private enterprise would build it with its own money," said Ossie Langfelder, who opposed the project when he was city streets commissioner. A study at the time by the parent company of the old Holiday Inn East (then one of Springfield's major hotels) predicted the downtown hotel would lose as much as $2 million a year for its first five years.

In hindsight, Langfelder, Holiday Inn and others who questioned the project look amazingly prescient.

The $15.5 million state-backed loan from 1983 now stands at $29.5 million. More than 80 private investors lost their stakes in the hotel, the city almost certainly will lose the $3 million in federal grant money it put into the project and the Springfield Metropolitan Exposition and Auditorium Authority will lose about $100,000 a year in air rights it had collected from the hotel.

State Treasurer Alexi Giannoulias, who wisely initiated foreclosure proceedings last year to end this mess, has kept expectations low for the sale price on the hotel.

"The previous administration tried to sell it for $3.7 million. I'm pretty confident it will sell for more than that," he said last week. That's what we call cautious optimism.

In addition to soaking state taxpayers, the loan deal — spearheaded by prominent Republican William Cellini — had a compounding negative effect. As the hotel fell further into financial trouble, it ceased to be the downtown jewel it had been when it opened in 1985 as the Ramada Renaissance.

"Defendants have stopped making needed improvements to the property and as a result lost their … franchise arrangement with Marriott Corporation, which operates the Renaissance chain of hotels," said court papers in last year's initial foreclosure action. "The hotel is currently in … 'non-competitive' condition, meaning that its value will continue to deteriorate if it is being operated by an owner who has no incentive to make needed repairs and improvements. The furniture and fixtures throughout the hotel are extremely worn and dated."

ODDLY ENOUGH, all of this happened as downtown enjoyed an unprecedented resurgence spurred in large part by the opening of the Abraham Lincoln Presidential Library and Museum. Today, it is hard to imagine a hotel in that location ever struggling.

We give credit to Giannoulias for bringing this to an end. Maybe a new owner and private financing will, in time, make the hotel a symbol of something other than a long, expensive lesson to the state on bad insider deals.