|By Scott Wuerz, Belleville News-Democrat,
Ill.McClatchy-Tribune Business News
Jan. 19, 2007 - --No matter who is elected the next state treasurer, it's foreclosure for the Collinsville Holiday Inn and Springfield's President Abraham Lincoln Hotel.
Both Republican Christine Radogno and Democrat Alexi Giannoulias said that if elected state treasurer, they would seize the hotels financed by taxpayers 24 years ago through former Gov. Jim Thompson's Build Illinois program.
"We need to get in there and acquire title to the properties and auction them off to get as much money as we can for the taxpayers," Radogno said of her plans to pursue the debt. "That's what needs to happen."
Scott Burnham, spokesman for Giannoulias, said his candidate also thinks the next move is to try to seize the hotels, much like a bank would foreclose on a house if the owner didn't pay the mortgage.
"Obviously he would want to recoup as much money as possible and get as much bang for the buck as possible to taxpayers," Burnham said. "And it looks like the best way to do that would be to auction them off to the highest bidder."
Neither Holiday Inn owners nor managers returned messages left at the hotel.
Calls to the President Abraham Lincoln Hotel and Conference Center, which was formerly the Springfield Renaissance Hotel, were referred to the general manager's office. A woman who answered the phone there declined comment and hung up.
The loan for the Springfield hotel was issued to political power broker William Cellini, who last week emerged as a possible player in the kickback scheme that led to the indictment of Gov. Rod Blagojevich's political adviser, Tony Rezko. Federal prosecutors claim Cellini, Rezko and others pressured investment firms to make political contributions and pay "finder's fees" before obtaining work with the Illinois Teachers' Retirement System.
Lawyers for current Treasurer Judy Baar Topinka, who is running for governor, in May won a $29 million judgment against the Collinsville hotel owners. The owners' motion to have the decision thrown out was rebuffed by the courts two weeks ago.
The state is currently seeking assets of the Collinsville hotel ownership group. So far, they have seized $1 million put up as collateral and they are after $1.5 million more promised by a bank to guarantee the loan, according to Scott Mulford, spokesman for Attorney General Lisa Madigan. He added that seizing the property is a definite possibility.
Lt. Gov. Pat Quinn, who served as treasurer before Topinka, expressed frustration about how long it has taken to resolve the case. He said he wasn't sure an auction was the answer.
"The owners should not be allowed to wiggle away from their obligation to the taxpayers of Illinois," Quinn said.
Quinn blamed Topinka for wasting taxpayer money and stalling the process of repossessing the property. She caused the delays and waste by striking an ill-fated deal in 1995 with owners of the hotels to allow them to settle their debts for 25 cents on the dollar, Quinn said.
The move was blocked in court by then Attorney General Jim Ryan. He sued, saying Topinka didn't have the authority to make a settlement deal.
Collinsville hotel owners B.C. Gitcho and Gary Fears sued the state in an effort to make the deal stick. Their case was thrown out by the Illinois Supreme Court in 2005.
"This should have all been over years ago, but they had signed papers from 1995 that said they had a settlement," Quinn said. "The bottom line is that the owners owe a tremendous amount of money that they haven't come close to paying reasonably. They should have to repay every penny that they owe the taxpayers of Illinois."
According to treasurer's office records, no payments have been made on the hotels' mortgages since the end of 1998. The state loaned out $28.9 million to build the hotels in 1982, when high interest rates were dampening development in Illinois.
The state treasurer elected on Nov. 7 will take office in January. Treasurer's office spokesman Martin Noven said he thinks foreclosure could happen as soon as February.
While the case has been tangled up in the courts for 11 years, Noven said Topinka isn't disappointed that the issue won't be resolved until she leaves office. She still believes taxpayers would have been better off had her 25 percent solution from 1995 been allowed to stand.
Noven said both hotels have depreciated considerably during the past decade. Little money went into upkeep or improvements as the likelihood of foreclosure loomed.
"Back then we would have got $10 million on loans worth $40 million," Noven said. "Now, with interest, the loans are worth nearly $60 million, and we'll be lucky to get $8 million at auction."
Contact reporter Scott Wuerz at firstname.lastname@example.org or 239-2626.
Copyright (c) 2007, Belleville News-Democrat, Ill.
Distributed by McClatchy-Tribune Business News. For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.