|By Phil Trexler, The Akron Beacon
Journal, OhioMcClatchy-Tribune Regional News
Mar. 26, 2008 - The Radisson Hotel Akron City Centre isn't turning a profit, and its owners want the city to forgive more than $700,000 in past-due loans.
The city says the hotel is insolvent and has not made a payment on its $2.2 million debt to the city since 2005.
To ease the hotel's economic woes and ensure the city recovers some of its money, Akron Mayor Don Plusquellic is seeking approval from City Council on a deal that would allow the hotel to pay $1.5 million on its loan and leave about $715,000 for the city to absorb.
The Radisson, about to become downtown's only hotel, is owned by businessman David Brennan's Downtown Hotel Development Co. Ltd. and is currently up for sale.
Neither Brennan nor a company representative returned messages Tuesday.
The city helped secure $2.9 million in loans and grants in 1995 to help Brennan and his company remodel and reopen the hotel.
Plusquellic wrote in a memo to the City Council that the Radisson is now "insolvent" and that by accepting the hotel's settlement offer, the city stands its best chance of collecting some of the debt.
Plusquellic wrote -- "The hotel has not made a payment to the city since 2005. At our request, it has provided financial information regarding the hotel operations, including an independent audit report dated March 2007 that expresses the opinion of the outside auditor that the company is insolvent. That is, the liabilities of the company exceed its assets.
"Further, the independent auditor states there is 'substantial doubt' about the company's ability to continue as a going concern . . . If the company were to pursue remedies for debt relief in the federal courts, the city could end up with its debt being discharged, and receive nothing."
The council has yet to act on the request.
The original loan included $1.7 million in Housing and Urban Development money obtained by the city, $900,000 in an Industrial Development bond purchased by the city and a $300,000 loan through a city-sponsored Economic Development Incentive Grant.
The city offered its help in 1995 to spur more business for its fledgling John S. Knight Center. The loan package was criticized by several council members when it was first announced.
Plusquellic said Brennan's group has paid the city $1.9 million in loan principle and interest to date.
Akron Finance Director Diane Miller-Dawson said Tuesday that the city would use the hotel's $1.5 million payment to settle the HUD loan, which has a $1.3 million balance.
The remaining $200,000 will go toward lowering the $720,000 bond balance. About $195,000 that remains on the grant would not be repaid.
Plusquellic was unavailable for comment Tuesday.
David Lieberth, deputy mayor of administration, said the city is looking to cut its potential losses with the owners.
"Here, the company has come forward and said they want to pay their creditors and they want to work out an arrangement with their creditors. The mayor's position, obviously, is that this is much better than we could expect if this insolvent company went into bankruptcy court," Lieberth said.
The Radisson remains open and is booking rooms for the summer. Lieberth said he is aware of at least one potential buyer whom he referred to the Radisson's owners.
He also said the city is in talks with a developer on a new hotel to replace the former Crowne Plaza hotel in Quaker Square, which the University of Akron purchased last year to be used for student housing.
UA bought the 190-room hotel last year for $22.6 million. Officials agreed to keep 95 rooms available for hotel users until next year.
Lieberth said an announcement on a new hotel in a different location is "imminent" and could leave the city with more than one downtown hotel. He called Akron a "growing hotel market" that can support two if not three downtown hotels.
The Radisson hotel site opened in 1971 as the Cascade Holiday Inn and 20 years later, it became the Cascade Plaza Hotel.
Brennan and Akron attorney Anthony Manna and Jeff Reed, as B.M.R. Development Corp., bought the hotel in 1993 for $900,000, then closed it to focus on renovation.
The hotel reopened three years later as the Ramada Plaza after a $9.6 million renovation. It has been a Radisson with about 270 rooms since 1998.
Hotel managers told workers last month that the facility was for sale.
Plusquellic's memo to the council said that the "outlook for the hotel business in Akron is positive," bed-tax collections are up and "occupancy for Akron was 56.3 percent, exceeding the state of Ohio average of 55.4 percent in 2007."
When the Quaker Square sale was announced in June, Brennan said reports that put downtown hotel occupancies at well over 50 percent "are not true. They've never been true. I can assure you that neither hotel has enough business. Akron is not a destination city. We just aren't."
Phil Trexler can be reached at 330-996-3717 or firstname.lastname@example.org.
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