|By Tony Reid, Herald and Review, Decatur,
Ill.McClatchy-Tribune Regional News
Dec. 16, 2009--FORSYTH -- There aren't many people who can drop
$6.5 million at auction and walk away with the feeling they got a steal.
But Forsyth builder and hotel magnate Steve Horve was grinning like the Cheshire Cat on Monday when he beat some 20 rival bidders with that price for Springfield's President Abraham Lincoln Hotel and Conference Center, which had been taken over by the state of Illinois after a series of financial disasters.
"It was a real bargain," Horve said Tuesday. "To build a hotel like that new today would cost you $200 a square foot. But I paid like $27 a square foot; it's a very nice hotel and a very good deal."
That deal is subject to formal ratification by the state, which will now probe Horve's background. Once accepted, the sale should close within 65 days, and the state expects Horve to assume possession by spring.
Horve can't wait to get started. He plans to carry out the same kind of renovation, upgrades and business turnaround that has transformed the operation and appearance of the Decatur Conference Center and Hotel. Seen as failing and dilapidated when Horve bought it for $7.2 million in 2007 from the city of Decatur, the hotel is thriving after Horve's intervention. His takeover also saved 100 threatened jobs.
Horve said he realizes the 140 workers at the 316-room Abraham Lincoln must be worried about the future, but staff members from Decatur already have been in touch to reassure them that they just got lucky.
"People have called to tell them that my buying this hotel is the best thing that could have happened," added Horve, 68. "They know I've treated the people here good."
The Springfield hotel, opened in 1985, recently underwent a $375,000 renovation, which included upgrades to the lobby. Horve likes the look of that but said the rooms are a different story, with little done to renovate them in the past 24 years.
"I am going to re-do the rooms with new furniture, TVs, phone systems and that sort of thing," he said. "The room decoration is pretty sad; it is worn out."
Horve plans to run the hotel with his usual tight-rein style: hire key people at the top who share his philosophy and keep a close eye on what's going on. It's an approach that has served him well in a hotel empire that, outside of Decatur and now Springfield, includes the new Homewood Suites in Forsyth, the Homewood Suites and the Hilton Garden Inn in Champaign and the Hampton Inn in Dearborn, Mich. He also previously sold another 12 hotels he owned.
A builder for 35 years, Horve got into the hospitality business about 20 years ago as a way of diversifying his business interests in a down economy and said he's never regretted it.
"I'm excited about Springfield," he said. "I still can't believe an old Forsyth guy stepped in there and got that."
Horve's buoyant optimism about the future is in sharp contrast to the Abraham Lincoln Hotel's tortured past. Built by businessmen described by state Treasurer Alexi Giannoulias as "politically connected," the developers received a $15.5 million state-backed loan and opened the hotel as the Ramada Renaissance.
The owners soon fell behind on mortgage payments, and the deal was restructured in 1990 so loan payments were only required when the place turned a profit. Payments later stopped in November 1997, and two payments Giannoulias said amounted to less than $143,000 were made in 2002.
The hotel later had a franchise agreement with Marriott International, but that was pulled in 2005. By the time the state treasurer gained title to the property in March 2008, Giannoulias said the outstanding principal and interest owed to taxpayers had ballooned to more than $30 million. Interest continued to build at the rate of $70,000 a month.
The findings of an independent audit into the private ownership of the hotel were later turned over to the FBI and suggested that the former owners had diverted some $2 million toward their personal expenses to hide the fact the hotel was back in the black.
Since being under state ownership, Giannoulias said the hotel has made $1.3 million in profits, part of which was plowed back into the building to pay for repairs and upgrades. He said the $6.5 million from the auction will be added to other monies his office has recovered in connection with the hotel and added up to more than $13 million headed back to state coffers.
"I'm pleased we were able to recover money for Illinois taxpayers, but I would only have been satisfied if the state could have recovered the entire $30 million owed by political insiders who fleeced the state under a deal that should never have been made," Giannoulias said.
He said that with Horve in charge, the stage is set for the hotel to "fulfill its promise to become the economic engine for downtown Springfield."
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