|By Lisa A. Bernard, The Journal-News, Hamilton, Ohio|
Knight Ridder/Tribune Business News
Aug. 2, 2005 - HAMILTON -- A three-way deal has been struck to get the Hamiltonian Hotel out of debt and keep its doors open.
Ohio Casualty Group and First Financial Bank have agreed to sell the $2.5 million in debt owed to them as first mortgage holders on the hotel to the Hamilton Community Foundation for $500,000, officials said Monday.
First Financial and Ohio Casualty helped back a $6.4 million community driven deal to build the facility. The 1985 project to build the hotel was taken on by the Hamiltonian Ltd., represented by general partners BriLyn Inc., Tipton & Associates and about 50 local investors.
Despite the $2 million concession, representatives from both companies said the deal is rooted in efforts to secure long-term financial stability for the hotel. It also will keep alive what Hamilton leaders call an essential player in the city's pursuit of downtown revitalization.
"It was intended to be a balance between what we felt was the right thing for the community as well as a good long-term business move," said Claude Davis, president and CEO of First Financial Bancorp. "Yes, maybe we could have sold the property and yielded more in short-term dollars, but we didn't feel that was the right thing for the Hamilton community."
Tom Caldwell, assistant vice president of Ohio Casualty Group, concurred.
"We all decided that there were going to be a lot of people that were going to have to do things that they weren't going to be 100 percent comfortable doing," he said. "With other people that have looked at it, it would not have come out to be the facility that (the foundation is) talking about. This was a chance to make it so attractive that the people of the city would want to have it."
Known for its contributions to the arts and education, the foundation's lead in the deal marks its first undertaking that recognizes economic development as an area of need in the city, said Craig Wilks, foundation chairman.
"Downtown development, plans for the former Mercy Hospital site and riverfront development all depend upon a successful first class hotel," said Wilks. "We believe that is an important step for the foundation because this hotel is critical to the continued success of our community." To structure the deal the foundation created a for-profit limited liability company, HCF Properties.
The foundation's board will take on the role of weighing what projects the newly formed LLC pursues. The company's eight-member board will have oversight of the hotel's bottom line -- one that has seen a decline from $3 million to $1.8 million in annual sales since 2001, according to financial spreadsheets.
While the deal lifts the burden of debt, money is needed to pay for long overdue renovations to the 120-room hotel, its restaurant, bar and 7,700 square feet of conference space, officials said.
The foundation and HCF Properties plan to launch a capital campaign following Labor Day to help raise money for the work.
"We believe that for about $3 million we can do a fantastic renovation and keep it as a 'Hamiltonian' and upgrade all the facilities and make it a first-class hotel," said John Guidugli, president and CEO of the foundation. "One of the questions that has come up is what about a brand?"
Turning the facility into the likes of a Marriott or Holiday Inn could be more expensive, he said. The foundation plans to bring in a new management group, but does not plan to let go of any employees, he said.
To complete the acquisition of the property, a foreclosure has been filed on behalf of HCF Properties in the Butler County Common Pleas Court, a foundation board member said.
That action will likely keep the city of Hamilton from recouping more than $800,000 still owed by Hamiltonian Ltd. to the city's commercial revolving loan fund, city officials said. Such funds are comprised of federal economic development dollars.
Loan agreements are often set up so that money generated from projects are repaid to into the fund to help jumpstart other initiatives.
Hamilton Mayor Don Ryan said despite the loss, the loan met its intent.
"All of us are aware of how critically important a downtown hotel is to our city" he said. "It's in all of our best interest to move forward on this and do whatever needs to be done to complete this transaction."
Foreclosure on the property is expected to wrap up in December.
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