|By Adam Jadhav, St. Louis
Post-DispatchMcClatchy-Tribune Regional News
Oct. 19, 2007 - EDWARDSVILLE -- The state of Illinois on Thursday officially called in its debts and took title to the beleaguered Collinsville Holiday Inn at a foreclosure sale in Madison County Court.
The hotel has languished as millions of dollars in taxpayer loans were never repaid. In the quarter-century since the deals were first struck, the debt has ballooned to just over $32 million.
Thursday, with the bang of a judge's gavel, the state gained full control of the property and plans to do whatever it can to salvage a deal gone awry.
The property, next to one of the St. Louis area's largest convention centers and near the intersection of major interstates, seemed like a surefire success.
But poor management -- and what officials have described as potentially criminal accounting and theft -- left the project debt-ridden and in disrepair.
Now officials hope they can soon end what has been a long political saga -- $13.4 million in loans to politically connected developers Gary Fears and B.C. Gitcho. The project almost immediately fell behind on payments, and Fears and Gitcho turned to the state to again help them out. The developers eventually renegotiated their financing in a deal that allowed them to pay only when the hotel turned a profit. According to state records, the last payment came in 1998.
But officials and businessmen believe the hotel has a chance if properly managed. On Thursday, about a dozen interested buyers came forward.
But the state elected to hold on to the property and set an opening price of $25 million to keep anyone from bidding. With no willing buyers, the state took the title by default.
"We have effectively extinguished the rights of these deadbeat owners and taken a significant step toward ending this costly debacle," said Scott Burnham, spokesman for Illinois Treasurer Alexi Giannoulias.
Rather than let the property go now, state officials want to rehab it.
Fears and Gitcho have been mostly absent from the proceedings, objecting only initially. Gitcho, reached at home Thursday, said only, "No comment. No comment at all."
In a previous interview with the Post-Dispatch, Gitcho denied any mismanagement or wrongdoing and argued the hotel was simply never profitable.
That runs contrary to the testimony of the court-appointed management company, Hostmark, which took over early this year during the foreclosure proceeding. Company officials quickly reported a turnaround and have made several hundred thousand dollars in profits so far this year.
The foreclosure sale drew considerable interest at the Edwardsville courthouse, and enough parties came forward to pack a jury box before Associate Circuit Judge Keith Jensen.
But no one was willing to pay close to the state's opening price. The hotel, according to county tax records, is appraised at roughly $8.9 million. Keith Baldwin, who owns a Holiday Inn in Mt. Vernon, had come prepared to offer somewhere around $6 million or $7 million.
"That's all it's worth right now," Baldwin said. "The property needs some work. It needs some money put into it."
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