|By Kenneth R. Gosselin, The Hartford
Courant, Conn.McClatchy-Tribune Regional News
Mar. 3, 2010--Deep financial troubles at the Hartford Hilton that threatened to shutter the downtown hotel appear to have been averted, raising hopes that 150 jobs will be saved and the city will not lose another landmark hotel.
The city has backed a rescue package for the 392-room hotel, owned by The Waterford Group. The city is seeking a $7 million federal loan for the owners and the hotel's union has agreed to some wage and benefit concessions.
Waterford also has negotiated a preliminary agreement with its lenders to get out from under a $22 million mortgage, in default since last summer.
The operating losses at the hotel -- taken over by Waterford in 2005 after a $33 million makeover -- have been so devastating in the recession that the property as it is now operating is worthless, given the debt now weighing on it, according to an independent appraiser hired by the city.
Last fall, The Courant cited documents that showed Waterford was seeking help from the city, the hotel's union and its lenders to keep the hotel open. The recession and slow recovery have taken an especially deep toll on the hospitality industry nationwide.
Without the multilevel rescue, city officials said Monday, there would have been no other alternative but to close.
David Panagore, the city's chief operating officer, said he hopes the combination of efforts will result in reviving a hotel that remains one of the best in the city.
"You can never be sure," Panagore said. "That's the simple answer. But from everything that we've done, this thing is on a steady track."
The agreement will ensure the hotel's viability and preserve jobs, said Frank Appicelli, a Hartford lawyer representing Waterford in the Hilton's negotiations with the city. "I think we're on sound footing to get this property turned around," he said.
Len Wolman, Waterford's chairman and chief executive, declined comment Monday.
Key to the hotel's survival is securing the $7 million U.S. Housing and Urban Development loan, part of a loan program created to preserve and create jobs. Waterford's chief lender, GE Business Financial Services Inc., has agreed to accept the $7 million and release Waterford from its $22 million mortgage, documents show.
As of August, the balance had ballooned to $24 million, including late fees and other default penalties, according to city documents.
It could be four months before there is a decision by HUD on the loan, and approval isn't guaranteed. If the loan is approved and the debt on the property is restructured as now envisioned, the property would have an appraised worth of about $8.7 million, according to an appraiser hired by the city.
The city is closely entangled in the affairs of the hotel because owns the land under the building.
As part of a series of tax abatements, the city has agreed to charge a base rent rather than real estate taxes for a period of 11 years, beginning July 1, 2011, reducing tax liability to the city.
If the hotel returns to profitability and takes in $25 million in revenues in a year, the city would be entitled to 2 percent of those revenues, under the agreement.
Waterford has agreed to preserve at least 90 percent of the hotel jobs for five years after the HUD loan closes.
The union agreed in January to a four-year contract that freezes wages until September and tightens up eligibility for health and pension benefits. The wage freeze has been in effect since the previous contract expired a year ago.
Ellen Thompson, organizing director for UNITE HERE, Local 217, said Monday that saving the hotel could only happen with the city, Waterford and the union working together.
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Copyright (c) 2010, The Hartford Courant, Conn.
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