A beleaguered and debt-ridden hotel in downtown Springfield will be auctioned in December, the state treasurer announced Tuesday.
The Dec. 14 offer of the state-run facility could end nearly 30 years of notoriety as a hotel built with a state loan to politically connected investors who had fallen $30 million behind in paying the debt.
Treasurer Alexi Giannoulias contended that the state's renovations and sound management of the Abraham Lincoln Hotel and Conference Center since it foreclosed early last year should drive up the sale price. But no one should expect the state to recover the loan's full amount, let alone interest owed.
"The hotel has always been known for the dealmaking, influence-peddling and suspect accounting that went on behind its closed doors," Giannoulias said at a Capitol news conference. "It was built with taxpayers' money but benefited only those with powerful political connections."
An audit by Giannoulias' office last year alleged Springfield political fundraiser William Cellini and his business partners diverted about $2 million from the 316-room hotel for personal expenses rather than repaying the debt. His attorney said at the time that the allegations are false.
Cellini has since been indicted in the federal corruption case involving former Gov. Rod Blagojevich.
After the 1982 loans of $15.5 million to build the hotel in Springfield and $13.4 million for one in Collinsville, the deals were restructured in 1990 to require debt payments only when the hotels made profits.
The state also took over the Collinsville hotel but sold it in July 2008 for $5.3 million — its former owners had owed about $32 million. But the state hopes to recoup several millions of dollars more from state-operation profits and other payments still owed.
Since taking over the Springfield hotel, the state has made $1.3 million in profit, of which it spent $375,000 on renovations, including replacing mattresses in July 2008 for the first time.
It also received a $5.65 million surety bond that the owners put down in 1982 in case the loan was not repaid.
Giannoulias would not say how much he expected the auction to bring in, but said if the state isn't satisfied with the price, it will wait for more favorable terms before selling it.
Source: AP News