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* Another win for Treasurer Giannoulias…
Owners have dropped their effort to retain possession of the President Abraham Lincoln Hotel and Conference Center, which owes more than $29.5 million on its state-backed loan.
Their decision should pave the way for the state to obtain title to the hotel, which is at Seventh and Adams streets, and sell it to a new owner later this year. Proceeds from the sale will be used to pay off at least part of the debt. […]
“Going forward, the days of sweetheart deals and cronyism at taxpayer expense are over,” Illinois Treasurer Alexi Giannoulias said in an interview Tuesday.
Giannoulias’ office began foreclosure proceedings on the hotel shortly after he took office in January 2007. The owners, who include influential Springfield Republican Bill Cellini, were fighting to block foreclosure.
* As everyone knows, this has been a long-festering problem…
In 1991, in the final days of former Gov. James R. Thompson’s last term, Cellini secured a controversial sweetheart deal in which his investment consortium didn’t have to make payments on the loan so long as the hotel didn’t turn a profit.
* More…
The saga began in 1982 when the state gave a $15.5 million loan to the hotel, which is owned by 80 investors, including William Cellini, a politically connected Springfield Republican. Since then, the hotel has made only intermittent payments, with the last one coming in August 2002, state officials said.
Thus, the hotel owes nearly $30 million in principal and interest, according to Giannoulias, who put the cost to taxpayers at more than $2,300 a day.
The kid’s alright.
posted by Rich Miller
Wednesday, Jan 16, 08 @ 9:47 am
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Yet another life lesson to learn that Government needs to stay out of private business deals. Perhaps the next time when an insider comes in with a deal which will be great as long as the taxpayer just helps a bit, the pols will remember this case.
The deal was questionable from the start.
It is time to cut the losses and get this venture off the taxpayer’s back.
Kudos to the Treasurer.
Comment by plutocrat03 Wednesday, Jan 16, 08 @ 10:05 am
At least something unquestionably positive is going on the state government.
The Governor should take notes. This is true leadership. Well done, Treasurer!
Comment by Bill S. Preston, Esq. Wednesday, Jan 16, 08 @ 10:07 am
Someone did something this week that should lead to a draft movement for governor. The kid can point to a concrete example of fiscal responsibility in sharp contrast to the incumbent’s performance.
Comment by Boone Logan Square Wednesday, Jan 16, 08 @ 10:14 am
Rich,
At this time of Illinois Representative Democracy Gone Wild, may I propose a question of the day:
Who has exceeded your cynical expectations more: A.G. Lisa Madigan or Treasurer Alexi Giannoulias?
I gotta admit that I expected nothing but disappointment and disaster from these two young Democrats, but they have pleasantly surprised me again and again and again…
Of course, this is still Illinois and they may just be setting me up for a huge scandal…
– SCAM
Comment by so-called "Austin Mayor" Wednesday, Jan 16, 08 @ 10:15 am
If you go into the Cellini loan and look at the terms of the bonds. They boggle the mind.
Cellini has been trying to force the State to just give up and give pay the bonds itself.
Comment by Truthful James Wednesday, Jan 16, 08 @ 10:21 am
Speaking of Madigan and Giannoulias, I’m wondering if the Speaker will ever admit, implicitly or explicitly, that he was wrong about the Treasurer. Ha! What a thing to wonder…
Comment by Bill S. Preston, Esq. Wednesday, Jan 16, 08 @ 10:22 am
Rich: The original hotel deal was struck before I became aware of state matters. We always hear about the involvement of Cellini because he is so high profile, but who were some of the other investors involved in this deal? Also, to plutocrat, please don’t condemn all public participation in private deals. Some are good, some are bad, depending on specific circumstances. This one was obviously very bad.
Comment by one of the 35 Wednesday, Jan 16, 08 @ 10:23 am
What might be the status of the Collinsville Hotel? Mt.Vernon?
Comment by A Citizen Wednesday, Jan 16, 08 @ 10:24 am
Admittedly, I’m not near the daily machinations in Springfield, but I thought there was a decent truce between the Speaker and Giannoulis–I mean, he’ll never admit he was wrong, but he’s willing to work with him. Correct me if I’m wrong…I’m not there, but that was my impression.
Comment by ArchPundit Wednesday, Jan 16, 08 @ 10:25 am
Isn’t Cellini’s name mentioned in the TRS mess?
Comment by Dan S. a Voter Wednesday, Jan 16, 08 @ 10:25 am
Wow, a state official does his job, and we all go ga-ga.
You know in MOST states this would have been a no brainer.
Comment by Pat Collins Wednesday, Jan 16, 08 @ 10:33 am
Mt. Vernon was disposed of about 15 years ago when Pat Quinn was Treasurer. The Post Dispatch said Collinsville has been completely foreclosed on and the state has the title. It will be auctioned off.
Comment by Anon Wednesday, Jan 16, 08 @ 10:33 am
Why wasn’t Topinka able to accomplish this during all her years as Treasurer? She is quick to criticize others, but if this matter is any indication, she wouldn’t have made an effective governor.
Comment by Anon Wednesday, Jan 16, 08 @ 10:43 am
Given his own banking experiences, the treasurer knows a shady loan when he sees one.
Comment by wordslinger Wednesday, Jan 16, 08 @ 10:43 am
Told you so
Comment by Rep. John Fritchey Wednesday, Jan 16, 08 @ 10:48 am
If you believe Russ Stewart there must be a truce between the Speaker and the Treasurer because he has Lisa Madigan going to the State Supreme Court to wait her turn to be nominated to the US Supreme Court and Giannoulis being the Speaker’s candidate for Governor.
It should be pointed out, however, that Russ Stewart hails from the planet Neptune and is not completely familiar with earthlings.
Comment by Garp Wednesday, Jan 16, 08 @ 10:53 am
i’m with fritchey. he said it better…
Comment by bored now Wednesday, Jan 16, 08 @ 11:09 am
The interesting thing about Giannoulias and madigan is they were both attacked for lacking experience (the way clinto is go after Obama). It turns out that lack of experience means they are not just following the old establishment system for running their offices, and the results have been fantatic to the State. All those who think you need long term establishment political leaders instead of Obama should look to Giannoulias and Madigan, who both showed that being fresh works out better for the rest of us.
Comment by Ghost Wednesday, Jan 16, 08 @ 11:21 am
To ‘one of the 35….”
I condemn the majority of the deals because the majority of the pols do not have the knowledge or the skill to sift the good from the bad.
If we apply a bit of logic here, we can ask the following question: If a deal is a good one, why won’t the private sector fund the project itself?
Traditionally developers go to government when the merits of the project are so poor or marginal that they need a subsidy to pull it off.
Bad examples abound. e.g. the tidal wave of park districts getting into the business of fitness centers because ‘the public wants them to’. (their rate are lower than the private organizations because ALL the taxpayers subsidise those memberships.) There are hundreds of private fitness clubs out there. Why do we have to have the taxpayers support competition to the private sector. e.g. Libertyville Sports Complex, annual losses are still near a million dollars per year. Another bad deal in the making…. the Chicago Pier Authority wants to build a Hotel/Water Park on Navy Pier….. why does the government need to compete with the private sector in hotel space and entertainment. (That also begs the question of whether that neighborhood can stand another increase in density…) Look at the Schaumburg Convention Center. Lots of public money involved, currently disappointing revenues. Waukegan shoveled millions in the renovation of the Genesee Theater, revenues do not support the bonds issued for the project.
I frankly cannot think of any good deals that have been made….
The point is that development is speculative. There is not enough public money available to take chances with it.
Comment by plutocrat03 Wednesday, Jan 16, 08 @ 11:25 am
If it’s sold, maybe someone will finally clean it up. I can no longer stay at the “Stinkin Lincoln” because I’ve had too many gross experiences. It’s like a chicago cab. They never really clean the rooms, just put more deodorizer. Blech.
Comment by Chicago Cynic Wednesday, Jan 16, 08 @ 11:33 am
Oh, and yes I have to say I’ve been very pleasantly surprised by Alexi. Didn’t see that coming.
Comment by Chicago Cynic Wednesday, Jan 16, 08 @ 11:33 am
Without taking any credit away from Alexi for stepping right up to the plate:
-As I recall, the hotel owners had the foreclosure tied up in court for most, if not all, of JBT’s time as Treasurer.
-It’s also noteworthy that once the Treasurer seized control, the “owners” could not charge their legal fees to the hotel and had to pay them personally. IMHO, that could hve caused them to rethink the viability of their case.
Again, kudos to the Treasurer.
Comment by Arthur Andersen Wednesday, Jan 16, 08 @ 12:00 pm
“Going forward, the days of sweetheart deals and cronyism at taxpayer expense are over,”
What a silly thing to say. No one believes that because everytime we hear it the person making it is exposed to be a crony. Naive!
Comment by VanillaMan Wednesday, Jan 16, 08 @ 12:14 pm
Arthur Anderson, as I recall the Hotel was pushing litigation during the JBT period to force the State to honor the low cost buyout sweetheart deal she offered them in the first place. Ryan then madigan were fighting to stop them. So it was tied up in court, but it was because of JBT and the issue was letting them get their sweetheart deal that had to be concluded.
Comment by Ghost Wednesday, Jan 16, 08 @ 12:28 pm
Ghost, point well made. AA’s feeble old mind stands corrected.
Comment by Arthur Andersen Wednesday, Jan 16, 08 @ 2:15 pm
VanillaMan - I hope you were being snarky. If not, I boo you for your negative outlook. Alexi may not be able to cure the sweetheart deals and cronyism wrought by other administrations, but let’s give him credit for doing what he can to get it out of his office. There should be more people like him at all levels of government.
Comment by Bill S. Preston, Esq. Wednesday, Jan 16, 08 @ 2:31 pm
If you need some help you can try to work with the Gov’s office, to no avail, OR you can contact the office of the AG or Treas. and you get lots of real help. (My experiences as well as those of my friends and acquaintances.)
I have always felt that the top dog’s attitude trickles down, and this seems to be the case with both Lisa and Alexi
as well as Rod 
Comment by Pot calling kettle Wednesday, Jan 16, 08 @ 2:59 pm
“The kid’s alright.”
Somewhat surprisingly, that’s turned out to be true. Based on the stuff he aparently was into at his family’s bank, he has, so far, turned out to be quite activist & doing a ‘good’ job?
Just hope it’s not all fluff.
Comment by Dear Rich.... Wednesday, Jan 16, 08 @ 4:39 pm
Alexi wasn’t “into things” at the bank. He is doing a great job. Many of us expected him to.
Comment by Way Northsider Wednesday, Jan 16, 08 @ 7:44 pm
To those of us who know Alexi this comes as no suprise, the Treasurer is man of great ethics and ideas and the performance of his office in its first year reflects exactly that. To Rep. Fretchey’s “I told you” I would like to add “You have seen noting yet”..stay tuned
Comment by Luis Wednesday, Jan 16, 08 @ 7:55 pm
Oh, for Pete’s sake, he HAD to do it, or risk losing his reelection bid. Anybody doing those kind of deals under the current atmosphere of scrutiny would be certifiably insane (Blago, where’s YOUR certificate?). Trust me, Rodogno would have done the same thing if she had won. And not because she wanted to; because she HAD to.
Comment by Snidely Whiplash Wednesday, Jan 16, 08 @ 11:57 pm
IMHO, you guys are way too tough on JBT. I haven’t done the math, but the deal she proposed would have taken the issue out, much as the current treasurer is doing now. The difference is that we don’t know yet what we can get for the hotel today until it’s sold, and then we will have to present value that back 10 years to see if her deal was really so bad.
I hope for the state’s sake I’m wrong but I will be pretty surprised if the state gets as much as $10m for the hotel in the next 18 months.
Comment by steve schnorf Thursday, Jan 17, 08 @ 12:08 am
Steve the deal JBT made allowed the current owners to keep the hotel, benefit from swiping all the money and poretending it was unprofitable, and basically have given them State tax dollars for free. technically they can come to the auction like anyone else and bid. They fought for years and years to avoid having the amount they must repay determined by the bid price from a foreclosure sale. Given the hundreds of thousands of dollars they spent trying to force the deal, it is clear they saw what a sweetheart deal it was for them.
The big questions is whether Springfield will get in bed with cellini to buy it back.
Comment by Ghost Thursday, Jan 17, 08 @ 8:19 am
Just for fun I went to The Mobil travel Guide which rates the Hotel as a three star.
The reviews were decidely mixed
http://www.mytravelguide.com/hotels/reviews-16095501-Renaissance_Springfield_reviews.html
It is clear that the hotel owners have done minimum maintenance with staff shortages. At $10 Million it on a price per room (316 rooms) it is priced at around $31.6K per room and with an average rack rate of $83 it meets the market price (only Hilton is more, Crowne Plaza is about equal.) At Full Occupancy that is only $26K per room, which means that it must generate considerable convention business and meal tickets to be a winner. You might get an Indian bidder…they are big in this market — provided that thee are no other financial encumbrances — mortgages and chattel mortgages on the personal property. I would not trust Cellini not to have done that.
There appears to have been little attention paid to room soundproofing. Looks like a candidate for condo conversion with about $60K per room in upgrades.
Comment by Truthful James Thursday, Jan 17, 08 @ 9:07 am
AG said he was going to do it and he did it. Good for him, and good for us.
Comment by Tango Charlie Thursday, Jan 17, 08 @ 5:01 pm