Illinois State Treasurer Alexi Giannoulias today sold the President Abraham Lincoln Hotel and Conference Center at public auction for $6.5 million, making good on his pledge to end a 29-year political and financial saga that has cost taxpayers nearly $30 million.
The money recouped from the sale of the 316-room hotel builds on the $5.65 million the Treasurer’s Office had previously recovered from a surety bond as well as $1.3 million in profits generated by the hotel, bringing the amount of recovered taxpayer funds to more than $13 million.
“Upon taking office, I vowed to finally put an end to this political debacle that has been an embarrassment to the people of Illinois for far too long,” Giannoulias said. “Today’s sale closes the book on the final chapter and will hopefully signal an end to sweetheart deals given to politically connected insiders.”
The auction was conducted by Chicago-based Sheldon Good & Company, a real estate auction firm selected through a competitive bidding process. The winning bid was placed by Steve Horve of Illini Hospitality, LLC of Forsyth. Horve owns five other hotels, including four in Central Illinois.
The sale is contingent on the buyer passing extensive background checks. If approved, the closing of the property will take place within 65 days. The Treasurer’s Office expects the new owners to assume operation of the hotel by Spring 2010.
The state did not expect to recover the full $30 million of lost taxpayer money, a casualty of cronyism and insider dealing. In 1995, the previous Treasurer’s administration wanted to settle on a $3.3 million selling price for the hotel, a deal that was blocked by the Illinois Attorney General.
“I’m pleased we were able to recover money for Illinois taxpayers but I would only have been satisfied if the state could have recovered the entire $30 million owed by political insiders who fleeced the state under a deal that never should have been made,” Giannoulias said. “Now, this hotel finally has a chance to fulfill its promise to become the economic engine for downtown Springfield.”
The Lincoln Hotel saga began in 1982 when its politically-connected owners received a $15.5 million state-backed loan through the Illinois Insured Mortgage Pilot Program to build the hotel, which opened three years later as the Ramada Renaissance.
The owners soon fell behind on their mortgage payments. State officials restructured the loan agreement in 1990 and required payments only when the hotel made a profit.
The owners stopped making regular payments in November 1997. Two payments amounting to less than $143,000 were made in 2002. In 2005, the hotel lost its franchise agreement and Marriott International, Inc. pulled its flag.
By the time the Treasurer’s Office gained title to the property in March 2008, the outstanding principal and interest had ballooned to more than $30 million with interest growing at more than $70,000 per month.
Within two months of the state takeover, the Treasurer’s Office turned over the findings of an independent audit to the FBI suggesting that the former owners of the Lincoln Hotel diverted $2 million for personal expenses – rather than show the hotel was in the black.
Under state ownership, the hotel has turned $1.3 million in profits, $375,000 of which was re-invested into upgrading the hotel. Improvements included purchasing new mattresses and linens for the first time since it opened and making much-needed repairs and renovations to the hotel lobby and restaurant.