A debt restructuring plan in the works since the Westin hotel in Lombard filed bankruptcy last July is now in motion, meaning the hotel will stay open but bond holders won't get back all of the money they put into the project a dozen years ago.
The plan calls for the agency that owns the hotel to take on $142 million in new loans, payable during the next 33½ to 50 years, to replace $264 million in debt that has accrued since the facility first issued bonds in 2005.
Lombard Westin history2003: An independent hospitality study indicates the Lombard area needs a hotel and convention center.
2003: The village of Lombard, under state law, forms the Lombard Public Facilities Corporation, which will own the hotel instead of the village.
2005 and 2006: Lombard Public Facilities Corporation issues $183.7 million in bonds to finance hotel construction.
2007: Westin Lombard Yorktown Center opens with 500 rooms.
2008: Hotel falls behind revenue projections. Generates $6.7 million in 2008, below anticipated $14.6 million.
2011: Hotel remains behind revenue projections. Generates $12.6 million in 2011, below anticipated $16.4 million.
December 2011: Lombard Public Facilities Corporation asks village to pay nearly $1 million to fill bond payment shortfall. Village board refuses.
2012-2017: Every six months, Lombard Public Facilities Corporation asks for village assistance making bond payments; every six months, village board denies request.
July 2017: Lombard Public Facilities Corporation files for Chapter 11 bankruptcy protection in federal court.
March 6, 2018: Federal judge approves bankruptcy restructuring plan.
Next: Lombard Public Facilities Corporation expected to issue $142 million in new bonds to replace $264 million in accrued debt;
Today, March 16: Village of Lombard will return $3 million to Lombard Public Facilities Corporation, which it had borrowed to make water main improvements at the hotel site.
2027: Deadline by which village must pay $3.7 million to Lombard Public Facilities Corporation for physical improvements at the hotel.
2067: Deadline by which Lombard Public Facilities Corporation is scheduled to repay all $142 million in new debt.
The plan also calls for Lombard to provide a total of $6.7 million -- $3 million now and the rest by 2027 -- to repay funds it used to make water main improvements at the site and to support future improvements to the hotel and convention space at 70 Yorktown Center.
The village doesn't own the hotel, but it does appoint members to an agency called the Lombard Public Facilities Corporation, which was created under state law in 2003 to own and manage the building. Village Manager Scott Niehaus said Lombard has a vested interest in the hotel's success because it props up the town's tax base with tourism spending.
"It's important that the Westin remain viable," Niehaus said.
Officials say the restructuring agreement allows for continued hotel operations.
Under the plan, a three-member board of the public facilities corporation will continue to own the building and oversee management contracts with hotel and restaurant operators.
The public facilities corporation will be on the hook to repay the $142 million in new bonds once they are issued, and will use only hotel revenue -- not any of the $6.7 million from the village -- to do so, Niehaus and Finance Director Tim Sexton said.
The village's money, however, will contribute to a three-year, $10 million facelift the public facilities corporation is implementing to upgrade amenities such as the parking lot, parking garage, banquet chairs and room finishes, which Niehaus said are "no longer up to Westin standards."
The work is expected to begin as an upscale senior living community under construction is expected to add 1,000 residents and $150 million in private investment to the Yorktown area, Niehaus said.
Village officials say this revitalization should help Yorktown Center fend off the national troubles facing shopping malls and continue to be a plus for the region.
"The hotel property," Niehaus said, "has had a positive impact to that extent."