State takes over control of controversial hotel

SPRINGFIELD -- A boondoggle hotel that had become a financial albatross for taxpayers and a political one for others is now being run by the state, officials announced Tuesday.

Illinois Treasurer Alexi Giannoulias said the state had taken possession of the President Abraham Lincoln Hotel and Conference Center in downtown Springfield after purchasing the hotel's title for $100,000.

"Financially, the hotel has begun to see dramatic improvement after two decades of mismanagement and financial loses," Giannoulias said during a Capitol news conference.

This particular property has cost taxpayers millions over the years after its former owner failed to make loan payments. Giannoulias hopes to soon sell the hotel, with the proceeds covering part of the nearly $30 million the former owners owe.

The hotel's problems began soon after development groups headed by Republican power broker William Cellini of Springfield and Metro East businessman Gary Fears received about $29 million in state loans in 1982 and 1983 to build what was then known as the Renaissance Hotel in Springfield and the Collinsville Hilton Hotel.

The Springfield hotel opened in 1985, but soon after the owners fell behind in payments. After years of legal wrangling that stretched to the Illinois Supreme Court, a judge recently cleared the way for the state to foreclose on the hotel.

"This hotel was built on false premises, but after 25 years its future is finally beginning to brighten," Giannoulias said.

Giannoulias said that after a court-appointed receiver began running the hotel last year, profits increased. From March through December 2007, the hotel generated a profit of $1.3 million. During the same period in 2006, the previous owners reported making about $238,000. Loan payments were based on hotel profits.

It's the first major development on the troubled hotel since 1995 when Giannoulias' predecessor, Republican Judy Baar Topinka, offered to settle the outstanding loan for $3.7 million, a fraction of the total due. Amid public and political outrage, then-Attorney General Jim Ryan killed the deal, and it haunted Topinka's career all the way through her failed bid for governor.

The Collinsville hotel hasn't fared any better. The owners also fell behind and owed more than $31 million before the state also recently foreclosed on the hotel.

State officials hope both hotels are sold before the end of the year.