Wheeling's Westin Hotel hit with foreclosure suit

Despite a foreclosure suit, Wheeling's most prominent hotel will remain open and operate as usual, according to Wheeling village officials.

"We have no knowledge that it wouldn't," said Director of Finance Michael Mondschain. "We are meeting with Westin officials next week and haven't heard anything from them so far that would indicate they would close."

Harp Group Inc., of Oak Brook, built the Westin Chicago North Shore in 2006 but cashed out most of its stake when a New York company called Marathon Funds bought into the project in 2007.

Representatives from Harp Group and Marathon didn't return phone calls this week and neither did Starwood Hotels, who runs the Westin.

According to a foreclosure lawsuit filed last month in Cook County Circuit Court, Marathon missed its Jan. 9 loan payment. Currently, Marathon owes $86.6 million including interest and fees, according to the complaint.

The 17-story, 412-room hotel opened in October 2006. Wheeling officials have always taken a keen interest in the development at the southeast corner of Lake-Cook Road and Milwaukee Avenue, viewing it as a beacon to attract major conventions, shoppers and customers for the village's Restaurant Row.

From the beginning, the $100 million project got some major help by being in a tax increment financing district, which allowed the village to contribute about $20 million to the project. That money currently is being repaid with the increase in property taxes collected in the district because of new development.

When it opened, the hotel was expected to generate as much as $1.3 billion in direct revenue over the next 23 years and an additional $3.5 billion indirectly in the local economy, according to a feasibility study by developers.

"It's huge," said Mondschain about the hotel's economic impact on tax collections for Wheeling's general fund and TIF funds. "Obviously, we're very concerned and are keeping a close eye on what happens."

Wheeling knew the hotel was in trouble when it was placed on an industry watch list in December, Mondschain said.

"But there is very little could do," he added.

A year ago, Harp wanted the village to assess a 4 percent "conference center tax" a year ago that would've applied to all hotel guests and most diners. With the money, about $1 million a year, Harp would have reacquired a controlling interest in the hotel, added about 100 spaces to the parking area and created open space at forest preserve land adjacent to the hotel.

Wheeling trustees were skeptical about the idea in August 2009 and never brought up the idea for a vote.