Lombard denies hotel bond funding request
In a move the village of Lombard expects every six months, the agency that owns the Westin Lombard Yorktown Center asked the village for money to help it make a bond payment due July 1.
And in a move the village has made once before, trustees voted to deny funding to the Lombard Public Facilities Corporation.
The village board also voted Thursday to create a three-member committee to review information on the hotel and make recommendations about how to handle it -- and the financial issues it is facing -- in the future.
"The village board wanted to establish an ad hoc committee to review publicly available information on the hotel," as well as facts and trends about the hospitality industry in general, Finance Director Tim Sexton said. The committee also will look into the future and evaluate the best course of action for when payment deadlines for other series of hotel bonds occur, said Trustee Bill Ware, who was appointed Thursday as one of its members.
The committee, which also includes Trustee Peter Breen and former trustee Ken Florey, will meet quarterly and bring its findings to the village board, Village President Bill Mueller said.
"It's going to continue to be an issue, so it's good for us to put a committee together," Breen said about the hotel bond obligations.
The Lombard Public Facilities Corporation, which was created to finance construction and operation of the hotel and conference center, had requested $1.3 million from the village to help it make a bond payment to investors due July 1.
Hulseberg recommended the village deny the funding request and trustees agreed -- unanimously. The village denied a similar request for about $900,000 six months ago, the first time the public facilities corporation struggled to make a bond payment since the Westin opened in August 2007. A reserve fund insures hotel investors still receive their scheduled payments.
The consequence of the previous denial of funding was a downgrade in the village's issuer credit rating to BBB from AA, which village officials said at the time was something they anticipated.
Sexton said Thursday he is unsure whether the funding denial trustees approved Thursday will result in another credit downgrade.
The need for additional funds to pay bonds arose before a payment due Jan. 1 because the hotel has been falling behind revenue projections.
It was projected to bring in $14.6 million in 2008, its first full year in business, according to figures from Sexton. Projections grew to $16.4 million in 2009, $17.9 million in 2010 and $18.5 million in 2011.
While the hotel's actual net operating income has grown from $6.7 million in 2008 to an estimated $12.6 million in 2011, revenue has remained below the projected amount each year.
The newly created committee to study the hotel and the hospitality industry has not yet set its first meeting date.