Lombard trustees deny funding for Westin bonds
Faced for the third time with the question of whether to assist the agency that owns the Westin Lombard hotel with a looming bond payment, Lombard trustees for the third time have said "no."
The Lombard Public Facilities Corp., an agency created to finance construction and operation of the hotel, sought $1.9 million to help make a loan payment due Jan. 1.
The request came because the hotel continues to fall short of revenue projections made before it opened in August 2007.
The village board's denial means the Lombard Public Facilities Corp. will use reserves to make the payment, Finance Director Tim Sexton said.
But those reserves won't last forever.
Based on previous shortfalls, Sexton said one reserve account is likely to run out in January 2014 and another sometime in 2015. A review committee consisting of Acting Village President Peter Breen, Trustee Bill Ware and former Trustee Ken Florey is preparing a report about options for handling the debt in the future.
"We are continuing our review, but we have not issued a report yet," Breen said. "We have no reason to recommend the board change its current stance."
Sexton said the committee is examining ways to restructure the debt before reserves run dry.
In the meantime, trustees last week stuck to their unanimous denial of appropriating taxpayer money to fund the Westin's debt.
The hotel never has hit its revenue projections, partially because of the economic downturn, Sexton said.
Projected to bring in $14.6 million in 2008 -- its first full year in business -- the Westin made $6.7 million. Through the first three quarters of 2012, the hotel was projected to generate $58.8 million, but brought in less than half that amount at $22.2 million.
"It appears the original predictions were too high to begin with," Sexton said. "And the hotel opened right as the hospitality industry was sinking."
The village's first denial of funding to assist with a bond payment a year ago triggered a downgrade of its credit rating to BBB from AA, but the rating has not dropped again since then.