Lombard board again denies Westin bond funding
In what has become a routine vote, the Lombard village board unanimously refused Thursday to assist the agency that owns the Westin Lombard with an upcoming bond payment due July 1.
Lombard Public Facilities Corporation, the agency that was created to finance construction and operate the hotel and conference center, asked the board for nearly $2.6 million to make up its bond payment shortfall.
"In the event that the facility doesn't generate enough revenue to pay off, in this case, the mortgage … the LPFC is legally required to ask the corporate authorities of the village to step up and pay whatever the shortfall is," Village Manager Scott Niehaus said.
"That takes place every six months."
Since it opened in 2007, the hotel has fallen short of revenue projections.
Thursday marked the eighth time since late 2011 that the board has said no to the corporation's request to use taxpayer dollars to help pay the loans.
When the village board said no in the past, the corporation used non-village reserves to make payments. But Finance Director Tim Sexton said those reserves ran out with the latest loan payment on Jan. 1.
"This is mainly a debt issue that the LPFC is working on resolving with the bondholders," he said.
Village officials say the board's denial of providing funds does not affect taxpayers or the village's general fund and day-to-day operations.
"The hotel and conference center is staying open," Niehaus added. "The lights are not going dark there."
However, the board's decision to say no has resulted in its credit rating being lowered from AA to BBB in January 2012 and from BBB to B in February 2014.
"The S&P (Standard & Poor's) bond rating for the village was based on a moral obligation, as opposed to any legal obligation of the village to have to make up the shortfall," Niehaus said.
Village officials say the credit rating drop would only impact taxpayers if the village tried to issue debt.
"I think whenever the bondholders' debt resolution process is identified, that's when the village can probably start looking at its road map toward a better bond rating," Niehaus said. "Until then, we'll still operate our capital on a cash basis."
In addition to its denial to help pay the shortfall, the board also agreed Thursday to disband a committee formed in 2012 to study the hotel and make recommendations on how to handle it.
"What we've been doing is communicating directly with the entire board, and we have new board members, too, now," Niehaus said. "I think it's been a collective approach as far as the village's monitoring of this."