Beds in their Heads

Rants and Raves of Mac McIntyre

In one of those darkly lit e-cigaretteless closed session meeting rooms where final decisions are allegedly not made the DeKalb city council and administrators paid for an “expert” study custom designed to tell them and any would be developer that a hotel-conference center on the banks of the Kishwaukee River right between NIU and Downtown DeKalb would be about the wisest investment venture capitalists and local taxpayers could make.

According to documents obtained by Lynn Fazekas at CityBarbs the city paid $19,500 for a two-part study that was incorporated into the DeKalb City Center Plan amendment to the comprehensive plan without public notification because of the city manager’s spending authority ($20,000 limit). Part of that report discusses one form of public investment under consideration that includes the City paying for the proposed conference center component of the development through selling tax-exempt municipal debt bonds.

The hotel/conference center boondoggle has been going on in Illinois since 1982 when then Gov. Jim Thompson (R) and Treasurer Jerry Cosentino (D) announced that the state would lend $100 million at what were low interest rates at the time to build hotels and shopping centers to create jobs and breathe new life into the state`s troubled construction industry.

By 1988 the state had to devise a bailout plan for three of the state-financed hotels — the Ramada Inns in Springfield and Mt. Vernon and a Hilton in Collinsville. State loans were renegotiated at taxpayers expense to a Springfield group headed by William F. Cellini, a major campaign contributor who once headed the state Department of Transportation under former Gov. Richard Ogilvie; a Collinsville group headed by Gary Fears, a campaign fundraiser for Thompson; and a Mt. Vernon group headed by businessman Fletcher Farrar, another Thompson campaign contributor.

In 1991 the loans were again renegotiated by Cosentino on his way out as Treasurer. He was replaced by Pat Quinn (D) who campaigned hard against the Cosentino/Thompson hotel deals and debt restructuring.

By 1995 Treasurer Judy Baar Topinka was trying to settle $40.3 million in state hotel loans for 25 cents on the dollar. The settlement was blocked by then Attorney General Jim Ryan (R) who contended a study showed the state should collect more money.

Cellini was also close to the Blagojevich administration and was later identified as “Individual A,” in the indictment of the former and imprisoned governor’s adviser and fundraiser Antoin “Tony” Rezko.

State funds for hotel construction were all but (Cook County) eliminated. If not for local TIF the boondoggle might have died.

In May of 2013 Mayor Rahm Emanuel and the ‘reformed’ Governor Pat Quinn announced that the Chicago Exposition Authority would be building a giant hotel not far from the McCormick Place convention center. The original plan called for $70 million in stadium construction costs to come from the McPier bond fund backed by local hotel taxes and $33 million in land costs to be paid for by the surrounding TIF. Another $21.5 milion in TIF funds would have been used to buy land. The plan has since morphed into a heated proposal for the city to devote the $55 million of TIF money to purchase land for the headquarters hotel and absorb a chunk of  development costs.

Copycat disasters include the western suburb of Lombard which had its credit rating downgraded by Standard & Poor’s prompted by the village’s refusal to make a $1.9 million payment on debt issued by the Lombard Public Facilities Corp., (whose board is appointed by the mayor) that was created in 2003 to build the 500-room Westin Hotel and conference center that opened in August 2007. Revenue projections were hammered by the economy bringing in less than half what was expected. The village promised to back most of the bonds — $161 million of the total — but it has refused to honor that pledge while trying to work out a long-term restructuring plan.

Sometimes life gets in the way of the best of plans.