The beleaguered Collinsville Holiday Inn, a sore point in a decades-old political debacle, could be sold within a year, said state officials who only last week foreclosed on the debt-ridden property.
Built with millions of dollars of unpaid state loans, the hotel has been mired in decline and debt. This year, state Treasurer Alexi Giannoulias moved to formally reclaim the property.
The loans, to politically connected developers in 1982, were part of a statewide economic development program. But the local developers never made good and now owe a total of $32 million.
Monday, Giannoulias toured the hotel and said the foreclosure, which concluded Thursday in Madison County Court, marked the start of a turnaround for the hotel. The state plans renovations and a resale in hopes of salvaging something from its investment.
Officials are in talks with the Holiday Inn franchise about repairs that need to be made and hope the property will be a hot item at a national auction.
"I am proud to say that last week marked the start of a new beginning for this hotel," Giannoulias said. "This hotel should serve as an economic engine for the Metro East, not as a burden for the state."
Giannoulias, however, did not sugarcoat the issue. He declined to speculate on a final sale price but said clearly that the state would ultimately take a loss.
"Let's not kid ourselves. This hotel was built on false promises," said Giannoulias, calling the loans to developers Gary Fears and B.C. Gitcho a "sweetheart deal that never should have been made."
Though the original debt stood at $13.4 million, the project fell behind almost immediately. Fears and Gitcho continued to renegotiate their financing and eventually won provisions that required them to pay only if they made a profit.
Their last payment was made in 1998, according to state records. Officials have said they believe that poor, and perhaps criminal, management led to the ballooning debt.
Gitcho declined last week to comment to the Post-Dispatch and has previously described the hotel as a failing venture.
The hotel would seem to have sure-fire potential, sitting adjacent to the Gateway Center, one of the bistate region's largest convention sites, and only about 10 minutes from downtown St. Louis. Local officials hope that a turnaround of the hotel's fortunes could also be a boon for the area.
"The city (of Collinsville) and the Gateway Center have a huge stake in this," said Paul Mann, Collinsville's community development director. "We've lost a lot of business here because of this facility being degraded so much."
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