PEORIA — City officials view prospects for resurrecting the Marriott Pere Marquette hotel deal as ranging from bad to worse.
Tuesday's agenda for the Peoria City Council includes a refinancing agreement with developer Gary Matthews featuring a $2 million payment by the developer with the proposal for a 4-percent hotel tax for a Special Service Area including the Hotel Pere Marquette and the adjacent Courtyard property.
It was just a year ago that talk about the stately Pere Marquette, Peoria's oldest hotel brought back to life by a $100-million makeover in 2013, was in danger of losing its affiliation with the Marriott chain due to Matthews being behind in making payments.
The latest trouble stems from the hotel's biggest investor beginning foreclosure proceedings in Peoria County Circuit Court. The INDURE Build-to-Core Fund, an arm of the Washington, D.C.-based National Real Estate Advisors, is seeking a judgment of almost $39 million and the sale of the property to pay back the investment.
The next foreclosure hearing is scheduled before Judge Kate Gorman in Peoria on Thursday.
While the city of Peoria holds a mortgage on the property, it's not one of the lead lenders. "The banks will get theirs but (Peoria) taxpayers are on the hook for $8 million," said Chuck Grayeb, the 2nd District Councilman.
The amount that Matthews owes the city is estimated to be between $7 million and $8 million.
The hotel complex includes the Pere Marquette, built in 1926, the Courtyard by Marriott that opened next door to the Pere in 2014 and the parking garage that serves both properties. Assuming hotel revenues of $10 million a year, the hotel SSA tax would raise $400,000 a year for the city
The financial difficulties that Matthews has encountered has raised the issue of the hotels' affiliation with the Marriott, the world's largest hotel chain that has set and extended multiple deadlines over the past year for the removal of its flag.
That affiliation is considered imperative for the hotels' viability. "The developer is trying to refinance, but we've got to have a place marker in there for our share," said 3rd District Councilman Tim Riggenbach.
"I think the important thing for us is we still have the responsibility for city taxpayers. We want to make sure we're protecting them as best we can," he said.
The hotel's difficulties were discussed by council members at several executive sessions in December, but Grayeb questioned any further scrutiny in private. "The purpose of the executive session serves no one. The public needs to know," he said.
Also on the council agenda for Tuesday is an ordinance that would hike the sales tax within the SSA area at the Westlake Shopping Center from 0.75 percent to 1 percent. The SSA sales tax was initially levied in 2014. The new funds are being sought to buy for additional security patrols, improved lighting and new perimeter sidewalks at the shopping center.
Steve Tarter covers city and county government for the Journal Star. He can be reached at 686-3260 or starter@pjstar.com.