PEORIA — At-Large Councilwoman Beth Jensen called it "a terrible choice for us," while 1st District Councilwoman said it was "the ugliest bill I've ever seen."
But both joined a 9-2 majority on the Peoria City Council that approved a refinancing plan for the Marriott Pere Marquette hotel on Tuesday night.
That plan will ensure that the hotel, in financial trouble since last winter when Marriott threatened to pull its flag because of the failure of developer Gary Matthews to make payment on franchise fees, will stay in business as a full-fledged Marriott property.
While Matthews remains the hotel's owner, the Dallas, Texas-based Aimbridge Hospitality, LLC, will take over management of the hotel.
The deal involved $38.5 million in refinancing for one year — at 10 percent interest — while $2 million comes to the city to pay off part of the $8.2 million loan made to Matthews. The city will convert its mortgage on the property to an unsecured loan while creating a Special Service Area hotel tax of 4 percent for the Pere Marquette and adjacent Courtyard properties.
The SSA tax is expected to yield $400,000 a year for the city, a figure that is conservative, said Peoria attorney John Elias, who worked with the city on the hotel deal.
Had the council chosen not to approve the deal, a foreclosure hearing scheduled for Thursday in Peoria could have brought bad news, said Elias. "The likelihood in a foreclosure decision is that the city's position could be wiped out," he said.
At Large Councilman Sid Ruckriegel noted that more lies ahead with the arrangement. "This is a short-term patch not a long-term solution," he said, adding that the city was "a precarious situation."
City Manager Patrick Urich pointed out that the city was liable for $44 million in the deal. "If the hotel shutters, we're still on the hook," he said.
Urich said that local lenders — Morton Community Bank, South Side Bank and Caterpillar Inc. — along with Washington, D.C.-based INDURE Build-to-Core Fund — couldn't be persuaded to accept a deal that would have removed Matthews as owner, a deal that would have seen the lenders take ownership, a deal preferred by At-Large Councilwoman Beth Akeson who, along with 4th District Councilman Jim Montelongo, voted against the hotel proposal.
Jensen agreed with Akeson that the proposal was preferable but was turned down by the lenders, leaving the council no choice.
Steve Tarter covers city and county government for the Journal Star. He can be reached at 686-3260 or starter@pjstar.com. Follow him at Twitter@SteveTarter and facebook.com/tartersource.