Taxpayer-funded Lombard hotel filing for bankruptcy

Taxpayer-funded Lombard hotel filing for bankruptcy

A decade-old, 18-story, taxpayer-funded hotel in the village of Lombard is headed for bankruptcy, proving to be a misguided investment of taxpayer dollars.

The village of Lombard’s agency in charge of an 18-story Westin hotel is filing for bankruptcy to restructure nearly $250 million in debt.

The Daily Herald reported that the bankruptcy comes with a $3 million commitment from the village to pay back a portion of hotel bonds. The Lombard Public Facilities Corp., which owns the hotel, formed in 2003 after Lombard officials successfully lobbied Springfield to change state law to allow the village to develop and own a hotel and convention center. Their lobbying efforts led to an amendment in the Illinois Municipal Code that changed references from “city” to “municipality” in reference to owning and operating convention centers.

The 500-room Westin was built in 2007, but it hasn’t met revenue projects over the last decade, and in 2014, Standard & Poor’s downgraded the village to junk-bond status based mostly on the financial mismanagement of the hotel. Village officials hope making the payment will help stave off future downgrades, but the entire hotel boondoggle is already a prime example of a government’s misguided priorities in public investment, which comes at the expense of taxpayers.

Lombard sits in DuPage County, where homeowners pay the second-highest property taxes in Illinois and the 27th-highest in the nation. That’s promised to get worse: DuPage County property owners are going to pay an average 1.76 percent more on their tax bills in 2017. When Lombard makes risky, unnecessary bets with taxpayer dollars, the village is only adding to the burden.

And the village isn’t just gambling Lombard tax dollars: In 2016, Lombard received more than $4.3 million in state funds from the Local Government Distributive Fund, or LGDF. The LGDF distributes money based solely on each government’s share of the population, not on need. Given the village’s recklessness in putting taxpayer money toward a hotel, the $4.3 million from state taxpayers certainly wasn’t needed.

The village is now planning to create a tax increment financing, or TIF, district to help redevelop the area east of the hotel. A TIF district freezes property values for up to 23 years, with any additional property tax money collected within the district in that timeframe going to a special fund that would then pay for the project. But this isn’t a more financially responsible plan, and it certainly isn’t a much better option for taxpayers. TIF districts fund redevelopment at the expense of other taxing bodies, such as schools and public works. It allows the government, in this case the village of Lombard, to pick winners and losers, forcing taxpayers to foot the bill at the expense of more critical public financing.

Lombard should re-evaluate how it prioritizes taxpayer money. Instead of putting taxpayers, both in the village and statewide, on the hook for failed pet projects, Lombard should focus on how to alleviate its tax burden, while still providing core services. Municipalities across the state, as well as state government, should follow suit, too, and not intensify one of the largest tax burdens in the country.

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