Why the city should not be in the loan business
Yes, this is one problem Mayor White inherited, but it still illustrates why Houston should not be in the loan business:
City officials are hoping to work out a new financial agreement with the owners of two downtown hotels that have defaulted on nearly $15 million in city loans.
[snip]
The city lent $5 million to the ownership of the Crowne Plaza, at 1700 Smith, in February 2000. The owners have yet to make a full payment since the first one came due in March 2001.
The city also lent $9.5 million to the owners of the Magnolia, at 1100 Texas, in October 2002. The Magnolia ownership hasn't made a payment since its first one came due in November 2003. Walsh said Wednesday that the Magnolia also is in danger of becoming delinquent on its property taxes to the city and other taxing entities by the end of this month.
The city can't foreclose on the hotels, Walsh said, without the agreement of North Houston Bank, which is the primary lender and first lienholder on both hotels. The Crowne Plaza still owes the bank $14.4 million, and the Magnolia owes it $27.8 million.
Both hotels are current on their payments on the bank loan.
The hotels can keep up with their bank payments, but not city payments. And the city has little ability to force the issue. Nice.
I'm sure Mayor White is trying to get this resolved, but it's a good idea to remember that some of the city's financial problems couldn't have been that big of a surprise to the mayor, since White played a part in the budget process during the Lee Brown administration.
RELATED: Businesses not repaying Houston development loans (bH)
Posted by Anne Linehan @ 06/19/05 11:36 AM | Houston Politics | Print | Comments (6)
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