Village Advances $217K for Radisson Hotel Expenses

The village’s involvement with the Menomonee Falls Radisson Hotel has become quite pricey, and it has made another cash advance to pay the bills at the hotel. 

Patch's review of municipal expenses revealed the village wired $217,903 to Lodging Investors of Menomonee Falls, the ownership group of the hotel, in three separate transactions during February and March.

On Feb. 1, the village wired the hotel $77,903 to pay the property tax bill due to the county. On Feb. 4, online tax records indicate, the January property tax payment — $77,902.76 — was made on the hotel property. Randall Crocker, an attorney representing the village in the ongoing foreclosure litigation, confirmed the purposes of the advances Monday. 

A second $77,900 payment will come due in July. 

On Feb. 20, the village wired the hotel $80,000. Of that amount, $60,000 was used for payroll and $20,000 was used for hotel cash reserves to meet ongoing obligations at the hotel, Crocker said. 

On March 7, the village wired $60,000 to the hotel. The money was used to pay sales tax to the Wisconsin Department of Revenue.

Closing the Gaps 

Unlike other businesses of its kind, the Radisson Hotel does not have a line of credit to tap into in order to fill gaps between revenue and expenses. 

“There are times when the cash flow collections don’t time with the expenditures; they can go into their line of credit. This hotel does not have a line of credit." Crocker said. “This hotel operates under budgeted projections, and when they get in the hole sometimes they need an advance.” 

Crocker said Seth Dizard, the receivership attorney appointed in November 2011, makes the requests to the village for advanced funds. 

“These monies that are being advanced come from the construction loan that’s outstanding. They don’t come from the general fund,” Crocker said. “So from time to time the village is called upon to address the shortfalls.” 

The village uses proceeds from the original hotel bond issue of $17.6 million to pay for the cash advances. 

"We still have proceeds from that bond issue that are unspent, and that's where they are coming from," said Village Manager Mark Fitzgerald. 

Other Cash Advances 

It isn’t the first time the village has advanced money for the hotel. Last June, the village spent $60,344 to pay the hotel’s full- and part-time employees. The village has also paid some $126,000 for an electronic reservation system and franchise fees.

At that time Crocker, an attorney for von Briesen and Roeper, told the Journal Sentinel no further shortfalls were expected. 

The following month, . The receivership attorney, Seth Dizard, said the village would be repaid by August 2012. After that meeting, Dizard clarified to a member of the public that the hotel is “paying its day to day obligations.”

The village has advanced a total of $484,000, and $216,000 has been repaid, Crocker said.

"The projections are that these protective advances will be paid back in the busier seasons. I'm hopeful we'll see part paid back in March, part in April, and the rest of it in May," Crocker said. 

Crocker said he would inform Patch when the repayments are made to the village. 

Hotel Doors Will Remain Open

Crocker said that the hotel has faced its obstacles with the negative media attention surrounding the hotel litigation. 

"Every time somebody runs a story about the hotel having difficulties, events get canceled," Crocker said. "Management will tell you dozens of events have been canceled ... the impact is negative on the cash flow. When that happens, it must sometimes be addressed by these protective advances." 

Crocker said the hotel continues to meet the needs of the community, and it has great potential. He also said the hotel is exceeding expectations and its performance compares to other Radisson franchises around the nation and world. 

"We've made it clear from day one that our goal is to keep the hotel open, sustain it, maintain and increase the value of the asset, and keep it a viable entity for the long term," Fitzgerald said. "As the lender, we are less likely to do anything dramatic on the closing of the hotel than a bank would be. It is more likely to stay open under our circumstances than any other financial institution." 

"There is no worry that it will be closed." 

Crocker added that in the next week or two, an outside professional management team will be brought into the hotel to work with the on-site employees. The names and faces at the hotel will remain the same, but Dean Grosskopf — one of the original owners — will no longer be associated with the hotel. The change was made possible after a judge granted the receiver expanded power over the hotel operations.

Crocker said the managment team will be more cost effective. 

"We have every expectation that 2013 will bring a return to normalcy," Crocker said.