Westin Book Cadillac/photo: Michigan.gov
For two decades, the carcass of the shuttered, but famed Book Cadillac on Washington Boulevard was a sign of despair, a symbol of what once was in downtown Detroit.
Then in 2008, the grand hotel re-opened as the Westin Book Cadillac, a sign of rebirth in a downtown that was littered with abandoned, tall buildings, a commercial graveyard if you will, an area where the American and Lafayette Coney Islands were among the few sustainable businesses.
Now, that symbol of rebirth is coming back to haunt those who have worked for the city of Detroit.
Joe Guillen of the Detroit Free Press reports that Detroit's two pension funds are at risk of losing at least $24 million, the result of loans to the hotel. Not such good news for city pension funds that are reportedly underfunded by more than $3 billion dollars, and a time when the city has filed for bankruptcy.
Guillen writes:
The owner of the iconic Westin Book Cadillac Hotel has not made a single payment to the Detroit General Retirement System on a $9-million loan made in 2006 to help renovate and open the hotel. That same owner, the Ferchill Group, has not paid back a $15-million loan backed by the Police and Fire Retirement System. The hotel has struggled financially since reopening in 2008, but the Ferchill Group CEO says it is not in danger of closing.
But neither of the funds’ investments are being repaid. The General Retirement System has limited options under the loan agreement to force payment on its investment, one of several real estate deals that have tanked for the pension funds.
Guillen reports that Detroit emergency manager Kevyn Orr is looking into the pension funds’ real estate deals as he investigates Detroit employee benefits programs. Bill Nowling, Orr's spokesman, says the Book Cadillac investment raises concerns about the years of questionable management of the pension funds.
