11 Detroit developments behind on Section 108 HUD loans
Updated On: May 09 2013 07:01:03 PM EDT
Officials in Detroit are asking a big question about developments in the city -- where's the money?
Section 108 HUD loans have long been used to spur urban development, but the idea is to pay the money back.
Several downtown Detroit hotspots, such as the Westin Book Cadillac, are behind on loans that are leaving the city out of millions of dollars.
The Book Cadillac is behind on loans that total $3.23 million. They are not the only hotel behind on payments.
The Inn on Ferry Street boasts on their website that they set the standards when it comes to comfort and elegance. The city, however, finds little comfort in their balance sheet. When it comes to paying off section 108 loans, many other developments are also behind.
The Garfield Building owes $ 2.5 million and the Fort Shelby hotel owes $4.1 million.
In all 11 loans on developments in the city are now overdue. The administration informed City Council today that the debts total nearly $25 million.
"We're basically telling people who have taken out these loans that, 'Oh don't worry about it just pay us when you get the money together and when the economy turns around,' we'll never get it," said Councilmember Ken Cockrel, Jr.
The Fort Shelby opened its doors in 2008 when the economy was in free fall. Two years later, the city wrote a letter to the hotel saying it "would continue to forebear from declaring a default."
Councilmember Saunteel Jenkins calls the letter inappropriate.
"I get requests all the time from people asking for letters of support or things of that nature and I turn them down all the time because even if I support the project, it just does not look right," Jenkins said.
Local 4 reached out to all the developments with past due loans. Advisors from The Book Cadillac were the only ones to respond. Members say they met today to discuss a payment plan for the city.