Comeback Plan for Hotel Syracuse Looks to be Dead
Company's option to tower wing
expires. Sale of assets may be next.
Thursday, September 30, 2004
By Frederic Pierce, Staff writer
A plan to bring the tower wing of the Hotel Syracuse back to life as
an independent, 190-room hotel appears to be dead, Syracuse's economic
development director said.
A Rhode Island company's option to purchase the 21-year-old addition
to the historic hotel expired in August, shortly after the bank that
owns the hotel backed away from a deal approved by the U.S. Bankruptcy
Court in Utica.
"As far as I know, that deal is dead," Economic Development Director
David Michel said Wednesday.
City officials had hoped the deal with The Procaccianti Group of
Cranston, R.I., would go through even after a deal to transfer ownership
of the hotel's original, 1924 building to the city appeared to fall
through this summer.
That seemed less likely than ever last Friday when the federal
trustee overseeing the Hotel Syracuse's bankruptcy filed for permission
to auction off all three of the downtown landmark's properties and
liquidate its assets.
Assistant U.S. Trustee Guy Van Baalen filed in federal bankruptcy
court Friday to immediately change the hotel's Chapter 11 status to
Chapter 7, which often precedes the sale of a defunct business' assets
to pay its creditors.
Van Baalen's motion said negotiations between the city and First Bank
of Oak Park over $1 million in back taxes and the transfer of the
property have been unsuccessful.
It noted that even though the hotel closed May 28, it continues to
incur costs, which could reduce the amount of money available for
City officials, however, don't think an auction will come to pass.
Lawyers for Syracuse and the bank are still talking, Michel said.
City lawyers have told him that the bank would take possession of the
building itself before it allowed it to go to auction.
Although the bank was the only bidder at a 2002 auction of the
property and assumed control to cover millions of dollars in mortgage
payments it was owed, it never formally closed on the building.
The situation looked like it was nearing resolution this summer when
Bankruptcy Judge Stephen Gerling approved a complicated deal that would
have transferred the historic part of the hotel to a non-profit arm of
the city, give the city its back taxes and reward the bank with a
multi-million-dollar tax write-off.
A New Orleans company was set to pour $90 million into the rundown
hotel building and transform it into a four-star hotel catering to
Onondaga County's nearby convention center.
As part of the deal, Procaccianti - which had been managing the Hotel
Syracuse for the bank - was prepared to buy the tower and open it
independently next spring. Two months ago, the Syracuse Industrial
Development Agency voted to give the project tax breaks if the
developers went forward.
Restaurateur Michael Ghabarou, meanwhile, had been trying to buy the
third hotel property, the old Addis building on Salina Street, and turn
it into a food court similar to the one he used to run at the nearby
Galleries of Syracuse.
All those plans seemed to unravel, however, when the bank asked
Gerling to be let out of the deal in July. The bank's accountants had
advised against it after discovering that the lucrative tax break
officials thought the bank would receive would not work the way they
"I expected that would happen," Council President Bea Gonzalez said
after learning that the Procaccianti proposal is unlikely to happen. "I
didn't expect any good news to come out of the hotel once the original
deal fell through."
Procaccianti had planned to invest $13.2 million in the 1983
structure, and open a new hotel with a lobby and entrance on South
That hotel would be run independently of the original, 600-room Hotel
Syracuse and cater to a more middle-income clientele. The group had
talked with Hampton Inns and other national hotel chains about a brand
affiliation, but nothing had been settled on.
Ghabarou Wednesday said he still hopes to move forward, regardless of
what happens to the rest of the Hotel Syracuse complex.
© 2004 The Post-Standard.