this kind of project, you know how complex it can be."
The project stalled last spring due to financing problems. When Rendleman read about these problems in the newspaper, she
called Shaw and set up a meeting to see if IFA could help him over the hurdles. Shaw welcomed the help and together they
proceeded down several paths simultaneously.
First, IFA brought in an expert in the hospitality industry to do a feasibility study. His report confirmed what their
instincts were telling them, according to Rendleman. It pointed to three strong areas of demand.
The report revealed that the Edwardsville/Glen Carbon area has a very strong need for additional hotels. In addition, the
study collected information from within the university itself to determine its need.
"We collected information on how many times they (SIUE) had people come in and they were putting people up in hotels
outside of the campus and outside of Edwardsville, and it was extreme," Rendleman said. "They're lodging people in St. Louis,
in Collinsville and all over the place because there's no place in Edwardsville. That's fairly inconvenient. If you are
recruiting someone to the campus or you have an alumni event or you're trying to do a fund-raiser or you want to put up people
who are performing at the university, it would be very nice to be able to house those people on campus," she added.
The other area of demand stemmed from the site's juxtaposition to the extensive system of bike trails in Madison County.
"A lot of people don't realize that the campus is connected to all these bike trails and you can go to Alton, up the Great
River Road and out the Katy trail (in Missouri)," Rendleman said. "There was a lot of interest in people coming to stay there
to go biking, go up to see the eagles, etc."
Armed with the positive feasibility study, IFA and Shaw enlisted the help of an investment banker, Stern Brothers & Co. of
St. Louis, and began to formulate a loan package.
"We didn't do this in an isolation booth," Rendleman said. "We started by calling around to several financial institutions
that we knew were strong commercial banks - good commercial lenders who were active in the commercial markets and aggressive
in doing development projects. We know most of the banks in the area. We researched who we thought would have an appetite for
this sort of thing. We called those bankers. We told them about the project; we ran some ideas by them and we got feedback. So
as we were putting together the bid package, we were having conversations and getting input from these bankers," she added.
Rendleman said they initially ran up against some resistance on the part of bankers in making a loan to a hospitality
industry project. She had to try to convince them that this project was different.
"This isn't a Comfort Inn on the interstate," said Rendleman. "The university's involved; there's a captive audience here.
This is a lodge and conference center; it's not a hotel/motel. We wouldn't have gotten involved in that type of a project
either, but we will get involved in a project that supports development in a community - and development in a university
setting - with a university that is very key to the vitality of the community," she said. "It took some bankers thinking
outside the box as well to help put this together."
From eight or nine banks that were sent the loan package, the field has been reduced to three. Rendleman declined to say
who the three are. She said she expects all three to submit bids; and while IFA will be providing input, it will be primarily
up to Shaw to select the successful bidder.
The total project cost is estimated at $8.9 million, according to Rendleman. She said that Shaw has already invested about
$2 million and the bank will provide $6.9 million, including the $1 million participation by IFA. The timetable calls for bank
selection by about mid-January with construction resuming in the spring.
The debt reserve fund ($500,000) is a new wrinkle in a participation loan that IFA has never used before, but plans to use
again, according to Rendleman. She said that as they were working with banks, they were hearing concerns expressed regarding
the fact that it was a start-up operation and that despite the strong feasibility study, there was no track record and no
guarantee that the predictions of the study would materialize. The debt reserve fund will act like a letter of credit,
providing a fund cushion in case the business starts off slowly.
"I really like the tool a lot," said Rendleman, "because it provides that extra measure of risk aversion to the bank. Banks
really like it and at the same time the state is not giving away money. The state keeps the money in reserve, and if the
client never uses it, we can turn around and use that money for another project. Rather than just throwing money at the
project with a grant or something, we're keeping it in reserve," she said.
IFA approves about $3 billion in project financing each year, much of it in the form of bonds, but Rendleman says the
authority does much more than that.
"We're all about trying to find ways to make good things happen," she said. "We look for the best creative approach to
getting something done. I think this is a pretty good example."