DECATUR - The Decatur City Council on Friday voted 5-2 to negotiate a contract for a Forsyth hotel developer to manage the Decatur Conference Center and Hotel.

Steve Horve, president of Horve Hospitality Management Inc., has offered to run the complex on Decatur's west side.

"My objective is to not only manage the Decatur Hotel and Conference Center, but also to have the opportunity to purchase the facility within the next year," Horve wrote in a proposal to the city council.

Voting for the plan were Mayor Paul Osborne and council members Dan Caulkins, Patrick Laegeler, Betsy Stockard and Mike McElroy.

Voting against the plan were Councilmen Shad Edwards and Michael Carrigan.

North Carolina-based Tri-Point Hotels LLC may present an offer next week to buy the hotel and construct a $12 million water park, attorney Stephen Willoughby said.

The council is expected to meet next week to discuss an offer from the North Carolina company, if one is submitted. The council also will soon meet to vote on a contract for Horve's group to manage the hotel.

Steven Jones of Tri-Point Hotels LLC stated in a news release: "We have concluded that without the water park element added to the property, a hotel of this size in Decatur is not a profitable long-term investment. A potential buyer without a water park in its plans will only put a Band-aid on the problem."

Mayor Paul Osborne expressed skepticism about the group but said he is open to proposals from any "credible" or "viable" buyer. Osborne said he's eager for the city to get out of the hotel business.

"Personally, I have never seen any evidence from this group that they're credible," Osborne said.

Osborne said the city bought the hotel because a credible buyer did not emerge.

"Groups like this were always promising to send the money, and they never did," Osborne said. "If they did, we wouldn't be having this discussion today."

If the council sells the hotel to the North Carolina group, the management plan with Horve fizzles.

Tri-Point Hotels said in its proposal that Richfield Hospitality Inc., the current hotel management firm, would continue to manage the hotel.

Regardless, city leaders say it's essential to have a management agreement in place soon.

The city closes its purchase of the hotel Oct. 15, and the city is prohibited from owning a liquor license.

If a management firm is not secured, the complex will not be able to sell alcohol, which would "seriously hurt business," City Manager Steve Garman said in a memo to council members.

The council voted 4-3 in August to purchase the financially distressed hotel for $6.5 million, ensuring the hotel would not go on the auction block. City hall got involved when it became apparent that "legitimate, first-rate hotel operators" were not coming forward to bid on the facility, Garman has said.

The total cost of the purchase is $7.225 million, including improvements and capital reserves for the complex.

Horve has proposed to pay interest only on $7.225 million at 5.6 percent interest. Included in the principal amount are $500,000 for maintenance and major repairs, $125,000 in operating cash and about $100,000 in financing costs.

Horve on Friday waived the right of first refusal to buy the hotel. Willoughby said giving Horve the right of first refusal would be a "deal breaker" for the North Carolina group.

Tim Stone, chief operating officer for Decatur Memorial Hospital, backed Horve's proposal.

"As a general rule, we support local control and ownership," Stone said. "We do that based upon the fact that we're a community hospital. We're not part of a large, monolithic health care system. We live and die by what goes on here in Decatur."

Local union leaders voiced concerns over the role unions would play in the future of the hotel. Bill Francisco, business representative for Painters Local 288, urged the council to carefully review a contract negotiated by city administrators before they agree to it.

"We've seen how the city of Decatur negotiates contracts, by the way the bus drivers and (Decatur Housing Authority) have been treated," Francisco said.

Hospitals need contractors that provide health insurance so employees are not a monetary liability to medical professionals, Francisco said.

"Our area businesses need people who earn a living wage to regenerate tax dollars, to fund projects such as the 'road to nowhere' at Cardwell Crossing," Francisco said, referring to a city-funded road next to the hotel, which was supposed to lead to a water park that never was built.

The city reimbursed Real Estate Investors of Decatur LLC about $1.75 million for the road and infrastructure improvements. The group agreed to start repaying the city for the improvements if the water park was not substantially complete by Jan. 15, 2005.

Repayment was suspended last year. In response, the city suspended reimbursements for improvements made at Fairview Plaza. The city's legal department is taking action for repayment, Osborne said.

Horve said union labor would be used for the $500,000 the city set aside for capital improvements. Requiring a potential buyer to use union labor only likely would be a deterrent, Horve added.

"If you think the first right of refusal was a problem, that would really be a problem," Horve said.

Carrigan, president of the Illinois AFL-CIO, sympathized with Francisco's comments. Carrigan wants to ensure all possible developers have a fair chance to submit proposals.

"Quite honestly, in some areas of the state where I travel, I see leaders of that community who are both business leaders and labor sit down and work together to put incentive packages together," Carrigan said. "Sometimes, they even put them together with the state.

"They look at creative ways to entice people, and they say, 'Here it is, one or all, come forward with your proposals.'

"We want to get out of this thing as soon as we can. But when it's done, we don't want to alienate one sector of the community, and we want this thing to work."

The council initially was asked to vote to allow the mayor to sign a management contract negotiated by city administrators. Under the proposal, the council would not review the contract.

Carrigan bristled at not having an opportunity to review the management contract before the mayor signed it.

"We all like our little councilman titles," Carrigan said. "But at the end of the day, we're just a glorified citizen review panel, and we're giving up our right of review on this vote that is coming up."

The council later amended the measure to require council approval of the contract that city administrators will negotiate.

Mike Frazier can be reached at mfrazier@herald-review.com or 421-7985.