An Illinois-based bank has begun foreclosure proceedings against the Eldridge Hotel, the latest financial blow for the struggling downtown Lawrence landmark.

But a hotel official promises the filing is merely a formality and that the Eldridge will enjoy a future that will be “bigger and better.”

Rob Phillips, the hotel’s general manager, confirmed Thursday evening that Mid America Bank had filed for foreclosure in Douglas County District Court. He said the Eldridge, 701 Mass., would continue to operate.

“We’re working with them, and everything’s getting worked out,” Phillips said. “It’s a formality they’ve got to go through.”

He said he was negotiating “confidential” deals to save the hotel and get it back on its feet.

“There’s a lot of things in the works, huge things,” he said. “I think you’ll all be surprised when those things come through.”

The foreclosure comes on the heels of a June raid on the hotel by state revenue officials.

Banks or other lenders typically commence foreclosure to take possession of a property after a borrower has defaulted on a loan or is seriously behind on loan payments. It typically leads to a forced sale of the property at public auction, with the proceeds being applied to the debt.

Tax troubles

Kansas Department of Revenue officials entered the hotel June 11 with tax warrants and took the business’ cash on hand to help satisfy unpaid tax bills. At the time, revenue officials said they were willing to work on a payment plan and were in no hurry to begin foreclosure proceedings against the historic 48-room hotel.

In June, the hotel owed the state $108,982 in unpaid guest tax, sales tax and Kansas withholding tax. The hotel also owed $219,665 in property taxes, dating to 2000. Douglas County Treasurer Pat Wells has said state statutes wouldn’t allow the county to include the property in an unpaid tax sale until 2004.

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It was unclear Thursday how much money is owed the bank.

The hotel’s 2003 appraised value is $1.8 million, according to the Douglas County’s Appraiser’s Office. The owner is Eldridge House Investors LP.

Longtime history

The hotel has played a big role in Lawrence’s history.

According to the hotel’s Web site, www.eldridgehotel.com, the original building at Seventh and Massachusetts streets was called the Free State Hotel, built in 1855 by settlers from the New England Emigrant Aid Society, which founded Lawrence.

In 1856, the Free State Hotel was destroyed by a group of pro-slavery forces. Col. Shalor Eldridge rebuilt the hotel and added another floor, vowing to do the same every time it was destroyed. The hotel stood until 1863 when it was attacked and destroyed once again, this time by William Quantrill and his raiders.

Eldridge promptly rebuilt the hotel, renaming it The Hotel Eldridge.

By 1925, the hotel had begun to deteriorate. A group of Lawrence business leaders was organized to tear down and rebuild the Eldridge. The community stepped forward and made the investment necessary to ensure the success of the project.

With luxury hotels giving way to motor inns, the Eldridge closed its doors as a hotel on July 1, 1970, and was converted to apartments.

In 1985, Phillips organized a group to rekindle the Eldridge Hotel. The city committed $2 million in industrial revenue bonds to match a $1 million private investment.

Phillips now believes he can save the hotel again.

He said Thursday that it would be at least two months before he would have any news to report about the hotel’s future. He declined to reveal any details or other participants.

“Some of those people who are worried about the future are stepping forward to help,” he said. “There’s going to be an Eldridge Hotel future that’s bigger and better than it is now.”