The Eldridge Hotel missed a $1.3 million loan payment in May, leading a Baldwin bank to begin foreclosure proceedings against the downtown landmark.

An attorney representing Mid-America Bank said Friday that lenders were eager to work with hotel officials to get the debt repayed.

“The bank certainly does have that optimism,” said Patricia Reeder, a Topeka attorney. “I don’t know if the bank currently is in negotiations with (the hotel’s owner), but they are certainly willing to visit with him and to negotiate. They are very much open to that.”

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.

Reeder said no date had been set for an auction, and that it was impossible to predict when one might occur because foreclosure proceedings can involve a lengthy court process.

The hotel, 701 Mass., also has tax trouble.

According to documents filed in Douglas County District Court, the Eldridge owes $160,000 in federal taxes. And it owes $300,000 in state and Douglas County taxes.

Rob Phillips, general manager of the hotel, said he was in negotiations with both bank and tax officials. Based on those negotiations, Phillips said he was confident the hotel wouldn’t close anytime soon. Attempts Friday to reach Kansas and federal tax officials familiar with the case were unsuccessful.

On Thursday, Phillips said he was negotiating “confidential” deals that would secure the hotel’s future. Friday, he wouldn’t go into detail on those talks, but said they involved continuing to use the building as a hotel. Though Phillips said he hasn’t talked about filing for bankruptcy protection, he said he was keeping “all options available.”

Rob Phillips, general manager of The Eldridge Hotel, 701 Mass., hopes to keep the historic landmark open despite a bank beginning a .3 million foreclosure proceeding.

And despite the deepening trouble, Phillips said he did not plan to sell the 48-room luxury hotel. He has had several offers since it was reported in June that tax officials entered the hotel and seized its cash assets to partially satisfy unpaid guest tax, sales tax and Kansas withholding taxes.

“All the potential buyers who have called me want to turn it into an apartment house, and that is not what Rob Phillips wants and not what Lawrence wants,” Phillips said. “That would be something that would happen over my dead body.”

The building was converted to apartments before, in 1970. In 1985, Phillips spearheaded redevelopment of the Eldridge as a hotel.

According to documents filed in the foreclosure, the Eldridge took out a $1.35 million operating loan in April 2002. The loan was structured to include 11 monthly payments of $10,903 and one balloon payment of $1.33 million due May 1. Court documents said Phillips failed to make all the necessary payments, and as of Sept. 3, still owed $1.31 million on the loan.

The federal tax liens against the hotel involve $161,482 in unpaid federal withholding taxes dating to 2001.

The hotel has an appraised value of $1.8 million, according to the Douglas County Appraiser’s Office. The owner of the building is Eldridge House Investors L.P. Phillips is the majority owner of the partnership, which includes about 20 other investors.

Lawrence resident Dale Miller is one of those investors. He said Phillips had not shared with him his plans for the hotel.

“Anytime you receive a letter of foreclosure, it is concerning,” Miller said. “But the better question probably is what can you do about it as a minority shareholder. Nobody has enough shares to do anything about it except Rob.”

Miller said he hoped Phillips would consider all options, including a sale. However, Miller said he hoped it wouldn’t come to that.

“It is in foreclosure, so I think a sale is something that would have to be considered,” he said.

Phillips blames the hotel’s financial struggles on the downturn in the tourism industry after 9-11.

“I’m sorry this economy has been bad and the terrorists bombed the twin towers and all those crooks on Wall Street did their thing,” Phillips said. “My life would have been a lot easier if those things wouldn’t have happened, but they did and we’re dealing with it.”