CHICAGO — Lombard, Ill.'s village board isn't budging from its longstanding position not to make up a shortfall in revenues needed for debt service on its $190 million of defaulted hotel and conference center bonds.

Without comment, the village board at a meeting Thursday evening voted against putting nearly $2.6 million toward a gap in hotel revenues needed to cover the July 1 debt service payment on the bonds. A total of $2 million was needed to cover the A bonds and $573,000 on the B bonds, according to village documents.

"Staff continues to work with the parties involved to attempt to restructure the debt," wrote village manager Scott Niehaus.

The trustees have long declined to cover any gaps in hotel revenues, believing the village is not legally obligated to burden its taxpayers. Nuveen Investments is the majority holder.

A special committee was previously assigned to come up with a long-term plan. The village is hoping to get investors and its insurer to eventually agree to a restructuring, village finance director Tim Sexton said previously.

The issuer -- the Lombard Public Facilities Corp. - drained reserves to cover the Jan. 1 payment on the A series that represents $118 million of the deal and carries an indirect appropriation pledge.

The A series is broken into two tranches, with an A-1 series for $64 million and an A-2 series for $54 million. ACA Financial Guaranty Corp. provides coverage on the A-2 series and made up the shortfall on the A-2 series while a portion of the A-1 series went unpaid.

The looming July 1 default would mark the fourth default on the $43 million B series which carries the village's appropriation pledge. No payment will be made on $29 million of C series bonds.

Under terms of a tax rebate agreement, the village pledged — subject to appropriation — to cover debt-service shortfalls on the Series A bonds before reserves are tapped. The backstop was first triggered in 2012. The B series carry a more direct appropriation pledge but reserves were tapped first before the village was asked to cover shortfalls. The $29 million C series does not carry any village support.

Standard & Poor's downgraded Lombard's issuer credit rating six notches to a speculative-grade B from BBB in February 2014. The portion of hotel bonds rated by Standard & Poor's are at the D level.

The public facilities corporation issued $190 million of bonds in 2005 to finance the project, which includes an 18-story, 500-room hotel operated by Westin Hotels & Resorts, a 55,500-square-foot convention center and two restaurants. If the project were to declare bankruptcy, the Series A and B bondholders have a mortgage claim.

The affluent village of about 43,000 is 20 miles west of Chicago. The January 2014 default marked the first actual payment default and it gave bondholders of the A and B bonds the right to accelerate repayment but they have not done so.

The facility's hotel and restaurants posted a $687,000 profit for the first quarter, down from $1.3 million for the first quarter of last year and $250,000 under what was projected in its current budget, according to its quarterly results. The project has about $2.9 million in various operating reserve accounts with just $62 in one of its several debt service reserve accounts.

The Series A bonds have most recently traded at 66 cents on the dollar and the B bonds at 30 cents on the dollar.

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