City's initial offer for Crowne Plaza Five Seasons Hotel is $1.5 million; low offer based on need for steam fix

CEDAR RAPIDS - The city of Cedar Rapids now officially has made the offer: It wants to pay $1.5 million to buy the Crowne Plaza Five Seasons Hotel, Mayor Ron Corbett reports.

The city's offer to the creditor who now is stuck with Cedar Rapids' only downtown hotel comes with a deadline of Friday, July 9, the mayor adds.

The offer is less than the $2.2 million value placed on the hotel by a hotel consultant hired by the city. However, the city is offering less, in part, because of the need to fix the hotel's steam system.

The creditor, CWCapital LLC, purchased the hotel out of bankruptcy in December. The hotel has been on the sale block since.

Complicating any sale is an agreement that gives the city, which owns the land on which the hotel is built, the right to match any offer. The city also owns the parking ramp and ballroom on which the success of the hotel is tied.

The city is making an effort to buy the hotel now because the city thinks it can get it cheaply and then update it as it embarks on and completes a $67-million Event Center project next to the hotel. The Event Center project consists of the upgrading of the U.S. Cellular Center arena and the construction of a new convention center, which will sit on what is now Third Street NE adjoining both the hotel and arena.

In the longer term, the city's hope is to sell the renovated hotel. The hotel is now run by a management firm and would continue to be under any city ownership.

The hotel's most recent owner, Kronos Hotels and Resorts, bought the hotel for $5.8 million in June 2007, according to the city consultant's recent report.

The report, by HVS Consulting and Valuation Services, Chicago, defines the hotel's 275 guest rooms as in “fair to good” condition and it states that the hotel is confronted by some functional obsolescence and “significant” deferred maintenance.

Overall, the hotel offers a “reasonably functional layout” and its size and location are “strengths,” the HVS report states. However, “significant weaknesses” include a poorly designed entrance, inconsistencies in quality, a dated exterior, no on-site parking and no grand ballroom inside the hotel. .

The guest rooms need new TVs, better furniture and new bathtubs, the report says.

HVS envisions a downgrading of the hotel to a “mid-scale, limited-service” brand unless there is significant reinvestment and new deals on parking and meeting space with the city.