Cedar Rapids council signs off on hotel sale for sake of complex

The City Council that voted unanimously tonight to buy the Crowne Plaza Five Seasons Hotel mostly hates the idea.

“I used to work in the hotel business, and I'm not real excited about being in the hotel business,” Councilmember Kris Gulick said. “But I understand the issue.”

“I don't think the city should be in any business,” said Councilmember Don Karr. “Under these circumstances I'll be in favor of doing this, but we need to be marketing this tomorrow.”

The circumstances is the troubled hotel's role in the conversion of the also-troubled U.S. Cellular Center into the new Cedar Rapids Convention Complex and Event Center.  Council members are convinced you can't renew one part of the 31-year-old complex without the other.

“Other cities own these types of facilities,” said Councilmember Justin Shields. “We need to make that the most attractive facility we can for a future owner.”

“That hotel could have gone dark at any time,” said Councilmember Pat Shey. “Then we would have been stuck with an albatross. Government does step in when the private sector can't.”

The council voted 7-0 (member Chuck Swore was absent) to buy the hotel for $3.2 million from 350 1st Ave. Holdings, which is in turn owned by CW Capital. The Washington D.C.-based company foreclosed on the Crowne Plaza's previous operator in October 2008 and hired Prism Hotels and Resorts to operate the hotel.

When the city takes ownership in March, the hotel will no longer be the Crowne Plaza, said John Frew of Frew Nations Group, the city's consultant on the entire convention center/hotel project. The city's deal calls for  its present owner and operator to shut down the hotel and have it ready for its facelift.

“I never dreamed I'd be voting to buy a hotel,” said Councilmember Chuck Wieneke. “We do this to make the convention  center work – that's why I'm voting for it.”

The council also unanimously approved a contract with Frew Nations Group to manage the hotel's share of the project, at a “not to exceed”  cost of $610,124. In April, the council hired Frew Nations to manage the convention center side of the project, at a fee that could reach $3.8 million.

Gulick noted Frew Nations stands to make more money if it were to operate the renewed hotel for the city, instead of turning it over to a new owner.

“If you were able to find a buyer for the hotel, your fees will be less,” Gulick said.

“We want this to succeed,” said Frew. “There is capital available, and there's (hotel) companies available that are interested.”

The council also raised the city's contract with D.W. Zinser Co. for demolishing the former Sinclair meatpacking plant to just over $20 million. Flood recovery director Grey Eyerly said the added costs were planned into the contract, which started at $4.68 million last May.

“It's something we had anticipated from the beginning of the contract,” said Eyerly. “What we didn't want to do at the time was to guess what the total debris amount would be.”

Heavily damaged by the June 2008 flood, the historic plant 1600 Third St. SE was finished off by a stubborn fire that burned for several days in July and August 2009. The Federal Emergency Management Agency will reimburse the city, which bought the plant in 2006, for demolition costs after the agency deemed it a threat to public safety and health.