Will eminent domain get Cedar Rapids its hotel?

CEDAR RAPIDS - Mayor Ron Corbett will ask the City Council next week to take a legal step that will clear the way for using its power of eminent domain to purchase the Crowne Plaza Five Seasons Hotel without the owner's consent.

The owner is the hotel's creditor, CWCapital LLC, which took possession of the 275-room, 31-year-old hotel in December after foreclosing on the former owner.

Corbett said the city's step toward a forced acquisition of the hotel is not being taken lightly, and he said it follows several weeks of negotiations between the city and CWCapital, a subsidiary of CW Financial Services in Washington.

“We've been negotiating in good faith with this group, but at this point in time, we've not been successful,” the mayor said. “We're keeping the pressure on them, and this is the next step.”

The step involves a City Council resolution setting a value on the hotel property. The city puts it at $2.2 million.

City Manager Jeff Pomeranz stressed that there was still time for discussions and negotiations between the parties, though he said the city wanted negotiations finalized by month's end.

Pomeranz declined to identify the stumbling blocks in the negotiations, though the mayor has said that the problems relate to liability issues and not selling price. The city initially offered $1.6 million for the hotel, while the owner had been asking more than $4 million.

“What we're trying to do is protect the citizens of Cedar Rapids and make sure that we get the hotel at the absolute best price and that we protect the interests of the citizens of Cedar Rapids,” Pomeranz said. “So at this point, there are just some issues we're uncomfortable with, and we hope to resolve those.”

Corbett announced in June that the city wanted to buy the downtown's only hotel and remodel it, since no private-sector entity had offered to purchase it. The hotel, which sits on land owned by the city, is attached to the city's U.S. Cellular Center arena. An upgrade of the arena is part of the city's $67 million Event Center project, which features a new convention center next door to the hotel and arena.

“It certainly is a signature building in our downtown skyline,” the mayor said, “and very little investment has been put into the facility. Concrete is actually falling off the side of it, and it still has windows busted out of it.

“We're trying to maximize the investment in our Event Center by having a first-class hotel.”

The mayor has said the hotel may need $17 million worth of remodeling. He has suggested that the city would sell revenue bonds to pay for the renovation and then use hotel revenues to pay off the debt.