Sioux City wrestles with downtown hotel dilemma

Maybe you've heard that the city of Cedar Rapids owns a big hotel downtown, the Double Tree by Hilton. City leaders bought the financially strapped hotel and floated $46 million in bonds to fix it up. The city didn't want a flailing, failing hotel attached to its new convention complex and remodeled U.S. Cellular Center. Now, Sioux City is trying to figure out what to do with a big, flailing downtown hotel, a formerly "stylish" joint that once carried the Hilton name. It's also attached to Sioux City's convention complex. The Sioux City Journal's editorial board is urging the city to get aggressive in landing a new owner:

The city should view this sale as an opportunity to participate in restoring the once-proud hotel to its former place of distinction.

That likely will mean offering financial incentives to the right prospective buyer.

In all likelihood, that also will mean taking heat from critics, but it's the right step.

...

Earlier this year, the current owners of the hotel hired an investment firm to market the property, which is in foreclosure. The firm has chosen an as-yet-unnamed buyer. The city will be involved in negotiations with the buyer.

In a Sept. 7 story, business editor Dave Dreeszen reported city incentives would be contingent on a new owner investing at least $6 million on upgrades and operating the 193-room hotel under one of several national names.

In our view, the city should be bold and aggressive in its talks with the potential buyer.In Cedar Rapids, city leaders originally expected to spend $15 to $20 million fixing up the former Crowne Plaza. But once Hilton was picked to manage the hotel, its staff concluded that more extensive renovations were needed. So the price tag jumped considerably. I wonder if $6 million will be enough in Sioux City's case. In both of these instances, city leaders face a tough choice. Can they allow a hotel attached to other important community assets stagnate and decline, or should the city step in? And how deeply do you get involved. Sioux City isn't talking about buying its hotel, but what if this buyer falls through? Speaking of taking heat, the hotel purchase remains a major issue here, even though the deal was done three years ago, the Double Tree is open and the city is locked into ownership for at least five years. With the hotel's revenues considered critical to making the whole complex/arena/hotel project work financially, I doubt the city sells in five or even 10 years. But painting this as only a temporary situation is better politics. Cedar Rapids was "bold and aggressive," which also meant committing so swiftly to a new convention center that there wasn't any time for public buy-in. I think that's dogged the project. City leaders strongly disagree, I know. Federal and state money was hanging in the balance, so they couldn't afford to debate and delay. And once the city committed to building the convention complex, it had to buy the hotel. I've heard people argue that they like the convention plex/arena portions of the project but they opposed buying the hotel. I'm not sure how that works. Imagine if the city had put tens of millions into the complex and cell center, only to watch the hotel close. I don't think people would have praised them for their restraint. Of those two big risks, I think the hotel risk made more sense. As I've said before, I hope the complex, arena and hotel are big successes. I think most people feel that way despite misgivings. I still hear some jeer-cheers for failure from folks determined to be right about the whole boondoggle. It's still way too early to know how much they'll have to jeer about.

In Cedar Rapids, city leaders originally expected to spend $15 to $20 million fixing up the former Crowne Plaza. But once Hilton was picked to manage the hotel, its staff concluded that more extensive renovations were needed. So the price tag jumped considerably. I wonder if $6 million will be enough in Sioux City's case. In both of these instances, city leaders face a tough choice. Can they allow a hotel attached to other important community assets stagnate and decline, or should the city step in? And how deeply do you get involved. Sioux City isn't talking about buying its hotel, but what if this buyer falls through? Speaking of taking heat, the hotel purchase remains a major issue here, even though the deal was done three years ago, the Double Tree is open and the city is locked into ownership for at least five years. With the hotel's revenues considered critical to making the whole complex/arena/hotel project work financially, I doubt the city sells in five or even 10 years. But painting this as only a temporary situation is better politics. Cedar Rapids was "bold and aggressive," which also meant committing so swiftly to a new convention center that there wasn't any time for public buy-in. I think that's dogged the project. City leaders strongly disagree, I know. Federal and state money was hanging in the balance, so they couldn't afford to debate and delay. And once the city committed to building the convention complex, it had to buy the hotel. I've heard people argue that they like the convention plex/arena portions of the project but they opposed buying the hotel. I'm not sure how that works. Imagine if the city had put tens of millions into the complex and cell center, only to watch the hotel close. I don't think people would have praised them for their restraint. Of those two big risks, I think the hotel risk made more sense. As I've said before, I hope the complex, arena and hotel are big successes. I think most people feel that way despite misgivings. I still hear some jeer-cheers for failure from folks determined to be right about the whole boondoggle. It's still way too early to know how much they'll have to jeer about.