New $67-million Event Center/upgraded U.S. Cellular Center jumps to the top of city agenda

It's not a new library, a new central fire station, a new bus depot or a renovated or new city hall.

No, leaping this week to the top of the City Council's public-building construction agenda is the proposed $67-million project that will upgrade the U.S. Cellular Center and build a new Event Center convention hall next to the arena and the struggling Crowne Plaza Five Seasons Hotel.

For some months now, city and community leaders have been on the edge of seats, awaiting word about a grant of up to $35 million from the U.S. Department of Commerce's Economic Development Administration for the Event Center, money that would go with $15 million already secured in state I-JOBS funds for the arena upgrade.

In a new memorandum to the City Council, city staff members report that the federal agency notified the city anew in late December that the city's arena/event center project “merits further consideration,” a project status that requires the city to report how it intends to provide local funds to help fund the project.

At its meeting on Wednesday evening, the City Council will decide local funding options, and Mayor Ron Corbett on Tuesday said he expected the local private sector would help City Hall meet the funding requirement.

As for city dollars, Corbett said he will ask his council colleagues to commit for some years some of the $2.5 million in revenue that the city brings in annually from a 7-percent hotel/motel tax. The city would sell bonds and use part of the annual hotel/motel revenue to pay off bonds, the mayor said.

One of the City Council's legislative priorities is to ask the Iowa Legislature to allow cities to levy a 9-percent hotel/motel tax, up from the current 7-percent tax, and such an increase would raise an additional $700,000 a year in hotel/motel revenue for the city. But Corbett said local legislators have told him it would be tough, though “not impossible,” to change the allowable hotel/motel tax rate this legislative session.

Doug Neumann, president/CEO of the Downtown District who in the past worked for former Mayor Lee Clancey at City Hall, said past city councils here have sold bonds for capital projects at the Ice Arena and Paramount Theatre and have paid them off or are paying them off with a portion of the city's hotel/motel tax revenue.

However, without a hike in the hotel-motel tax rate, Neumann said some local organizations that depend on a slice of hotel/motel revenue might suffer.

Nonetheless, Corbett said it made sense to use hotel/motel tax revenue for the arena/event center building project because, once completed, the new facility will bring more visitors to Cedar Rapids, which will increase the amount of hotel/motel revenue coming into the city.

Another funding route might be to sell city bonds for the project and pay them off with property-tax revenue, an idea Corbett rejected.

“I'm not interested in increasing property taxes,' the mayor said. “And I don't think we have to do it on this project. I think we can do it with the hotel/motel tax.”

Neumann noted that community leaders have been trying to build a new convention center downtown since at least 1994, an effort that included a failed local-option sales tax vote in 1998.

“If done right, the event center will spur significant private development, add jobs and increase the tax base,” said Neumann. “Facilities like this one being planned have been anchors of economic redevelopment in some of the strongest cities and most vibrant downtowns in America.”

The building plan would close Third Street NE at First Avenue East, and the new events center would sit there. One plan calls for the center to extend to the Roosevelt building on First Avenue NE, and another keeps the parking ramp next to the Roosevelt in place, with much of the event center built along A Avenue NE between Second and Third streets, Neumann reported.

Jessica Palmer, director of marketing and research at the Cedar Rapids Convention and Visitors Bureau, on Tuesday said the city could see $7.7 million annually in new, direct spending and $24 million a year in overall economic impact with the new convention center and upgraded arena.

Corbett said the new investment would position Cedar Rapids to compete for convention and entertainment business that it has ceded to cities like Des Moines and Dubuque, each of which has invested in a new convention center.

“We have said all along that Cedar Rapids hasn't been very competitive in the convention business for the last decade,” Corbett said. “ … This is going to help us be a player again. And when we're legitimately competing, we will win our fair share of the business. And that will bring more visitors to Cedar Rapids.”

A robust convention center and arena, he said, will beef up what he said was the important downtown tax base, which benefits taxpayers in every part of the city, he added.

Corbett said the new investment also likely will attract a new buyer to the city's only downtown hotel, the Crowne Plaza Five Seasons Hotel, which is owned now by creditors after a recent sheriff's sale. The investment may also prompt the construction of a second downtown hotel, he added.