Corbett says a struggling hotel next to a new Event Center like a partially remodeled kitchen

CEDAR RAPIDS - Mayor Ron Corbett on Thursday likened the city's potential purchase of the downtown's only hotel - the long-struggling Crowne Plaza Five Seasons Hotel - to remodeling your kitchen with new cabinets and countertops and leaving aged appliances in place.

“You don't get the full effect of the kitchen remodel,” he said.

Corbett emphasized that the hotel, which is owned by a creditor looking to sell, sits in the middle of the city's $67-million project to upgrade the U.S. Cellular Center arena and to construct a new Event Center convention center next to it on what is now Third Street NE. Ignoring the hotel in the middle of the new life around it is like a partial kitchen remodeling, he said.

Corbett, who will ask the City Council on Tuesday to pursue a purchase, also said the time is opportune to buy the hotel from CWCapital Asset Management of Washington, D.C., which foreclosed on the property and then purchased it at a sheriff's sale in December 2009.

CWCapital has tried hard to sell the hotel, without luck, Patrick DePalma, head of the city's Five Seasons Facilities Commission, noted Thursday at a midafternoon news conference alongside Corbett.

Corbett and John Frew, the city's consultant on the Event Center project, dodged a question on how much the hotel might cost to purchase, though in recent weeks city officials have suggested that the purchase price might be $3 million or lower. Corbett and DePalma acknowledged that the city also would face not-insignificant renovation costs if it became the owner.

DePalma said the city would want to retain a quality hotel flag like Crowne Plaza for the hotel or a flag of equal of better status. He said Doubletree, Hilton and Westin would fit that bill, though the renovations are required to retain or acquire a quality flag.

Frew said he had spent six weeks studying the hotel matter before recommending that the city buy the hotel. Existing contractual agreements between the hotel and city on air rights, parking, the ballroom and other issues make selling to another private party difficult in the current economic climate, Frew explained.

Joining Corbett on Thursday also were City Council members Chuck Swore and Justin Shields.

Shields said the city has been talking for years about the need to revitalize the hotel. He said the city didn't want to be in the hotel business - Corbett has said a private management firm will run it like now if the city buys it - but short term it may be a way to address “an ongoing problem.”

Swore noted that the city has purchased private property in the past, and he pointed to the former Sinclair meatpacking plant as a case in point. The city paid $2 million for it a few years ago, and by happenstance, it now stands to get $18 million in federal disaster funds because it can't be used because of flood damage. Federal funds also are paying to demolish it. He predicted the Crowne Plaza investment will work out as well.

Doug Neumann, president/CEO of the Cedar Rapids Downtown District, on Thursday said the city's purchase of the hotel has been an option on the table for months and has been seen as a way to guard against a nightmare scenario in which a new owner would extract profits and not make a much-needed reinvestment in the 275-room facility.

Neumann said a lack of a strong hotel in the downtown has been “a significant impediment” to the revitalization of the downtown for some years.

He pointed to the city of Coralville, which owns the Coralville Marriott and Conference Center, as an example of how public ownership and reinvestment in a hotel can work. The city, he suggested, could sell hotel bonds to pay for refurbishments and then pay the bonds off a piece of the hotel revenue. The reinvestment then will make the hotel marketable to a new owner, he said.

He also cited a feasibility study conducted along with planning for the new Event Center that concluded that the downtown will need at least 400 hotel rooms after the center is finished in 30 months.

In fact, Neumann said “significant developer interest” exists to build a second downtown hotel in the vicinity of the Crowne Plaza Five Seasons Hotel.

At the afternoon news conference on Thursday, Corbett looked out a window at the hotel to a parking lot across First Avenue and said that a new development will sit in that parking lot because of the investment the city is making in the Event Center and, potentially, the hotel.

Afterward, the mayor said he was eager to see the public reaction to the hotel idea. He said the idea came with the potential to cause a “firestorm” of questions and criticism.

Last night, he reported that online comments, in fact, included some criticism.