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FAQ - Hotel Purchase for Convention Complex 11-22-10

FAQ - Hotel Purchase for Convention Complex 11-22-10

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Published by: Source Media Group News on Nov 22, 2010
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Frequently Asked Questions:Hotel Purchase for Cedar Rapids Convention Complex Project
 November 22, 2010
How much will it cost to buy the hotel?Answer:
$3.2 million. The City plans to buy the hotel with existing funds.
Why is the City buying the Crowne Plaza Five Seasons Hotel?Answer:
The hotel was designed as an integral part of the City of Cedar Rapids FiveSeasons Center in 1979 and has served the community well for a long time. The hotelwas last sold in June 2007 for a reported $5.8 million but went into foreclosure inOctober 2008. The lender requested the court appoint a receiver in November 2008,and then subsequently foreclosed on the hotel. 350 1
Avenue Holdings, LLC is thecurrent owner.
The success of the City’s $75
.6 million convention complex project depends in largepart on an adjacent hotel that is up-to-date, well operated and jointly marketed. Asthe owner of the land that the hotel is built on, the ballroom and parking leased to thehotel, the U.S. Cellular Center and the soon-to-be-built adjacent convention center,the City is the only buyer capable of bringing all of these components together forcohesive economic development.
Is it unusual for a City to own a hotel?Answer:
No. Cities across the country own and operate their own convention centerhotels. The Coralville Marriott Convention Center and Hotel is owned by the City of Coralville. The Omaha Hilton is owned by the City of Omaha and located adjacent tothe Qwest Center. Baltimore, Phoenix, Denver, Austin, Overland Park, Houston,Vancouver, Lombard, Dallas and other cities have followed this same path. PiperJaffray, an industry leader in hotel financing, reports that the vast majority of non-gaming, non-resort, downtown convention center hotels, that have entered the U.S.market or began construction since 2003, have been financed with public ownershipor significant public participation.
When would the City take possession of the hotel?Answer:
The City expects to take possession of the property in March 2011.
Who is the current owner?Answer:
350 1
Avenue Holdings, LLC.
Will the hotel continue to operate under city ownership?Answer:
Hotel operations will cease prior to city ownership. It will remain closedfor renovations and reopen in September 2012.
How much will it cost to renovate the hotel?Answer:
Approximately $20-22 million. It is anticipated that renovations will befunded with bonds that will be repaid
out of hotel operations. However, the City willseek private sector financing to reduce or eliminate the need for City funds.
How much will it cost to operate the hotel while renovations are made?Answer:
Security, utilities and other operating expenses incurred during renovationswill be included in the renovation budget.
What will happen to the current hotel management employees?Answer:
PHC Dallas, LLC (Prism) of Dallas, Texas, manages the hotel. The 130 orso full and part-time employees, as well as all consultants, vendors and supplierswork for Prism.
What is the timeline for renovation of the hotel?Answer:
The hotel renovations will be completed simultaneously with the conventioncomplex project
which is scheduled for total completion in February 2013.
Will the hotel be closed during renovations?Answer:
Will the hotel remain a Crowne Plaza?Answer:
The Purchase and Sale Agreement requires that the Crowne Plaza franchiseagreement terminate at closing. Frew Nations Group will engage in discussions witha targeted list of hotel brands -- including Crowne Plaza
and will recommend ahotel franchise for city approval.
What are some of the renovations planned for the hotel?Answer:
The City’s convention and events center design team, including TVS, a
highly respected convention center architect, has recommended relocating theregistration desk to the first floor as well as the following general themes:Floor 1: Grand entry and guest registrationFloor 2: Redesigned as the arena concourse and food courtFloors 3
5: Hotel meeting/conference rooms (note: floors 4 and 5 arecurrently meeting rooms on the interior side and guestrooms on the street side
this mixing of meeting space andguest rooms is frowned upon in the hospitality industry)Floors 6
15: Remains as Guest rooms

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