Frequently Asked Questions: Hotel Purchase for Cedar Rapids Convention Complex Project

November 22, 2010 1. How much will it cost to buy the hotel? Answer: $3.2 million. The City plans to buy the hotel with existing funds. 2. 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 Five Seasons Center in 1979 and has served the community well for a long time. The hotel was last sold in June 2007 for a reported $5.8 million but went into foreclosure in October 2008. The lender requested the court appoint a receiver in November 2008, and then subsequently foreclosed on the hotel. 350 1st Avenue Holdings, LLC is the current owner. The success of the City’s $75.6 million convention complex project depends in large part on an adjacent hotel that is up-to-date, well operated and jointly marketed. As the owner of the land that the hotel is built on, the ballroom and parking leased to the hotel, 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 for cohesive economic development. 3. Is it unusual for a City to own a hotel? Answer: No. Cities across the country own and operate their own convention center hotels. 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 to the Qwest Center. Baltimore, Phoenix, Denver, Austin, Overland Park, Houston, Vancouver, Lombard, Dallas and other cities have followed this same path. Piper Jaffray, an industry leader in hotel financing, reports that the vast majority of nongaming, non-resort, downtown convention center hotels, that have entered the U.S. market or began construction since 2003, have been financed with public ownership or significant public participation. 4. When would the City take possession of the hotel? Answer: The City expects to take possession of the property in March 2011. 5. Who is the current owner? Answer: 350 1st Avenue Holdings, LLC.

6. Will the hotel continue to operate under city ownership? Answer: Hotel operations will cease prior to city ownership. It will remain closed for renovations and reopen in September 2012. 7. How much will it cost to renovate the hotel? Answer: Approximately $20-22 million. It is anticipated that renovations will be funded with bonds that will be repaid out of hotel operations. However, the City will seek private sector financing to reduce or eliminate the need for City funds. 8. How much will it cost to operate the hotel while renovations are made? Answer: Security, utilities and other operating expenses incurred during renovations will be included in the renovation budget. 9. What will happen to the current hotel management employees? Answer: PHC Dallas, LLC (Prism) of Dallas, Texas, manages the hotel. The 130 or so full and part-time employees, as well as all consultants, vendors and suppliers work for Prism. 10. What is the timeline for renovation of the hotel? Answer: The hotel renovations will be completed simultaneously with the convention complex project – which is scheduled for total completion in February 2013. 11. Will the hotel be closed during renovations? Answer: Yes. 12. Will the hotel remain a Crowne Plaza? Answer: The Purchase and Sale Agreement requires that the Crowne Plaza franchise agreement terminate at closing. Frew Nations Group will engage in discussions with a targeted list of hotel brands -- including Crowne Plaza – and will recommend a hotel franchise for city approval. 13. 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 the registration desk to the first floor as well as the following general themes: Floor 1: Floor 2: Floors 3 – 5: Grand entry and guest registration Redesigned as the arena concourse and food court Hotel meeting/conference rooms (note: floors 4 and 5 are currently meeting rooms on the interior side and guest rooms on the street side – this mixing of meeting space and guest rooms is frowned upon in the hospitality industry) Remains as Guest rooms

Floors 6 – 15:


Floor 16:

Roof: Exterior:

Restaurant and meeting space remains. 16th floor meeting space expanded through elimination of second story of 15th floor presidential suites. Helipad to remain Replacement throughout to match exterior of convention complex