Cedar Rapids Taxpayers Just Bought A Lousy Hotel

From the Cedar Rapids Gazette:

City officials are slated to hold a news conference on Monday to announce the city’s purchase of the downtown’s Crowne Plaza Five Seasons Hotel from its creditor, Mayor Ron Corbett said Saturday.

The announcement has been expected for weeks.

Corbett first announced in June that the city intended to buy the long-struggling hotel from CWCapital LLC, which took possession of the 275-room, 31-year-old hotel in December after foreclosing on the former owner.

The hotel is attached to the city’s U.S. Cellular Center arena, which will be attached to the city’s coming new convention center next door.

It doesn’t make sense, Corbett has said and repeated on Saturday, to build a $75.64-million Convention Complex, which includes an upgrade of the existing arena, and not update and renovate the hotel...

...The city has appraised the value of the hotel at $2.2 million, made an initial offer of purchase that was less than that and said CWCapital was seeking more than $4 million for the property.

Corbett has said the city will use the proceeds of a $3.5-million insurance settlement from a fire at the city-owned Sinclair site to buy the hotel. He has said renovation costs could approach $17 million, an amount which revenue from the hotel may help to cover, he has said.

This is going to be a huge boondoggle.

The US Cellular Center, located next to the hotel, lost $600,000 in 2005.  Now Cedar Rapids wants to tack on a convention center?  Those almost never make money.

What makes anybody think that the City of Cedar Rapids can turn around a rotten old hotel that has been crumbling for years and was recently foreclosed on?  $17 million to rehab a hotel?  Doesn't this always cost more than expected?  Isn't revenue always less than expected?  Aren't projections always filled with blue sky and BS?

This is a problem with so many towns.  When downtowns started dying in the 1960s and 1970s, Federal money poured in to "revitalize" them under what was then known as "urban renewal".  Largely, this has been a huge waste of money.  The Flood of 2008 didn't help Cedar Rapids either, but now it's clear the politicians there are using the flood and other events such as the Sinclair fire to buy stuff they normally could not.

Let's see how this works out in the future.  Here's the starting point for you all to remember.