WATERLOO — Developers planning a $10 million renovation of the Ramada hotel said they were attracted by city’s downtown revitalization efforts.
“There’s a lot of people that have spent a lot of money renovating downtown and rejuvenating it,” said Brian Kern, president and CEO of South Dakota-based Makenda LLC. “You can drive around and you can see it; you can see where you’re headed.
“This is a project that everybody’s going to be proud of,” he added.
Makenda, which Kern said has done more than 50 projects nationwide, is planning to buy the 10-story downtown hotel and renovate it as a dual brand Best Western Plus and Executive Residency, with 99 regular rooms and 69 extended-stay units.
Waterloo City Council members voted 6-0 Monday, with Councilman Steve Schmitt absent, to approve a development agreement rolling out generous incentives to leverage the project.
The agreement includes a $450,000 city grant; 85 percent property tax rebates over the next 20 years; hotel-motel tax rebates for 20 years; and a city commitment to invest between $4.9 million and $9.8 million in improvements to the adjacent Five Sullivan Brothers Convention Center and common areas over the next five years.
Makenda agreed to raise the assessed value of the hotel from $1.6 million to at least $9.5 million through its renovations, which include interior and exterior work, pool improvements and a new restaurant.
“We’ll be able to take that property and completely convert into something that’s really needed downtown,” said Rod Lindquist, Makenda’s vice president of development. “It will take a very tired property and make it brand new.”
Lindquist said closing on the hotel purchase is expected in early November with renovations completed by August next year.
The development incentives generated little discussion at the council meeting.
Residents Forest Dillavou and John Sherbon objected to the amount of public funds going into the project.
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“I think we’re going to start a precedent that’s going to almost break this city in half,” Sherbon said. “If we can’t make the same deal for everybody we have no business doing it for this one company.”
Dillavou added, “You guys are supposed to be working for the taxpayers of Waterloo, not the businesses or public employees.”
Council members Bruce Jacobs and Margaret Klein both questioned whether Makenda had proof of financing in place, an obvious reference to the city’s previous decision to support Leslie Hospitality’s planned acquisition and renovation of the hotel and convention center.
The Leslie Hospitality deal fell apart last year when the company failed to get financing and ultimately sued the city. That case is still pending in federal court.
Kern said “financing is absolutely not an issue” for Makenda, which is not buying the city-owned convention center.
“On these deals, you’ve got to kiss a lot of frogs. For every one you find you leave 50 behind,” he said. “For many, many, many reasons they’re just not viable. This project we feel has a lot of viability.”
Mayor Quentin Hart said he believed the development agreement protected the city from financial harm should Makenda fail to move forward with renovations.
“If this does not go through will we be out of anything … other than time and egg on the face?” Hart asked.
Chief Financial Officer Michelle Weidner replied, “No, I don’t believe so.”