WATERLOO — A developer is blaming city officials for his inability to secure financing to buy the Five Sullivan Brothers Convention Center and Ramada Hotel.
Leslie Hospitality issued notice Monday that some current and past members of the Waterloo City Council created a “hostile business environment” detrimental to the company’s ability to complete financing to purchase the downtown property.
The City Council voted in August 2017 to approve a development agreement with LK Waterloo, managed by Omaha, Neb.-based Leslie Hospitality, calling for LK Waterloo to buy and renovate both the hotel and city-owned convention center.
More than a year later, LK Waterloo has not scheduled a date to close on the purchase of the properties.
“While we’re still committed to this project and want to see it be successful … we’ve had lenders that have left the project due to turmoil in the city,” said Edwin Leslie, company president.
Leslie said his firm had financing for the project through an Illinois bank which wanted a local lender to manage the loan. But the bank was unable to find a local lender willing to participate, which he believes to be based on comments from council members.
“Some current and prior members of the Waterloo City Council, through their actions, have breached the legal agreements in place between the two groups and have caused irreparable harm to LK Holdings and its affiliates,” he added.
Leslie said Councilwoman Margaret Klein attempted last July to have an item placed on the council agenda to terminate the development agreement with LK Waterloo.
Klein said she never asked to terminate the contract, adding “had I wanted that to be on the agenda it would have been on the agenda.”
Klein, who was not on the council when the development agreement was approved, said she is 100 percent behind the project moving ahead.
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“I hope it succeeds and I’m praying that it succeeds,” she said. “I want it to look good. I want it to provide a good service to our community.”
Previously, former Councilman Tom Lind had called for a special investigation into Leslie Hospitality’s finances after the company was sued by a business partner in an Omaha hotel development. That measure was not approved by the council.
LK Waterloo has been managing the hotel and convention center since July 2017. A contract in place since 1980 allows the hotel owner to manage the convention center.
The convention center has been without a liquor license for nearly four months, which Leslie said was a result of the city’s failure to make necessary repairs.
City Clerk Kelley Felchle said the hotel is allowed to serve liquor for events it caters in the convention center but can’t sell alcohol to ticketed events. She said the previous license holder, Watermark Hotel Equities, did not complete a new application for the building when the old license expired.
LK Waterloo is buying the hotel from Watermark.
The city’s development agreement called for the city to donate the convention center, provide a $1 million grant and future property tax breaks for LK Waterloo’s planned $6 million renovation of the building.
The city was also planning to provide property tax and hotel-motel tax rebates to LK Waterloo following the private acquisition and remodeling of the Ramada, which has been renamed Hotel 4th.
City officials declined to comment on the situation Monday but indicated they would be releasing a statement Tuesday.