WATERLOO — City Council members Monday narrowly approved selling the Five Sullivan Brothers Convention Center to Omaha, Neb.-based Leslie Hospitality Co.
The decision, which will leverage an estimated $20 million renovation of the downtown center and adjoining Ramada Hotel, drew praise from a large portion of the city’s business community in attendance.
But some councilmen and members of the public wanted more time to investigate details of the project and Leslie Hospitality’s track record.
“There are no alternatives waiting in the wings that don’t require more taxpayer money,” said Aaron Buzza, past director of the Waterloo Convention and Visitors Bureau. “There’s no organization waiting in the wings to take this on.”
Steve Dust, president of the Greater Cedar Valley Alliance and Chamber, said his organization endorsed the sale and development agreement, adding “this solution is the best we could have imagined.”
Councilmen Jerome Amos Jr., Ron Welper, Pat Morrissey and Tom Powers voted in favor of the development agreements which give Leslie Hospitality the 42-year-old convention center, a $1.05 million grant and 15 years of 34 percent tax rebates in return for the company’s $6 million renovation.
A related agreement calls for Leslie Hospitality to buy the Ramada, invest $14 million in the renovation and rebrand it as a Hotel RL. The city will provide 20 years of 85 percent tax rebates on the hotel and refund any growth in hotel-motel tax generated by the renovation.
Supporters said the deal provides a net increase in property taxes to the city and allows taxpayers to avoid costly renovation costs the building needs to remain viable in the convention marketplace.
Councilmen Tom Lind and Steve Schmitt abstained from voting, saying more time was needed to vet the agreement. Councilman Bruce Jacobs abstained due to a potential conflict of interest related to his banking job.
While Lind said he supported the stated financial arrangement, he said the city needed more time sorting through the company’s background and needed to see commitment letters from banks and the hotel chain.
Resident Todd Obadal objected to council members approving the development agreements, which had undergone last minute changes over the weekend, before the public was able to see the details.
Amos said the city’s legal, planning and financial staff had already done that review.
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“Somewhere down the line we have to trust the staff and the job they are doing,” he said.
Initial plans to change the convention center’s name were an early stumbling block that was later worked out to the satisfaction of the Sullivan family. The new Waterloo Convention Center and Five Sullivan Brothers Plaza will include a memorial to the building’s namesakes.
But Schmitt still urged company president Edwin Leslie to reconsider the change.
“With all due respect, Mr. Leslie, there’s a lot of Waterloos in the United States; there’s a lot of Waterloos in the World; there’s only one five Sullivan brothers,” Schmitt said. “I don’t think that you understand that, and I don’t think a lot of people in the audience get that. That is probably one of the biggest marketing tools you could use.”
Several business leaders speaking in support of the development agreement detailed horror stories of having their events at the center and adjoining 228-room hotel, both of which were in disrepair.
“If you have not had the displeasure of attending an event at the convention center lately, you can accept my expert opinion that both the facility and the service are abysmal,” said Christa Miehe, president of marketing at VGM, which hosts its annual Heartland conference there.
Mayor Quentin Hart said he’s frequently embarrassed by the condition and service at the convention center and Ramada, often having to write “Dear John” letters to unhappy patrons.
The new Hotel RL must maintain a four-diamond rating to retain its full tax rebates under the development agreement.
Correspondence in recent weeks to the city questioned the financial ability of Leslie Hospitality to handle the job, noting Edwin Leslie had been involved in several bankruptcies.
Leslie noted his firm has had two of 42 hotels fail during its 20 years in business, but that internet searches show his name related to other bankruptcies where he was appointed to serve as a receiver and turned failed properties into successes. That is the company’s business model.
“If you had a pretty convention center and a pretty hotel, Edwin Leslie wouldn’t be standing here today,” he said.
Leslie Hospitality is expected to begin operating the Ramada soon, which also would put the company in charge of managing the convention center. The city will need financing letters and details prior to closing on the convention center sale.