City Watching Crowne Plaza for Breach of Lease

By Justin Foss, Reporter

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By Justin Foss

CEDAR RAPIDS - Cedar Rapids City officials are watching what happens at the Crowne Plaza closer than ever. Even more so today after the hotel's owners fired the general manager on Wednesday.

The hotel sits on city owned land, so Kronos Hotels, which owns the Crowne Plaza, pays a total of $100,000 a year to lease the land and the ballrooms from the city.

The Crowne Plaza Five Seasons is owned by a company out of Atlanta, but that company started in Malaysia and bought more than a dozen hotels all at once last year.

Employees say the owners spent so much money on hotels, they don't have money for payroll, leaving people like John McLaughlin with bouncing payroll checks.

"My bank account is $987 minus, it's not a pretty sight," said McLaughlin.

McLaughlin is the hotels front desk manager and has been in the hotel industry for 20 years.

The hotel owes employees money for payroll.

Kronos Hotels and it's affiliate companies owe the state of Iowa $407,000 in unpaid sales tax, that doesn't include unpaid withholding taxes from last September, according to the Iowa Department of Revenue.

The owners owe Cedar Rapids $71, 000 not to mention several lawsuits still pending from vendors seeking payment.

"I'm fed up with it," said McLaughlin. "If I wrote out checks and bounced them all over town, you can bet I'd be in prison right now."

That could happen, according to Iowa's Department of Human Services.

They say Kronos is collecting child support money from an employee, and not sending it on to the state. The DHS says that's theft, and if it's not paid, the owners could be held in contempt.

Meanwhile some employees say they're sinking. Employees said they are scheduled to get paid again on Friday. But, some employees tell KCRG TV9 that they plan to walk out if they aren't paid on Friday.

Friday also happens to be the day the Iowa Hawkeye Football Team is scheduled to stay at the hotel, for their game on Saturday.

KCRG TV9 asked McLaughlin, "What do you tell the city right now?" He replied, "Help, please."

The city said it's watching, but because of the lease with the city, right now Cedar Rapids can only ask the hotel to get better.

"It's very structured as to how we can respond. And while it may seem like a good idea to go in and kick them out and put somebody else in there, we don't have the authority to do that," said Patrick DePalma, Chairman of the Five Seasons Facilities Commission.

However, the city can take over if Kronos Hotels defaults on the lease.

KCRG TV9 asked DePalma, "How close are you watching to see if they breach the contract?" DePalma replied, "Daily."

DePalma says buying the hotel back is a last resort, because he says it's not efficient for a city to own and operate a single hotel. But, he says the city is well aware of its options.

Kronos representatives have blamed the payroll problems on glitches in the system in the past.

And the city says it expects payment of the $71,000, it's just not sure when the money will arrive.

Meanwhile, Doug Neumann, President of the Downtown District said the Crowne Plaza Five Seasons is a disappointment in its current state. He said the downtown needs a first-class hotel to be an attractor for people. Right now, Neumann says the Crowne Plaza isn't anything to brag about.

Kronos representatives have said they are in the middle of a major renovation.

Email Justin Foss at Justin.Foss@kcrg.com

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