Another Update:
Since Wednesday I had not heard from Hotels.com who had assured me that I would have a resolution within 24 hours. I tried calling and chatting with them at least fifty times with no luck. Their systems were always down on the phones and agents always busy on the chat.
After three calls to the hotel (University Inn MN) they had approved my booking for a refund on their end, but could not credit my account or cancel the booking.
Finally today at 12:30 PM I got through to the automated system and after about 30 minutes on hold, a representative helped me out. She called the hotel and since the cancellation was already approved, it took less than ten minutes to complete.
I was told by the hotel staff that Hotels.com is owned by Expedia, and to try and reach out to them for help as well. I was going to do that, but I got through on this number for Hotels.com (800)246-8357
This was supposed to be a non-refundable booking, but these are certainly extenuating circumstances. The least these places could do would be offer the normal rate instead of the inflated prices we were willing to pay while the event was happening.
Good Luck to everyone else going through a similar process.