State board OKs plan to sell bonds for W. Md. resort

January 17, 1995|By Frank Langfitt | Frank Langfitt,Sun Staff Writer

After years of searching for private financing, the state approved an agreement yesterday for a bond sale to a Texas company that paves the way for building a controversial convention center and golf course at Rocky Gap State Park.

The approval by the Board of Public Works was a milestone in a 10-year quest to build the $34.4 million resort, which is intended to help revitalize the Western Maryland economy.

"This is part of a vision for Western Maryland and Allegany County," said Mark L. Wasserman, state secretary of economic and employment development. We are "putting into place a very important building block for a distressed part of our state."

The board, made up of Gov. William Donald Schaefer, state Treasurer Lucille Maurer and state Comptroller Louis L. Goldstein, approved a plan to sell $15 million worth of tax-exempt bonds to Esping Capital Inc., a Dallas investment company.

The state would guarantee $5 million worth of the bonds, while the investor could lose up to $10 million if the project fails. However, Esping would take control of the resort in that case.

The Maryland Economic Development Corp. (MEDCO), a quasi-public agency that assists with economic development projects, would issue the bonds and serve as the project's developer. The remaining $19 million would come from federal, state and local funds.

The board also approved spending $1.5 million yesterday to pay for the design of the resort's conference center and golf course.

MEDCO expects to present construction bids to the board in May. After the board selects a builder, construction could begin in June, state officials said.

But some legislators worry that the state-owned resort could become a white elephant. The project has several faults that have made it difficult to attract private financing.

Located just east of Cumberland, the resort would be a 2 1/2 -hour drive from Baltimore, Washington and Pittsburgh. Although there a regional airport nearby, the site is not accessible through major airlines. The area also gets little snow and visitors would not be able to enjoy the usual Western Maryland winter activities like skiing.

Sen. John A. Cade, an Anne Arundel Republican, called the project a "crap shoot with public funds," during a hearing Friday before the Senate's Budget & Taxation Committee. Mr. Cade, though, stopped short of calling for a halt.

If the resort fails and Esping takes over the lease, the state could lose millions of dollars, said Hans F. Mayer, executive director of MEDCO. However, Mr. Mayer said the state would retain ownership of the property and would limit its use to a convention center and golf course.

The plan could fall apart as early as May if builders' bids come in higher than the $34.4 million budgeted for the project. Under those circumstances, MEDCO would have to go back to the legislature in 1996 for more money. By then, Esping would probably have invested its money elsewhere, Mr. Mayer said.

"It could crash and burn," he said.

The resort would include a 220-room hotel, as well as meeting space, a ballroom, a swimming pool, two tennis courts and an 18-hole Jack Nicklaus signature golf course with a pro shop and a driving range.

Mr. Wasserman said the resort would complement other tourism projects, including Canal Place in Cumberland and the performing arts center at Frostburg State University, that are designed to help replace industry lost in the region over the last several decades. The state predicts the resort would generate at least 280 jobs.

House Speaker Casper R. Taylor Jr., a Cumberland Democrat, has kept the project alive for years despite the doubts of some of his colleagues.

"I hate to see this thing end in a way," said Mr. Taylor, drawing laughter at the board meeting yesterday. "I've had more meetings about Rocky Gap than anything in my life."

Mr. Taylor has been speaker for a year and his power to kill bills has helped keep the project's critics from openly opposing it.

Some legislators, though, have expressed concern over the financing arrangement. Sen. F. Vernon Boozer, a Baltimore County Republican, said the interest rate of the bonds, which would average nearly 12 percent, was "mind-boggling." He also said it concerned him that the developer could not find financing from local bond houses.

Mr. Mayer said MEDCO had tried, but failed to reach agreements with investment companies nearby, including Alex. Brown, Ferris Baker Watts and Legg Mason.

"We have tried to get financing all kinds of places," he said.

Mr. Mayer attributed some of the lack of interest to a prejudice against the region. "A lot of people don't like Western Maryland," he said. "They don't have any use for it."

Mr. Boozer didn't think much of that argument. "My experience with lenders is they'll go anywhere for money," he said.

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