City hotel plan goes back on table Proposed Hyatt next to convention center comes up for review

Commercial real Estate

November 06, 1997|By Gary Gately | Gary Gately,SUN STAFF

Baltimore's economic development agency will begin reviewing at least two proposals tomorrow for city-owned parking lots across from the convention center: a bid to build an 850-room Grand Hyatt Hotel and an offer to purchase the lots.

With tomorrow's deadline for proposals, the Baltimore Development Corp. enters the city's hotel fray anew, eight months after its board's choice of the controversial Wyndham Inner Harbor East led to widespread criticism.

An offer by a team led by New York developer Harvey Schulweis to purchase the land would prevent the Grand Hyatt that Orioles principal owner Peter G. Angelos wants to build, eliminating a would-be competitor to the 44-story Westin Hotel that Schulweis wants to construct downtown, on the site of the closed News American newspaper.

Under Schulweis' proposal, the parking lots would be purchased for an undisclosed amount by an investors' group led by Schulweis Realty Inc., then operated as private parking lots. The proposal calls for no development on the site, beyond improvements.

Schulweis again said that a hotel next to the convention center would be a poor choice because it could get only half its business from the convention center and it would be too far from the downtown tourism center to attract enough leisure and business travel. As a result, he said, building a major hotel there would drive down occupancy and rates citywide.

"I don't think anybody should want a hotel there," he said. "This city should not be supporting a hotel adjacent to the convention center. It sounds good. It's in the area of conventional wisdom, and conventional wisdom is not always right," he said.

Tom Marudas, an Angelos associate, said a hotel next to the expanded center is critical to the health of the downtown convention and tourist trade and to protecting taxpayers' more than $150 million investment in the convention center expansion.

"Our hotel is the only one that creates the critical mass to bring in the larger hotels by bringing in the larger conventions," he said.

He pointed to a 1,200-room Marriott built next to the Pennsylvania Convention Center in Philadelphia, which he said drove up citywide occupancy 9 percent in its first three years. The Grand Hyatt, which would rise 22 stories, would have the same effect here, he said, by drawing larger conventions regularly and increasing the city's profile to lure more leisure travel.

Carroll R. Armstrong, president of the Baltimore Area Convention and Visitors Association, said the land provides the last best hope for what he deems an essential to remain competitive in the $83 billion-a-year meetings industry.

"There's no question that we need a hotel to serve that convention center on that site if we're going to compete in the big-time," Armstrong said.

Armstrong said the 750-room, $132.6 million Wyndham Inner Harbor East also would fulfill a need for downtown rooms. Today, playing host to a 2,500-room convention can require housing delegates in more than 20 hotels spread well into the suburbs and at the airport.

But he said meeting planners, especially for the larger conventions that book three to five years in advance, insist on a headquarters hotel next to centers and often make booking decisions on that basis.

As BDC begins its review, the hotel debate is also playing out in City Council chambers. Tonight, at the first City Council public hearing on the Wyndham, taxpayers will get the chance to tell city lawmakers what they think of the hotel, which seeks some $50 million in public subsidies.

The council's 5 p.m. public hearing, before the Urban/Intergovernmental Affairs Committee, will focus on a proposed overhaul of the Inner Harbor East master plan to accommodate the hotel, which would rise more than 45 stories on the waterfront south of Little Italy.

The BDC opened the bidding process for the lots next to Camden Yards after Angelos proposed a 22-story, $150 million Grand Hyatt in June that would be linked to the expanded Baltimore Convention Center by an enclosed walkway.

Since then, the agency and Mayor Kurt L. Schmoke have repeatedly said the city would not limit development on the land to a hotel. Developers have expressed interest in building a park, a parking garage and an office building, according to Schmoke and BDC leaders.

None of those plans had materialized as of yesterday. But development proposals typically arrive at the 11th hour.

Angelos would be principal owner of the proposed Hyatt hotel, with an 80 percent stake and a $20 million initial cash investment. Hyatt Hotels Corp. would hold a 20 percent share and invest $5 million for construction. The development team seeks about $51 million in public subsidies, including $16 million in bonds to be repaid with revenues from an 800-car garage and $10 million for the land.

But the Grand Hyatt team is dropping a request for $25 million in tax-increment financing -- bonds issued with the expectation that property taxes generated would cover the debt -- and instead is seeking roughly equivalent tax abatements over the next 20 years, Marudas said.

Because the bonds must go to city referendum next November, that would delay opening of the hotel, he said. With approval, construction of the Grand Hyatt could start by next summer and be completed by late 1999, he said.

The $170 million Westin, ranked first among three projects by BDC's executive staff, the convention bureau and business leaders in the first round of proposals, could be completed within 30 months of beginning construction, Schulweis said.

Pub Date: 11/06/97

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