A new ballgame? Hotel saga: Council president wants limited public subsidies and bigger private stake.

December 04, 1997

BALTIMORE CITY's tortuous hotel saga has taken another twist. City Council President Lawrence A. Bell III now says approval of the 48-story Inner Harbor East Wyndham hotel should be delayed, so that the controversial project can be considered in tandem with another hotel located closer to the Convention Center. And he wants public subsidies for both hotels limited to property tax relief.

"We will not entertain any public subsidies that would require any out-of-pocket expenditure," he said at a meeting of the city's Board of Estimates yesterday.

Mr. Bell's pronouncements, if he can make them stick, could change the rules of the game even as the council is scheduled today to give tentative approval to the Wyndham proposal.

DTC Since February, when Mayor Kurt L. Schmoke threw his support behind bakery mogul John Paterakis' plan to build a $132.6 million Wyndham hotel in the Inner Harbor East area south of Little Italy, a key assumption has been that more than $50 million of its cost would be covered by public subsidies, including nearly $20 million in parking revenue bonds.

That assumption could now change. The Wyndham developers -- and backers of any other taxpayer-subsidized hotel -- might have to increase the percentage of private financing.

Meanwhile, Councilwoman Lois Garey, who heads the land use committee, says she plans to limit the Wyndham's height to 40 stories and seek guarantees that the hotel will not be turned into a future gambling casino.

Suddenly, the hotel situation is in flux.

Mr. Bell's double-track approach would appear to give new life to Harvey Schulweis' bid to build a Westin hotel at 44 East Pratt Street, which was rejected by Baltimore Development Corp. earlier this year. Meanwhile, the BDC is scheduled to decide on Dec. 18 whether to accept Orioles owner Peter Angelos' proposal to build a Grand Hyatt hotel next to the Convention Center.

We have serious doubts that the total exclusion of such a useful financing mechanism as parking revenue bonds is prudent. In theory, at least, such subsidies are supposed to keep already astronomical downtown parking rates more manageable. Yet it is interesting that two potential hotel developers yesterday greeted the possible loss of parking revenue bonds as no great cause for concern. "We would just have to increase the amount of the first mortgage," said one.

This reaction suggests that Baltimore City development officials have been far too generous in offering hotel subsidies. Hotels are a cyclical business. Large subsidies may have been justified a few years ago, when the industry was in recession. Today, when room occupancy rates are good, the industry is thriving and chains are changing hands at record prices. As a consequence, hotel developers are far more willing to depend on commercial lenders and other sources of private capital than just a few years ago.

As they consider a land-use bill for the Wyndham today, City Council members ought to ask themselves whether they should act before their Dec. 15 Christmas break. A more prudent course would be to wait for BDC's Dec. 18 hotel decision and see who emerges as the winner. A delay would cause no harm since the Wyndham financing package -- the crucial missing link -- is not expected to be ready for presentation to the council before February.

Pub Date: 12/04/97

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