Angelos gets OK for hotel proposal Public subsidies of $43 million sought

January 23, 1998|By Dennis O'Brien | Dennis O'Brien,SUN STAFF

Baltimore Development Corp. gave the nod yesterday to Peter G. Angelos to develop a hotel next to the Convention Center and acknowledged that he wants $43 million in public subsidies -- a package similar to a controversial hotel project in Inner Harbor East.

BDC President M. J. "Jay" Brodie announced that Angelos has been awarded exclusive rights to negotiate with the BDC for an 850-room Grand Hyatt hotel at the city-owned site bounded by Pratt, Howard, Camden and Paca streets.

Brodie said the city could accommodate both Angelos' $150 million hotel proposal and the 750-room Wyndham Hotel proposed for a site a mile away by a group led by John Paterakis Sr.

"The Hyatt would be in addition to the Wyndham, not in place of it," Brodie said.

But in announcing the board's 11-0 vote, Brodie also unveiled financing terms sought by Angelos similar to those that have subjected the Paterakis project to criticism.

Angelos' proposal calls for a $124 million private investment. But Angelos is asking for the city to donate the site, valued by city appraisers at $10 million.

He is also asking for a 20-year waiver of city taxes, worth $17 million and for the city to use its credit rating to win favorable borrowing rates for $16 million in parking revenue bonds to finance two or three levels of underground parking.

Paterakis wants $40 million to $50 million in public subsidies for his $132 million hotel. The city's offer to Paterakis is expected to be released by the end of the month.

Brodie said yesterday that such concessions are necessary for construction of major hotels in urban areas because the costs to build them have risen much faster than what the hotels can charge for rooms.

"The payoff for us, and for the city, is the jobs it creates, the taxes it brings in and the convention business it brings to the city," he said.

The two hotels -- the first major hotels to be built downtown since 1988 -- would bring the number of city hotel rooms to more than 6,000.

Brodie said that smaller hotels might lose some business in the first few years after both hotels open. But he said that in the long run, other hotels will benefit because the Grand Hyatt and Wyndham will attract more conventions to Baltimore.

"Demand is outweighing supply of hotel rooms. This city needs more hotel rooms," Brodie said.

Brodie also touted the tax revenues and business that Angelos' hotel, which would be connected directly to the Convention Center, would bring to Baltimore.

Brodie said BDC will also ask Angelos for some profit-sharing arrangement, so that a percentage of the profits generated by the $145-a-night hotel rooms are returned to the city.

A profit-sharing arrangement is also being discussed with Paterakis.

The board's vote gives Angelos 90 days to negotiate exclusively with the BDC to come up with a design and public financing terms.

The final plans must be approved by the City Council and Board of Estimates.

Brodie said construction is slated to begin in spring 1999 and would be completed by spring 2001, about a year after the Wyndham would open.

Pub Date: 1/23/98

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