Hotel foes rally against subsidy plan Council is urged to oppose Wyndham tax break package

'A game of chicken'

Westin's proposal to build without aid raises speculation

March 12, 1998|By Robert Guy Matthews | Robert Guy Matthews,SUN STAFF

Bolstered by the news that a developer wants to build a downtown hotel without public money, dozens of people urged the Baltimore City Council yesterday to vote against the mayor's plan to give $25 million in tax breaks to developers of another proposed downtown hotel.

It was a last-ditch, pull-out-the-stops effort from opponents of the Wyndham Inner Harbor East hotel, who for months have used any argument available to try to thwart the city's plan to build the 750-room project.

"If we have so many people willing to come here, why are we willing to give the farm away?" asked Tracy Gosson, a Butcher's Hill resident who opposes the hotel.

Yesterday's council hearing allowed foes and supporters of the Wyndham project to make their argument before the council's taxation and finance committee. Later this month, the council is expected to vote on whether to give the developer $25 million in tax breaks.

The city, hoping to dramatically increase the number of hotel rooms to accommodate the newly expanded Convention Center, has three developers who say that they want to build a hotel in Baltimore.

Only developer Harvey Schulweis, who is proposing a 600-room Westin on a Pratt Street parking lot across from the Inner Harbor, has said that he can do it without tax dollars.

The developers of the Wyndham, led by baking mogul John Paterakis Sr., and developers of the proposed 850-room Grand Hyatt, headed by Orioles owner Peter G. Angelos, say that they need tax breaks to lower construction costs and to keep room rates affordable.

"I don't think that in the last 15 to 20 years that there has been a major downtown hotel built without something on the order of 30 percent public assistance," said M. J. "Jay" Brodie, who heads Baltimore Development Corp., the city's chief economic agency that brokered the Wyndham hotel deal.

But hotel industry analysts say that the city should not be so quick to dismiss the notion that large hotels cannot be built without subsidies.

In the past 10 years or so, many hotel developers needed public funds to offset costs, but today's strong economy and growing tourism industry are making subsidies less necessary, they said.

"We are building a hotel in Savannah [Ga.] without subsidies," said Mark Lukens, director of development for Seattle-based Westin Hotels & Resorts. "It is being done in several cities across the country."

"There are a number of factors that go into the whole project that could allow owners to go without subsidies," said Rick Pastorino, managing director of American Express Hospitality Consulting, a Virginia firm that studies financial aspects of buying and selling hotels.

But Baltimore officials are skeptical because Schulweis is offering few details of his hotel development.

Some council members believe that the developer is presenting his proposal because he wants the council to quash one of the other hotel deals and get them to commit to his proposal. If they choose his proposal, they speculate that he will hit them with a demands for public money.

"I think it is a game of chicken," said Northeast Baltimore Councilman Martin O'Malley. "I don't know what we are going to do."

Pub Date: 3/12/98

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