Angelos wants 2nd extension of hotel negotiating rights Lacking final deal, he seeks 90 more days


August 19, 1998|By June Arney | June Arney,SUN STAFF

Baltimore attorney and Orioles owner Peter G. Angelos has asked for a second extension in the exclusive negotiating privilege he has with the Baltimore Development Corp. to build a $150 million Grand Hyatt hotel downtown.

The negotiating rights expired at 6 p.m. yesterday with no deal made final for the proposed 850-room hotel, which is to open in 2001 adjacent to the Baltimore Convention Center.

In a letter delivered to the BDC yesterday afternoon, Angelos spokesman Tom Marudas asked for a 90-day extension. That request is being considered by the BDC.

M. J. "Jay" Brodie, president of the BDC, said he was not surprised by the request and that some local projects have needed as many as three extensions.

"It takes some time to get complex deals together," Brodie said. "It's possible that there's been an honest underevaluation of how long it takes to strike a formal deal with a Hyatt or another company like that. I don't think it casts any pall over the project at all."

In meetings during the past few weeks to discuss the west side of downtown, Angelos and Marudas have been upbeat about progress on the project, Brodie said.

Mayor Kurt L. Schmoke said he thinks one reason for the delay might be the complexity of the deal Angelos is trying to broker.

"I believe what Mr. Angelos is trying to put together is not only a good development but a deal between Hyatt and Grand Hyatt," Schmoke said. "If you end up with the deal he's talking about, you'd have single management of the Hyatt and Grand Hyatt."

That would create more than 1,000 rooms under one management group.

"We don't have anything like that in the city," Schmoke said. "Somebody being able to control that many rooms becomes a significant player."

Developers have said they hope to be able to make the deal final by November, Schmoke said.

"Perhaps what Mayor Schmoke is saying is that we are on The verge of having a 1,400-room Convention Center headquarters hotel and all the economic benefits that would flow from that," said Marudas. He declined to elaborate.

Schmoke also said he thinks the request for more time underscores what private hotel developers have said about the site's presenting several challenges, including basic infrastructure components such as the need to move underground pipes.

"I've always said in this whole discussion of hotels over the past two years that no one bid on that site," Schmoke said.

In May, the BDC approved a 90-day extension for the Grand Hyatt project after developers said that although significant progress had been made on meeting the conditions of the negotiating privilege, they weren't in a position to announce an operating management agreement.

"It's not uncommon for extensions to be granted," said Kiyoshi Sekine, director of international real estate for PKF Investments in San Francisco. "In city politics, I think it's standard operating procedure. A project of this magnitude and with those parties involved, there's a lot of politics."

There are various reasons for such extensions experts say, ranging from an inability to secure financing to concerns about market demand to negotiating strategy.

Market demand could be a significant element in this deal because Baltimore would have three new hotels opening about the same time.

The city would have an additional 2,200 rooms downtown, an increase of about 50 percent from the current 4,479. A 1996 Legg Mason Realty Group feasibility study commissioned by the mayor said 1,000 new rooms was optimal for the Baltimore market.

Karen Rubin, senior vice president with HVS International in Mineola, N.Y., said she could not comment on specifics of Baltimore's proposed Grand Hyatt because her company is involved in the project, but she agreed to talk generally.

"Hotel deals take a while to forge," she said. "They are complex. There are a lot of contractual issues, a lot of parties involved, and it takes more negotiating."

About 29 percent of the $150 million Grand Hyatt project would be publicly subsidized. Angelos wants the city to donate the site, which is assessed at $10 million.

He also wants a 20-year waiver on an estimated $17 million in taxes, and wants the city to use its credit rating to win favorable borrowing rates for $16 million in revenue bonds to finance parking facilities.

One of the other hotels, a $124 million Westin planned for the former News American site at 300 E. Pratt St., is scheduled for groundbreaking in November and for completion in 2000. That 600-room project, headed by New York developer Harvey Schulweis, is being built with no public money.

A ceremonial groundbreaking was held in June for the controversial 31-story Wyndham Inner Harbor East Hotel. Despite several lawsuits filed in connection with that $134 million project led by Baltimore businessman John Paterakis Sr., the hotel is planned for completion in September 2000.

Pub Date: 8/19/98

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