To build hotel, city will dig itself into $290 million hole

December 02, 2004|By DAN RODRICKS

WAIT A minute. Time out. Stop the world. I need to go back a week, to Thanksgiving, to take another look at something that appeared on the front page of this newspaper that day: City to seek millions more for hotel plan.

Did you see that?

I know: another hotel story.

But this wasn't just another installment in Baltimore's long, tortured effort to get a convention "headquarters" hotel next to the convention center so that we can have thousands of square dancers, turf growers, pediatricians, Republicans and Democrats come to town for huge conventions. You've heard it all before: We don't have enough beds. We need hundreds, even thousands, more. Without them, we'll never attract big conventions, and Maryland taxpayers will never see the downtown convention center they paid millions for fully utilized.

Yadda yadda yadda.

But, in all the eye-glazing stories about Baltimore's efforts to get a big chain to build a hotel with a gazillion rooms, I must have missed the full meaning of "public ownership" - or maybe I just didn't believe city economic development officials were serious about it. Then, this story last Thursday jumped out: $290 million in bonds would finance the project.

Bonds?

They are serious - the city is about to get into the hotel business.

Baltimore development officials plan to seek an estimated $290 million in public financing for the proposed convention headquarters hotel ...

Wait, there's more:

... making it one of the costliest projects ever undertaken by the city government.

Oh.

Please pass the sauerkraut.

Maybe you missed this story. It was Thanksgiving Day, and you might not have been paying attention, which is something I suspect the people behind all this hotel wheeling and dealing probably prefer. (They are, after all, some of the same people who've been sued by west-side business owners for making redevelopment decisions in secret).

Here's something else I must have missed: They've already picked the hotel, the developer, the architect and general contractor for this convention headquarters.

The hotel will be built by team member Whiting-Turner Contracting Co., headed by Willard J. Hackerman, with a construction cost of about $195 million.

Ah, that's nice - bringing in someone new to do the job.

RTKL is the architect and Hilton is the hotel chain involved, and the head of this development "team" is Robert Johnson, the founder of Black Entertainment Television.

Johnson's firm will have no equity stake in the project but will be paid fees for "advising city officials on negotiating a management contract with Hilton."

Sounds like a pretty sweet deal - for the developer. The risk is all on the city.

Pardon me if I sound grouchy. I am a citizen of Baltimore, a taxpayer of the old palatinate, and I am getting the hotel headache again.

Is it really impossible to get a development group to put up private money to build a hotel near the Baltimore Convention Center, Oriole Park, Camden Yards, and the Stadium Where the Ravens Play, and all of this just a few blocks from the Inner Harbor?

Give us this day our daily break.

We've had a financial crisis in the city schools, a city government scraping around for new ways to tax its citizens, and we're going to tie up $290 million in public financing for a hotel?

Why are we still making these kinds of deals in this city? Why are we still acting like a bunch of beggars, trying to get developers to honor us by coming here and making money?

About seven years ago, the city had a chance to bring a nice hotel right near the Inner Harbor, within four blocks of the convention center, and with largely private investment. Harvey Schulweis was the New York tycoon with that plan, and his was the one that most impressed the city's economic development staff, the city's convention bureau and a panel of experts. Peter Angelos had an even stronger plan to build a Grand Hyatt just a long line drive from the convention center, where this new publicly financed Hilton is supposed to go now.

But both those plans were rejected, and Mayor Kurt Schmoke instead backed taxpayer subsidy of a hotel - the Baltimore Marriott Waterfront in Inner Harbor East - proposed by one of his political supporters, the millionaire baker John Paterakis. Ultimately, the city will subsidize the Marriott to the tune of about $43 million over 25 years.

And it will still be a mile from the convention center, with no commitment to provide a block of rooms for the convention center.

The Marriott is practically its own convention center now; it's doing fine and has rooms booked out to 2012. So taxpayers actually subsidized a hotel that undercuts the taxpayer-subsidized convention center.

Now, we still don't have a "headquarters" hotel near the convention center, and we supposedly can't find a private investor, so the city's going to take a $290 million risk and go into the hotel business. I think it might be a good idea to stop here, call a timeout, and have a little debate. Let's have a town meeting. There's plenty of room for one in the convention center, and it needs the business.

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