Convention hotel redux

July 25, 2005

THE O'MALLEY administration's development team has taken a beating before the Baltimore City Council recently. Members opposed to a proposed publicly financed $305 million convention center hotel have been pounding away at the deal's lack of private investment. Their criticism has focused on whether the city actually needs another hotel, whether that hotel would invigorate Baltimore's convention business, and whether the city's investment in the project might be better spent improving conditions in blighted city neighborhoods.

Those are valid concerns, but careful consideration shows the plan to be in the best interests of Baltimore.

Council members have particularly pressed the city's development officials about the lack of private investment. In fact, the Baltimore Development Corp. did consider two proposals from private developers, each of whom sought considerable public financing. Let's review the would-be costs in today's dollars:

Treyport Ventures LLC: The proposal included a waiver of all city permits, inspection and constructions fees, rebates on property taxes, a city guarantee of debt service and the land, totaling about $148 million.

RLJ Development-Quadrangle Development Corp.: This offer asked for a 10-year city rebate on property taxes, city financing for part of the construction and the land, totaling about $61 million.

The O'Malley administration proposal - a city-financed hotel developed for a fee by the RLJ group and managed by Hilton - would require a city outlay of about $13 million. That figure is based on projections for a successful hotel, with revenues, room taxes and property taxes paying the debt service and excess revenue being returned to the city. The city would own the land and hotel.

Some council members think the city should shop the project until it finds a more reasonable private deal. Other members object to a convention center hotel on principle, preferring that the city cater to an expanding tourist trade with smaller hotels. While those arguments don't persuade us, this new, leaner council has shown a welcome toughness, enlivened the debate and offered public scrutiny of an important project.

But their concerns don't address the need to bolster business at the convention center. It's true that the convention center trade is changing, with big conventions giving way to smaller meetings. A convention center hotel would increase the proximity of conventioneers to their meetings and give city officials the ability to guarantee organizations hotel rooms at one site, which they can't do now. Those are selling points.

When the City Council revisits the hotel proposal this week, it should consider this: The goal of this project is to boost convention business, and that's the risk. But hotel demand in Baltimore suggests that another 752-room hotel would do a brisk business, and that's the potential reward.

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