Convention hotel proposal doesn't add up

July 31, 2005|By Keiffer J. Mitchell Jr.

THE PAST FEW weeks, the Baltimore City Council has been debating the merits of a publicly financed, city-owned convention center hotel proposed by Mayor Martin O'Malley and the Baltimore Development Corp.

Under the proposal, the city would issue $305 million in tax-exempt bonds to build the hotel and create a quasi-city agency to oversee it.

As a member of the City Council representing the district where the hotel is to be built, I oppose this plan, though I do believe there needs to be a hotel connected to the convention center.

Where I differ from Mayor O'Malley and the BDC is on the financial structure they have proposed and on the wisdom of the city taking on a private enterprise such as hotel-ownership.

The BDC has said that this proposal is the only way to boost convention center business, and its consultants have presented to the City Council projections that show a financial windfall for the city if we build the hotel as proposed.

But what concerns me about the plan is whether the hotel will perform as projected. This is an important concern because should it fail, the amount of money the city has available for neighborhood redevelopment, school funding and other critical public services would be reduced.

The possibility of falling short of the projections must be carefully considered, along with the question of whether the risk is worth the reward.

The City Council has been told repeatedly by the BDC that this project is not fiscally attractive to private developers, and that the city would enjoy certain benefits that would not be available to them. But why couldn't a carefully crafted public-private partnership make most of those benefits available to a private developer?

True, the council has been told that such a partnership is not fiscally viable - even at the Inner Harbor, the successful heart of Baltimore's renaissance. So if the private sector thinks the project is not viable or is too risky, why would the city government think otherwise?

Here's another of my concerns, and one that may be on the minds of outside developers as well: The proposed hotel is billed as a four-star luxury hotel with all the amenities, and to attract convention business, blocks of rooms must be set aside and offered at a reduced rate.

But consider this: An Abell Foundation report on the convention hotel noted that the average room rate in Baltimore was $167.42 in 2004. According to BDC projections, the new hotel's average room rate would be $195.06 in 2009, the year it is expected to be in operation, while the BDC's own consulting firm, HVS International, has said that high room rates have been a factor in organizations not choosing Baltimore for their conventions. This means that the projected room rate, on which the BDC is basing its claim that the bonds could be paid off five years after the new hotel is fully operating, could be unrealistic, depending on what the average room rate is then. What's more, numerous publications and reports have indicated an overall reduction in convention business nationwide.

The last concern I have with the current proposal is that the new hotel would be owned by the city and, as a result, another quasi-city agency would be created called the Baltimore Hotel Corp., run by a board of directors appointed by the mayor. Lost in the debate over the funding is the makeup of the board, the powers of the board, and the oversight needed for such an entity.

Finally, the debate between those of us on the council opposing the proposed hotel and the mayor and its supporters is healthy for our city, especially under the newly configured City Council. Unfortunately, at the last committee work session of the Committee of the Whole, Mayor O'Malley, through his chief of staff, characterized those of us opposing the hotel as obstructionists to progress who want the city to "stand still" instead of moving forward.

I was born and raised in this city. My family has dedicated many years of public service to this city, state and nation. We have always supported progress and moving our city forward.

I am proud to be part of a City Council that has finally raised its profile as a necessary check and balance over the mayor; this is no longer a "go along to get along" City Council.

We, too, want the city to move forward together as the "Greatest City In America," but not at any cost and at any risk to our future.

Keiffer J. Mitchell Jr. represents the 11th District in the Baltimore City Council.

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