Tempers flare on hotel proposal

Dixon and Pratt spar over $305 million plan

`I'm getting a little perturbed'

August 04, 2005|By Doug Donovan | Doug Donovan,SUN STAFF

Tempers flared yesterday at the city's spending board as two of Baltimore's top elected leaders - and potential mayoral contenders - sparred over the convention center hotel's public financing, and as O'Malley administration officials attacked a developer's last-minute assertion that he could privately subsidize the project.

The testy Board of Estimates debate was sparked by a procedural proposal that officially earmarks $305 million in bonds needed to build the hotel plan but needs final approval from a City Council that is still closely split over the deal.

Council President Sheila Dixon, chairwoman of the five-member Board of Estimates, lost her temper when Comptroller Joan M. Pratt and her real estate officer questioned O'Malley administration officials over the details of a plan that has been exhaustively debated in council hearings this summer.

"You wait till today? I'm getting a little perturbed with this nitpicking," Dixon said. "You're playing political games."

"You're convinced. I'm not convinced," Pratt said. "We're not playing political games."

Pratt's real estate officer, Michael McAvinn, asked questions about the deal when Dixon interrupted him, prompting Pratt to come to his defense.

"Can he ask his questions?" Pratt demanded.

"Excuse me - I'm conducting this hearing," Dixon said.

Dixon and Pratt, who are elected citywide, are expected to run for mayor if Mayor Martin O'Malley wins his bid for governor next year. If that happens, Dixon, as council president, would assume the office until the 2007 election. The proposed hotel is the city's largest publicly financed project, and incumbents' votes are certain to follow them during that year's elections.

O'Malley, who did not attend the meeting because he was on vacation, and his economic development and tourism officials have pushed the hotel as the only way to rejuvenate the underperforming Baltimore Convention Center. Without the 752-room Hilton and its ability to offer agreements for blocks of rooms, they say, Baltimore will never be able to compete for meetings.

Under the plan, Baltimore would issue revenue bonds to finance the hotel. If the hotel fails, to become profitable, the city could still use tax income from the hotel - and possibly the occupancy tax from all Baltimore hotels - to pay off its debt. Though Baltimore Development Corp. officials insist the hotel would pay for itself, skeptics call the risk too high and question whether a hotel developed with private money was ever truly pursued.

Pratt suggested yesterday, before casting the only dissenting vote on the item that was ultimately approved, that BDC try again to find a developer willing to privately finance the deal - even if that requires subsidies.

She was joined in her objections by Councilman James B. Kraft, who was also frequently interrupted by Dixon.

"I'm going to limit your comments," Dixon told him.

"I have not heard his testimony," Pratt said.

"You could have come to our hearings," Dixon replied.

Kraft then demanded to know why BDC has not taken the time to consider a new proposal presented by Portman Holdings to privately build the hotel. The Atlanta-based company previously bid to develop the hotel but lost to a group that included billionaire Robert L. Johnson. On July 22, however, Portman sent an unsolicited proposal outlining how it could build the hotel for $214 million with about $50 million in tax breaks.

BDC President M.J. "Jay" Brodie said he "hasn't heard a single new thing" in the recent Portman proposal and that it would require substantial public subsidies without the city maintaining hotel ownership - and a share of the profits.

Roger J. Zampell, a senior vice president at Portman, appeared before the board but was immediately taken to task by City Solicitor Ralph S. Tyler, who is one of the board's five members.

Tyler peppered Zampell with a series of harshly toned questions until the Portman representative agreed with Tyler's summary of the company's proposal: The company gets the land for free, a 20-year tax break and $58 million in grants.

"You own it, you get the profit," Tyler said. "The public pays for it, and you own it - correct?"

Zampell said the public subsidies in his proposal are necessary to provide blocks of rooms to the convention center at a per-night room rate of $125 that meeting planners can afford. He said the city's plan would require the new hotel to charge closer to $200, which would only add to the convention center's problem of being unable to offer affordably priced rooms to meeting planners.

The only issue yesterday that garnered unanimous support was an item that, once approved by the council, would appropriate the first $10 million of what would become a $59 million affordable-housing program. The program was crafted by the O'Malley administration to try to draw a majority of council support needed to approve the hotel and to appease church and community activists who demanded investments in neighborhoods, not hotels.

At the end of yesterday's meeting, Dixon said the two deals were good for the city because they would spur economic development in downtown and in neighborhoods.

"Is it a big risk? Yes," she said of the hotel deal. "Can we use this to do more for neighborhoods? Yes."

She then voted yes, but was promptly reminded that she had to abstain because both items are being forwarded to the council. The hotel plan passed, 3-1.

Pratt, before casting her no vote on the hotel proposal, said the deal to float $305 million in bonds was based on "hopes and dreams" that the hotel will generate enough revenue to cover the debt service. "I'm not convinced," Pratt said. "This [hotel] deal should be re-evaluated."

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