Hotel plan OK'd by city

$305 million project intended to aid tourism, conventions

September 20, 2005|By John Fritze | John Fritze,sun reporter

Putting a final stamp on what has been one of its most hotly debated endeavors in years, the Baltimore City Council approved plans yesterday to build a downtown hotel by 2008 in an effort to boost tourism and kick-start the local convention industry.

On a 9-5 vote, the council lent its support to the 752-room Hilton - to be built on a vacant lot next to the convention center - after forcing Mayor Martin O'Malley to make significant compromises to gather support.

The outcome, which was not unexpected, was the culmination of more than a year of debate over the project and its financing - discussions that dominated the City Hall agenda and pitted supporters against those who said spending the money is risky.

Council President Sheila Dixon, who voted in favor of the project yesterday, said those risks are far outweighed by the potential benefits of keeping Baltimore competitive in the convention and tourism industries.

"We're going to see much benefit going forward," Dixon said. "The responsible thing is to go this route and maximize that benefit."

City development and tourism officials have said the hotel is necessary to continue to lure conventions at a time when competition among cities across the nation has increased. The ability to guarantee meeting organizers a large number of rooms in one hotel, supporters say, will give Baltimore a leg up. Having the city, rather than a private developer, own the hotel would let taxpayers reap any profits.

"One thing that conventions don't have now is the luxury of having everyone in the same location," said Donald C. Fry, president of the Greater Baltimore Committee.

Opponents countered that the city has not defined the cost of building the hotel. They worry that if the hotel loses money, other revenue sources will be raided.

"There is an obligation to tell both us and [citizens] the cost of construction, and not the preliminary number," said Councilman James B. Kraft.

Last week, Baltimore Development Corp. officials named Colorado-based Hensel Phelps Construction Co., as the hotel's builder and said it would need about $186 million for design and building expenses, less than the $195 million the city had budgeted.

M.J. "Jay" Brodie, president of the city's development arm, said that price is preliminary. For example, the variable cost of fuel and building supplies may affect the bottom line.

In total, the city will borrow $305 million for the project, which will cover not only construction and design but also financing and legal costs.

To pay for the hotel, the city will borrow money that will be paid off by revenue generated from the hotel's operation. Baltimore Development Corp. officials have said the hotel will pay for itself.

Some council members remained unconvinced.

"What if the cost does go up?" asked Councilman Keiffer J. Mitchell Jr., who voted against the proposal.

Technically, the council approved three separate ordinances yesterday. One will allow the city to issue the debt, another will create a "development district" used to capture taxes to pay back the bonds, and the third actually spends the money.

The vote, 9-5, was the same on all three. In the past, the 15-member council has voted 9-6 for the hotel. But yesterday, Councilwoman Mary Pat Clarke, who has voted against the hotel, was absent.

Earlier this year, a majority of council members were inclined to vote against the hotel, but O'Malley's administration changed minds by authorizing $72 million in community revitalization projects.

Part of that money is a $59 million low-income housing fund created to purchase blighted properties and turn them over to developers to create low-income housing.

Councilman Kenneth N. Harris Sr. said he was swayed to vote for the hotel because of that and other programs.

"Very seldom does the council have much leverage with the mayor," he said.

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