Baltimore's $197 million Four Seasons Hotel is on target to open by late 2011 with partial financing from the proceeds of $45 million in tax-exempt bonds issued by the Maryland Industrial Development Financing Authority.
Representatives for the state and the hotel developers said that PNC Bank is purchasing the state-issued bonds and that the proceeds will be loaned to the developer so that it can complete the 18-story, 256-room luxury hotel in Harbor East. Affiliates of John Paterakis' H&S Properties Development Corp. are the developers.
The MIDFA held a public hearing on the bond sale Wednesday morning, and the settlement is scheduled for Thursday. According to H&S Vice President Michael Ricketts, the hotel project is expected to create 1,273 construction jobs and 577 full-time jobs.
The financing became available through a one-time program created by the Obama administration to stimulate the economy. It allows proceeds from the sale of "recovery zone facility revenue bonds" to be used for projects that wouldn't ordinarily qualify for tax-exempt financing — as long as the bonds are sold by Friday, the proceeds are used within three years, and the construction site is within a "recovery zone." For the purposes of this program, the entire city of Baltimore has been designated a recovery zone.
According to Gregory Cole, executive director of the financing authority, the assistance is not provided in the form of direct funding but in the state's issuance of tax-exempt bonds for a specific project. He said PNC is purchasing all $45 million of bonds issued in connection with the Four Seasons project and the H&S affiliates are borrowing the money from PNC.
Cole said the state will receive $56,250 a year for participating in the transaction. "It's an example of what the stimulus act was intended to do," he said.
The concrete superstructure and glass "skin" of the building are already up, next to the Legg Mason tower on Baltimore's waterfront, but the interior has not been completed or furnished. Ricketts said the developers have built the hotel so far using "internal sources" of funding.
H&S President Michael Beatty said that his team is aiming to open the hotel by the end of 2011 and that the bond sale is a key to meeting that target. "This helps us move the project forward," he said.
After the hotel is complete, the developers intend to build condominiums above it as a separate phase of the project. The condominiums would bring the building's height to 44 stories, making it the tallest in the city. Ricketts said the development team does not have a timetable for that phase of the project.
Cole said proceeds from the recovery zone bond issuance must be used solely for the hotel and related retail spaces, not the condominiums.