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Convention center hotel plan is met with skepticism

Standing before a panel of skeptical politicians in the City Council chambers, Baltimore Development Corp. President M.J. "Jay" Brodie conjured up the image yesterday of councils past that had had to make tough decisions on risky public projects - things such as Charles Center, the Inner Harbor and the west-side redevelopment.

Now on the table before city leaders is a publicly financed convention center hotel - what could be the costliest city project of all time. "In every case, the decision of the council was to move forward," Brodie said. "Now is the time to move forward with this."

In the heated hearing, which lasted more than eight hours, City Council members grilled Brodie and other hotel proponents on why Baltimore needs such a hotel and why it must by paid for with public money.

Development and tourism officials firmly outlined how the proposed 752-room Hilton, to be developed and owned by the city, is the only way to keep convention business in Baltimore alive. And they insisted that issuing $305 million in city revenue bonds is the only way to build and pay for it.

Though the hearing came a day after the release of an Abell Foundation report questioning whether the hotel would really revive Baltimore's stagnant convention business, Clarence T. Bishop, the mayor's chief of staff, promised it would. He also vowed the hotel would bolster the city's work force and tax rolls without taking money from crime fighting or education.

"The administration feels, and feels strongly, that the iron is hot, the need is clear ... and it's time to act," he said.

Under the plan being considered by the council, the city would create a corporation to develop, own and operate the hotel, to be built adjacent to the convention center just north of Oriole Park at Camden Yards. BDC, the city's economic development agency, chose Robert L. Johnson, the founder of Black Entertainment Television, to lead the team.

One of the more dramatic moments in the hearing came when a representative of a team that lost the development bid in 2003 questioned the BDC's selection of Johnson and its insistence on a publicly financed plan.

Robert C. Hazard, president of the Pittsburgh-based MetroVision Community Development, told the council it was clear when his firm bid that the administration had already decided on Johnson. Hazard's team proposed a privately financed deal that required extensive subsidies from the city.

"It surprised me," he said, "how the mayor publicly put his arm around [Johnson], effectively endorsing the project."

Hazard also said the two-month bid process - a period that fell over the Christmas holiday - was too short. "Maybe that's why there were only three proposals," he said.

Brodie defended the BDC's choice.

"There's an implication that there wasn't thorough consideration," Brodie said. "There was - just not in favor of Mr. Hazard's plan."

"There are no sour grapes," Hazard said outside the hearing. "But don't go and say there was no viable private sector proposals."

Council members skeptical of using tax dollars for the project jumped enthusiastically on Hazard's testimony.

"I'm really excited to hear there are private investors out there that want to be part of this deal," Councilman Bernard C. "Jack" Young said, asking Hazard if he was still interested in the project.

"Absolutely," Hazard replied.

"Mr. Brodie," Young said, "I think you should talk to him."

Though dozens of people had signed up to testify before the hearing began at 1 p.m., as the hours stretched on, many of them left in disgust.

Marvin L. Cheatham Sr., president of Baltimore City's NAACP chapter arrived early, eager to testify about how he thinks the city needs stronger recruitment of conventions rather than a new hotel.

He sat through talks, left for dinner, then returned. At 7 p.m., he angrily left for good, saying, "I think it's insulting. Apparently we signed up for nothing. How can they deal with one of the largest public works in Baltimore history without public involvement?"

Red-shirted labor representatives also waited most of the day for a chance to say that they support the hotel as long as it would permit union workers.

Councilwoman Mary Pat Clarke took up their cause, saying: "We don't need another hotel that doesn't pay living wage. I want to see it in writing."

Some council members expressed suspicion of claims that public financing is the only viable option. "I think we are only getting one side of this," Councilman James B. Kraft said.

Robert Swerdling, managing director of public finance at Piper Jaffray & Co., the bond underwriter, explained that in either a private deal with city subsidies or an all-public-money scenario, the city's financial risk is essentially the same. But in a private deal, the city wouldn't get its money back, he said.

"The city's taking the risk, should it reap the profit or someone else?" he asked.

Hours were absorbed answering the council's questions on various aspects of the complex financing plan, frequently focusing on the amount of risk the city would assume.

Officials said they intend for the hotel to eventually pay for itself. However, to guarantee the bonds, the city must promise other ways to pay should revenues fall short. The city would first turn to the hotel's property tax, then the hotel's occupancy tax and then - as a last resort - money from the citywide hotel occupancy tax.

Hilton also guaranteed $25 million in the event of a shortfall - but that's money the city would have to pay back.

Brodie and other officials continued to push a July 11 vote to take advantage of low interest rates and have the hotel open by spring of 2008.

Council members said they felt rushed.

"We have a responsibility to people in the city to make sure all their questions are answered," Kraft said. "A lot of people in this room espousing this don't live in the city. If it falls apart, you don't have to pay for it, we do."

"That's unfair," Bishop said. "We are not trying to put pressure on our elected officials to move things forward."

Sun staff writer William Wan contributed to this article.

Copyright © 2015, The Baltimore Sun
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