A Colorado company will construct Baltimore's publicly financed convention headquarters hotel, city officials said yesterday - replacing Whiting-Turner Contracting Co., which could not keep its projected cost within the budget.
Also yesterday, the state said it expects to decline a request from the city for funding because it has concerns about the project.
Hensel Phelps Construction Co., the winning bidder, said it would need about $186 million for design and building expenses, less than the $195 million the city had budgeted. But Baltimore Development Corp. President M.J. "Jay" Brodie cautioned that he asked for "preliminary" numbers from the three companies that were in the running for the job - drawing complaints from hotel opponents.
"The design is not finished; construction costs vary," said Brodie, noting the fluctuations in gasoline prices. "For us to say this figure is final today would be foolish."
He said a guaranteed maximum price would be set before the city issues bonds for the 752-room Hilton, which will probably be in November. The hotel, slated for a parking lot next to the Baltimore Convention Center, could open in the spring of 2008, he said.
Baltimore-based Whiting-Turner - which built the original, smaller convention center building in the 1970s - was part of the development team Baltimore selected before the city decided to handle the project itself. The company remained as the builder until the city, unhappy with Whiting-Turner's cost estimates, asked for competitive bids in March. Whiting-Turner was one of the three that submitted bids.
The Whiting-Turner bid was about $200 million, Brodie said. The lowest bidder was FaulknerUSA of Austin, Texas, which said it could do the job for $163 million. That firm's work includes convention headquarters hotels in Austin and Vancouver, British Columbia.
Brodie characterized FaulknerUSA's estimate as a low-ball bid that "was not dependable."
"We were not convinced they had thoroughly thought through all the aspects," he said.
Brad Pittenger, FaulknerUSA's executive vice president of development, said in a statement: "While we are surprised at the city's selection, considering that FaulknerUSA is the industry leader in this type of development and our proposal offered a more attractive financial package, we are not going to second-guess the city's decision."
Whiting-Turner did not return phone calls.
Though the project financing plan did not count on state funding, Brodie said yesterday that he has asked the Maryland Department of Business and Economic Development about the "possibility" of help, and officials were considering it. The state has a financial stake in the convention center.
But reached by telephone yesterday, Aris Melissaratos, secretary of the business and economic development agency, said the answer he's prepared to give is no. "The current plan, as well thought through and as rigorous as the analysis is, does not commit to the convention center's needs," he said. "There is not a firm, low room price guarantee that would allow the convention center to be competitive."
Irene E. Van Sant, project analysis director for the BDC, said the price would be negotiated annually, with convention group rates lower than transient room rates. She could not say what sort of discount conventions would receive. The city is looking at an average daily rate of $187 for all users in 2008, the current going rate.
"Our profit objectives don't need to be as high as the private sector," Van Sant said. "We clearly anticipate the room block rate will be lower to attract conventions."
Hensel Phelps, based in Greeley, Colo., with annual revenue of $2 billion, built the new Southwest Airlines terminal at Baltimore-Washington International Airport and convention center hotels in Sacramento and San Diego.
Baltimore officials said they picked its proposal because the company came in under budget; offered the most detailed numbers to back up its estimate; has experience with similar projects; and will splice its subcontracting work into small pieces to give more local companies a chance to participate.
Baltimore-based architecture firm RTKL Associates Inc., which is handling the design work, will be paid by Hensel Phelps.
"It has been a long, thorough process," said City Council President Sheila Dixon, who appeared at the announcement yesterday at City Hall with Mayor Martin O'Malley. "I was very satisfied."
Said O'Malley: "This is an exciting day."
But Councilwoman Mary Pat Clarke, an opponent of the plan to publicly finance the hotel, was surprised and upset to hear that the numbers were preliminary. "That's not a bid," she said. "It was a selection of a contractor, price unknown, upon whom to impose a cap at some point. ... They could have chosen anyone."
The council is expected to approve the project in a final - largely formal - vote on the project Monday. Clarke doubts anyone's mind will be changed by the bid information; an earlier vote was 9-6 in favor.
Councilman Keiffer J. Mitchell Jr., another opponent, said he's used to seeing preliminary numbers early on and final numbers before he votes.
"The citizens deserve to know what the bottom-line number is going to be," he said.
Even with the uncertainty about the construction numbers, Brodie said he is confident that the total cost of the hotel will remain at $305 million.
"Come hell or high water, we will bring in this project within that number," he said.
Bob Daniels, an executive vice president at Hensel Phelps, praised the Baltimore project and promised: "We will meet the budget that we commit to."
Billionaire Robert L. Johnson, who was ready to take a lead role in the hotel project before the city decided to handle the development itself, might continue to play a part - but that remains undecided.
His company, RLJ Development LLC of Bethesda, and partner Quadrangle Development Corp. could be picked as the project's construction monitors, Brodie said. The pay for that work would be $1.8 million to $2 million, he said.
RLJ Development and Quadrangle advised the city during the design-builder bidding but have not received compensation. They, along with Whiting-Turner and RTKL, were on the original development team for the hotel.