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City Council President Bernard C. "Jack" Young is urging Baltimore finance officials to sell the city-owned Hilton Hotel to raise money for recreation centers.
Young says he will introduce a resolution Monday calling on city finance, development and recreation officials to appear before the council to discuss selling the high-profile hotel, which the city built in 2008 to connect to Baltimore's convention center.
"The hotel has been a drain on the city since it opened," Young said. "We floated $300 million in bonds for it, and since it opened, we've been constantly losing money."
The proposal is a counter to Mayor Stephanie Rawlings-Blake's idea to sell four downtown parking garages to raise up to $60 million as part of a $136 million plan to fund park, pool and rec center improvements.
Young has not let the mayor's legislation get a vote, saying he wants assurances the recreation plan will include two big new centers, on the east and west sides. He says selling the Hilton makes more sense than the mayor's idea of selling garages. "The Hilton Hotel is losing money," Young said. "The garages are producing revenue for us."
In a statement, Howard Libit, a spokesman for Rawlings-Blake, said the administration still hopes Young will hold a hearing on the proposed sale of parking garages.
"If the council president has an alternate plan, we would hope that the council would give that plan a hearing, too. All potential ideas to fund our recreation centers deserve to be scrutinized," Libit said.
The 757-room convention center hotel, which overlooks the Orioles stadium, opened two years after then-Mayor Martin O'Malley and the City Council authorized more than $300 million in tax-exempt bonds to finance its construction. The measure passed the council by a 9-6 vote with Rawlings-Blake voting in favor, and Young opposed.
Since then, the hotel has underperformed financially. Last year, it reported a $5.6 million loss. Under the deal's initial projections, the hotel was supposed to be making $7 million in profit by now — pumping that money into the city's budget.
Administration officials note the hotel has positive cash flow, but is weighed down by debt on its bond payments and by depreciation. They say the hotel has contributed 400 jobs to the local economy — 80 percent of which have gone to Baltimore residents — and generates about $100 million a year in economic impact.
In 2013, the city hired a consultant to study options for the hotel, and decided not to sell it. The consultant's report called the hotel's finances "markedly improving" and showed projections of increased income over five years. The city could lose $60 million to $90 million if it sold the hotel now, officials said at the time.
But Young's office consulted economists who endorsed the idea of selling the hotel.
"Get it off the city's books and onto the books of the private sector and use the cash to fund needed programs. I think it's a great idea," Stephen J.K. Walters, a professor of economics at Loyola University Maryland, said in a statement released by Young's office.
Several City Council members immediately endorsed Young's proposal.
Councilman Warren Branch, of East Baltimore, and Councilwoman Helen Holton, of Southwest Baltimore, both called a sale a "great idea."
Holton, who initially voted to float bonds for the Hilton, said selling it was preferable to parting with four of the city's 17 garages.
"It's quite simple: Those parking garages have a surplus almost every year. Parking in Baltimore city is at a premium. You don't sell a valuable asset," she said. "The Hilton has never turned a profit. Maybe this is an indication we need to get out of the hotel business."
But others said they'd like to hear more information about both proposals.
The Evening Sun
"As somebody who would like to see rec and parks have additional money, it would be marvelous to have a hearing on both and discuss both possible ways to raise money for rec and parks," said Councilman Bill Henry. "Then the council can make a decision as to which is the wisest course."
Since 2012, the city has stopped operating 14 of its 55 recreation centers as part of Rawlings-Blake's overhaul of city recreation programming. Four centers were closed, while 10 others were transferred to private organizations or the school system. The mayor said the idea was to offer higher-quality programs at better, if fewer, centers.
The city has since opened two new centers. The Rita R. Church Community Center opened in Clifton Park in 2013 in a renovated historic pavilion. Last year, the city opened a new $4.4 million rec center in Morrell Park that city officials call "state of the art." Next, the administration plans to open a new facility in Cherry Hill.
Councilman Brandon Scott said the city should consider selling both the garages and the hotel.
"You'd be hard-pressed to find citizens that say we should be in the garage or hotel businesses," Scott said. "What we don't need in Baltimore right now is arguments over which way to do something that needs to be done. ... We need to look at both options."
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