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Harrison's owes city $1.3 million Poverty, housing funds used to cover owners' debt.


Harrison's Pier V, an Inner Harbor hotel and restaurant heavily financed with tax dollars, owes Baltimore $1.3 million in delinquent property taxes and loan payments.

The unpaid taxes and penalties alone total $720,408 for 1990 and 1991.

In addition, the city is liable for a $6.6 million guarantee on Harrison's first mortgage because the owners are delinquent on payments to the National Bank of Washington.

Baltimore also has had to dip into funds earmarked for housing and poverty programs because Harrison's missed payments of a federal loan guaranteed by the city.

The $20 million hotel and restaurant complex opened in June 1989 just east of the National Aquarium. It is a joint venture of the Harrison Family Organization, headed by Eastern Shore entrepreneur Buddy Harrison, and James I. Humphrey Jr., a Silver Spring developer and former president of Harkins Associates, a real estate developer.

The city provided and guaranteed the owners $5 million in federal loans in addition to a guarantee on their mortgage.

The construction of the hotel and restaurant complex on a prime piece of waterfront real estate was hailed as a coup by Mr. Harrison, an Eastern Shore millionaire who wanted to bring the family-style dining of his Tilghman Island restaurant to the city.

The 71 rooms of Harrison's inn are decorated with mahogany furniture and paintings by Eastern Shore artists. The landscaped lobby surrounds a 40-foot skipjack replica, and the sprawling waterfront restaurant resembles a lighthouse.

Mr. Harrison is on a Caribbean cruise this week and could not be reached for comment.

Mr. Humphrey said he and his partners have been unable to pay loans or taxes because "we haven't generated enough income. We're running about 60 to 70 percent occupancy in the hotel. Even the restaurant has not been able to make money."

When Harrison's was originally financed, the city gave the owners two loans -- one of $3 million and one for $1.9 million -- from the U.S. Department of Housing and Urban Development. The owners are now delinquent on both loans by $524,866, according to city records.

Harrison's failure to keep payments of the smaller loan current has forced the city to use funds for housing and poverty programs to reimburse HUD.

The city has sent the federal agency $303,145 from Community Development Block Grant funds, said David K. Elam, development director for the city's Department of Housing and Community Development.

Harrison's owners recently made one payment on that loan and have promised to make more, he said.

The city also is responsible for its $6.6 million guarantee of Harrison's troubled first mortgage from the National Bank of Washington, but city officials said they have not paid on the guarantee.

They are negotiating with the Federal Deposit Insurance Corp., which took over the failed National Bank of Washington in 1990.

"We are negotiating with the developer and the lender and our effort is to try to make the best of it," Mr. Elam said.

"The city's got a heck of an investment in the Inner Harbor," said Mr. Humphrey, who hopes the city will take over the mortgage and renegotiate with the owners to keep Harrison's open.

"They can't have another dead elephant laying in the Inner Harbor. They're trying to make it work," he said.

He said the city has been "diligently dunning us" to collect the property taxes and other payments.

"The city has reviewed our books backwards and forwards and upside down," he said.

But the city did not offer Harrison's for auction in the city's annual May tax sale, its usual method of pressuring recalcitrant property owners who don't pay their real estate taxes.

Ottavio Grande, assistant city collector, said Harrison's could not be put up for auction because the city owns the land and leases it to the owners of the hotel and restaurant. The lease is for 50 years.

"When the property is in the name of the mayor and City Council, that property does not go to tax sale," Mr. Grande said.

Mr. Humphrey blames the operation's problems on its location just east of the Inner Harbor's main attractions and on poor access from the street and for pedestrians.

"Pier 5 is an attempt to extend the Inner Harbor to Fells Point and Little Italy. It's not doing that," Mr. Humphrey said. "We're at the far end of the Inner Harbor. We wanted the city to move the pedestrian bridge in front of the hotel. And you have to know how to get to us through a maze of parking alleys.

"On top of that came the economic crunch," he said.

In addition to the delinquent taxes and federal loans, Harrison's is $66,000 behind on fees to the city for guaranteeing the first mortgage and owes $22,571 for installing water meters, city records show.

The original agreement with the city also calls for Harrison's to share its profits with the city, but there haven't been any.

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