The city is taking over the debt-plagued Harrison's Pier 5 hotel and restaurant at the Inner Harbor -- at a cost to taxpayers of $5.25 million.
Under an agreement approved yesterday by Baltimore's Board of Estimates, the city will give up to the Federal Deposit Insurance Corp. $6 million of a $6.6 million municipal loan guarantee for the project in return for title to the property. At the same time, the city will receive $750,000 from the owners of the property.
The $5.25 million cost of the takeover is in addition to a loss of $5 million in federal loans funneled through the city that were never repaid and a loss of $1.2 million in unpaid property taxes.
"It's a great loss to us. It is not a pretty picture. We just bought a hotel. At least we get a hotel," said City Council President Mary Pat Clarke, who joined the other four board members in approving the agreement.
Michael V. Seipp, executive vice president of the Baltimore Development Corp., said the takeover "would allow the city to recoup some of the losses in the future from the eventual sale of the real estate."
The city would set up a nonprofit corporation to run the hotel and restaurant until a buyer could be found, he said. The daily operation of the complex breaks even but has not generated enough money to repay its debts, he added.
The alternative to the takeover, Mr. Seipp said, was for the FDIC to take title to the building, leaving the city with nothing and resulting in the loss of 300 jobs.
Under the agreement, the owners retain no interest in the property, though they will be able to bid to operate it for the city, he said.
The property is owned by Pier Five Associates Limited Partnership -- a joint venture of the Harrison Family Organization, headed by Eastern Shore entrepreneur Buddy Harrison and Silver Spring developer James I. Humphrey.
Jeffrey H. Scherr, a Baltimore attorney representing the owners, said of the takeover: "It's a good deal for everybody. The restaurant and hotel stay open and people will continue to be employed."
Mr. Scherr said that some members of the Harrison family would bid on the contract to run the property for the city. "They've done a lot of work on it and they want to see it through and continue to try and do a good job," he said.
Ms. Clarke suggested that the city use the hotel and restaurant in part as a training center for minority workers to get more experience in the hospitality industry. That would give them an opportunity to qualify for higher-paying jobs at downtown hotels, a goal of Baltimoreans United in Leadership Development, a coalition of church and community groups, she said.
BUILD has called for a suspension of public investment downtown unless the city's hospitality industry increases training and job opportunities for non-white workers.