A partnership led by an enterprising Fells Point merchant has tentatively won a two-year contract to manage a debt-ridden Inner Harbor hotel and restaurant that the city took over in December at a cost of $5.25 million.
Baltimore development officials said yesterday that they have narrowed negotiations to manage Harrison's Pier 5 to a group formed by Terry T. Brown, a 40-year-old shopkeeper, antiques dealer and investor. A contract is expected to be signed by the end of the week.
The move drew immediate protest from leaders of Baltimoreans United in Leadership Development (BUILD), which supported one of five rival bids to manage Harrison's. A dozen members and organizers of the church-based group challenged Mayor Kurt L. Schmoke to defend the choice of Mr. Brown and to make the agreement public.
BUILD has campaigned since April 1993 for a "social compact" that would raise the pay of low-wage workers downtown, enhance training programs and put more blacks in management jobs. The group argues that government has a responsibility to ensure that Inner Harbor jobs pay a "living wage" of at least $7.70 an hour because public money rebuilt the waterfront.
"The mayor can't hide behind process," said the Rev. Douglas Miles, a BUILD leader. "This is a decision he publicly said he would personally make. . . . The ball is in his court to assure BUILD and the Baltimore community that the letting of this contract meets all the parameters of the social compact."
Mr. Schmoke, who supports the social compact in principle, had pledged to take BUILD's goals into account when awarding the contract to manage the 71-room Harrison's hotel.
The city took over the financially troubled waterfront hotel after paying $5.25 million in loans it had guaranteed. That was on top of a loss of $5 million from federal loans funneled through the city and never repaid and $1.2 million in unpaid property taxes.
Mr. Schmoke, while noting that the contract still is under negotiation, responded sharply to BUILD's criticism.
"I find it somewhat dismaying that they are complaining that a local African-American businessman has this opportunity," he said. "I think it's a great step forward."
Mr. Brown plans to recruit minorities and run hotel management training programs in conjunction with Morgan State and Johns Hopkins universities, Mr. Schmoke said. "I firmly believe that the principles of the social compact have been honored," the mayor said.
Sitting on the steps of his General Store in Fells Point, Mr. Brown talked about owning his first night club at the age of 26 and said he has lined up a partner with extensive hotel experience. He said he is the majority partner in Pegasus I Inc. and declined to name his associate.
Mr. Brown, who described himself as a real estate agent and investor, said he has a master's degree in business administration from Morgan State University. He runs two small Thames Street stores, the General Store and LT Antiques and Olde Stuff Ltd. He just resigned as president of the Fells Point Business Association.
"All I want to do is go in as a businessperson and make the property work and start paying some debt service to the city," he said.
Mr. Brown said he sympathized with BUILD's goal of raising wages but that any pay increases must be based on the hotel's profitability.
"I'm a minority, how could I not share some of those concerns? But because I'm black, am I only concerned about the black issue? I'm not. I'm concerned about the Baltimore issue. It's about people working and making a decent living," he said.
BUILD backed the out-of-town Isom Hotel Management Co., which has run the Howard University Hotel in Washington since 1987.
Eddie L. Isom offered the city a "proven track record" with more than 30 years in the hotel industry and an "entirely African-American management team," said Kathleen O'Toole, BUILD's lead organizer.
Mr. Isom pledged to pay wages about 10 percent above the going rate for Baltimore hotel employees and eventually to meet BUILD's $7.70-an-hour wage standard.
The Isom proposal, which BUILD made public, was to share profits with the city on a 50-50 basis and to make a bid to buy the property -- with BUILD's help in raising the capital -- after two years. It estimated an annual profit of $154,000 at the end of the second year.
Mr. Brown said the Isom proposal "doesn't make business sense" because its notion of profits was misguided in not factoring in paying off debt on the project.
Baltimore Development Corp., the quasi-public arm of the city that promotes economic development, refused to give details of the proposals.
Harrison's has been managed for six months by Pier Five Associates Limited Partnership, a joint venture headed by Eastern Shore entrepreneur Buddy Harrison and Silver Spring developer James I. Humphrey. They made one of the five unsuccessful bids.
"We're all in major limbo," said Cathy Freed, Harrison's assistant general manager and one of 200 employees at the hotel.
Mr. Brown said he intends to retain as many employees as possible in making the hotel successful.
"It's a great spot. . . . This is one of those properties that we believe, why shouldn't it work?" he said.