The proposed Wyndham Hotel at Inner Harbor East won approval from the city's economic development agency yesterday -- with a price $25 million higher than the original proposal and taxpayers being asked to put up an additional $15 million of the cost.
At the same time, the Baltimore Development Corp. voted to delay opening any hotel on city-owned parking lots next to the Baltimore Convention Center -- where Orioles owner Peter Angelos wants to build a Grand Hyatt hotel -- until at least 2002.
That move infuriated Angelos, whose 850-room hotel would be connected to the expanded convention center, and intensified fears that the lack of a hotel closer to the convention center could turn the center's $151 million expansion into a publicly financed failure.
The BDC's approval of the Inner Harbor East hotel in no way assures construction, as the 750-room Wyndham project needs approvals from the City Council, state lawmakers and possibly city voters in a referendum.
In the face of criticism, Daniel P. Henson III, a BDC board member and the city's housing commissioner, staunchly defended the board's 7-0 vote.
"I think the board made the decision that was in the best interest of the city," Henson said. "We have a great site on the water, and we have a real victory for the city here that I think is worth defending."
The move, subject to Mayor Kurt L. Schmoke's expected approval, drew a decidedly more negative reaction beyond the BDC board and Schmoke's inner circle.
"I just think it's going to be very difficult for the General Assembly to be supportive of this project or any public subsidy for any hotel that is clearly not in the best interest of the state's investment in the Inner Harbor and the Convention Center," said Del. Howard P. Rawlings, chairman of the powerful House Appropriations Committee.
"I think it's going to be a major issue during this session with regard to support for Baltimore City," added Rawlings, a Baltimore Democrat.
Like others at City Hall and in the state legislature, Rawlings expressed surprise that the subsidies had increased so much during negotiations.
After three months of negotiations, the project, budgeted at $112.2 million when selected for exclusive negotiating rights in late February, is now expected to cost $137.6 million.
And the development team assembled by baking mogul John Paterakis Sr. upped the proposed public financing more than $15 million, from $42.1 million to $57.7 million.
M. J. Brodie, the BDC president, said the increased costs came primarily as a result of the need for improvements to bring the hotel up to four-star quality. Construction, pending completion of contract negotiations, could begin by the end of this year, and the hotel could open as early as spring 2000, Brodie said.
Brodie said the development team had met all eight conditions set by the agency, including parking, design changes, selection of an operator and financing.
But even with the blessing of the BDC and the mayor, the Wyndham, which would be built on the banks of the harbor south of Little Italy, faces numerous hurdles:
Some $17.5 million worth of tax-increment financing -- bonds issued with the expectation that increased property taxes generated by the project would cover the debt -- must be placed on the ballot by the council, then approved by voters in referendum. But Brodie said the city will ask the General Assembly to change the law so the referendum would be unnecessary.
The City Council, which does not reconvene until fall, would have to approve $19.6 million in parking revenue bonds -- paid off with expected income from a 1,000-car parking garage to accompany the hotel.
City Council approval could be necessary for $10.1 million in city grants, though the BDC and city officials were unsure whether the council, or merely the mayor-controlled Board of Estimates, would have to approve the grants.
A $10 million state loan would need approval from the Glendening administration and from at least one legislative committee.
The Wyndham, rising about 30 stories, would require City Council approval of major changes to the Inner Harbor East master plan, a decade in the making. And community groups have lined up in opposition.
Del. Martha S. Klima, a Baltimore County Republican and one of 40 lawmakers who toured four potential downtown hotel sites three weeks ago, said she was shocked by the move.
"I just can't believe it; maybe this is some sort of political payback for the mayor, but somebody should tell him, 'Get a life, Mr. Mayor,' because this isn't going to fly in the General Assembly. Let's not be stupid about this."
City Council members said they had been kept in the dark throughout the process of selecting a subsidized hotel, and several members promised a hard look at any request for subsidies or other council action.
"The Angelos proposal made a lot more sense in terms of having a hotel that complemented the Convention Center," said Councilman Martin O'Malley, who heads the Taxation and Finance Committee. "I think it'd be nice if we could have both, but Angelos' would seem to be the logical one to do first, if we're choosing here."
Council President Lawrence A. Bell III said he was disappointed that the BDC did not move forward with both the Wyndham and the Grand Hyatt but would withhold further comment until a request comes before the council.
Angelos said that if the city goes ahead with its plan to forbid construction of a hotel at Camden Yards until 2002, "the convention center will be seriously jeopardized, if not destroyed in that time."
But the city must stagger opening of two hotels to avoid "cannibalization" of the market, Brodie said. The request for proposals for the four acres at Camden Yards, he said, should go out Sunday.
The Hyatt proposal, filed a week ago, came amid growing pressure on the Schmoke administration from lawmakers, business leaders and the city's convention bureau to support a hotel site closer to the center, where the expansion and renovation was completed in April.
Tom Marudas, an associate in Angelos' firm, said the attempt to "delay the opening of the Grand Hyatt hotel until 2002 -- presumably to allow the Inner Harbor East hotel the opportunity to position itself in the market -- raises serious doubts about its [the Wyndham's] viability."
Michael Beatty, vice president of development for Paterakis' H&S; Properties, presented a more upbeat outlook than most, saying the Wyndham's success would disprove naysayers' claims.
"BDC and the mayor made a decision that the Inner Harbor East hotel is the right site for Baltimore, and it certainly gives the most economic bang for the buck," Beatty said.
Pub Date: 7/01/97