Hotel decision came naturally BDC members felt that Paterakis had met their concerns; Gambling wasn't a factor; 5 say Wyndham site isn't too far from convention center


Explaining their controversial decision to give the final green light to a planned $137.6 million Wyndham Hotel at Inner Harbor East, members of the board overseeing the city's economic development agency say they had no choice but to live up to terms they had set months before.

The business leaders and city officials who make up the board also say they are unsure whether the Wyndham Hotel being planned by baking mogul John Paterakis Sr. will eventually be the site of casino gambling, but they say that played no role in their deliberations.

And they say they do not believe that the hotel will consign the recently expanded Baltimore Convention Center to failure -- a claim made by many business leaders, convention planners and state legislators who favor a site next to the downtown exhibition hall that Orioles owner Peter G. Angelos wants to develop as a Grand Hyatt Hotel.

"It may not satisfy [critics'] definition of a convention headquarters hotel," Arnold Williams, a board member and an accountant, said of the Wyndham site a mile from the convention center. "But I would say it only enhances the convention center. It will be better off than it is now."

On Monday, the board of the Baltimore Development Corp. voted 7-0 to approve the proposed 750-room waterfront Wyndham project on Paterakis-owned property south of Little Italy. The project is seeking $57.7 million in public financing.

The board's approval came four months after it granted exclusive negotiating rights to the Paterakis team, choosing it over competing plans for hotels across from the Power Plant and next to the Harborplace Renaissance Hotel.

At the same time, the board voted to delay until 2002 the JTC opening of any hotel developed on two city-owned parking lots next to the convention center.

Though Mayor Kurt L. Schmoke has since softened that stance, the action effectively scuttles for the time being Angelos' proposal for a Grand Hyatt, which he presented unsolicited only a week before the board met.

Meetings with Schmoke

Last week, Schmoke met privately with Angelos and with Paterakis in what sources said was an attempt to broker a compromise between the two competing developers.

The mayor hopes to bring the two developers to the negotiating table in coming days to strike a deal, the sources said. The talks have centered on possibly scaling back the $137.6 million Wyndham or making Paterakis part of the team developing the Hyatt.

Schmoke declined to comment yesterday on the meetings but said he hopes to decide this week how the city will proceed.

As a quasi-public agency, the BDC claims that it is not bound by state open-meetings law, and its board deliberates and votes in secret.

In an effort to more fully understand the thinking behind the board's decision, The Sun attempted last week to contact each of the seven board members, who are mayoral appointees.

One BDC board member, S. A. "Skip" Brown III, president of Belt's Corp., was on vacation and unavailable for comment, his office said. In February, Brown was one of four board members who voted in favor of the Inner Harbor East hotel plan.

Another board member, Theo Rodgers, president of A&R; Development Corp., who did not vote at the February meeting, )) did not respond to repeated phone messages and a faxed list of questions.

But the other five spoke at length about their decision to approve the Wyndham plan and delay the Grand Hyatt proposal. Three of the five -- Bruce Alexander, retired senior vice president of the Rouse Co.; William R. Brown Jr., city finance director; and Williams, managing partner of the accounting firm Abrams, Foster, Nole and Williams -- made their first public comments about their vote.

In separate interviews, each of the five, including board Chairman Roger C. Lipitz and city Housing Commissioner Daniel P. Henson III, said they felt an obligation to approve the Wyndham proposal because it had met design, financing, parking and other conditions the BDC established in February when it granted exclusive negotiating rights to the Paterakis team.

Henson, Alexander and Williams also voted in favor of the plan in February.

'Process should be respected'

"The Inner Harbor East team spent an enormous amount of time and effort and money meeting those conditions. And when people spend that kind of money and effort in reliance on a process, I think that process should be respected," Alexander said.

Lipitz, who abstained from the February decision because of a conflict of interest but has since urged the mayor to reject the Wyndham choice in favor of a site closer to the convention center, said the paramount issue for him this time around was fairness, not location.

"I had great concern as to the equity to the Wyndham people I didn't think it was equitable to reopen the whole thing," said Lipitz, vice president of Genesis Healthcare.

"It was almost lose-lose no matter what we did," he added.

Once the board members decided that they had to give the go-ahead to the Wyndham plan, they say it was an easy decision to put chronological distance between that proposal and any development of the two city-owned parking lots, identified as 6A and 7A. Their worry: Opening one new hotel right after another would all but guarantee that neither would be a success.

"There's a substantial investment involved. You have to protect your investment," is the way Brown, the city finance director, put it.

Henson raised another issue. To have accepted Angelos' unsolicited Grand Hyatt proposal, he said, would be "akin to accepting a no-bid contract."

"There are myriad questions that an unsolicited proposal might elicit, all of which might be asked down the road," said Henson, who was criticized by federal auditors and others for a $25 million no-bid repair program he operated four years ago on behalf of the city's public housing agency.

Casino issue brushed aside

Henson also brushed aside the question of whether the Wyndham might one day house a casino -- a prospect that critics of the proposal say may help explain its selection.

"I have no idea," he said. "There is no casino in the design that I have seen. Ask a silly question and you get a silly answer."

Added Williams: "I do not believe it's a gambling hotel. But I believe that if gambling comes, most of the hotels will want to be the scene of gambling."

As for the issue of whether the Wyndham will doom the convention center, Williams and Brown point out that when the $151 million public expansion of the convention center was first proposed, proponents argued that larger events frequently booked rooms outside the city. Indeed, the official statement provided to prospective bondholders in 1994 said that "significant expansion of the hotel room supply over the next 10 years is unlikely due to the inability to obtain financing for hotel projects."

"The rationale that was pushed for the convention center expansion was that occupancy levels [of existing hotels] were not up to levels that are considered acceptable," Brown said.

Other board members noted that the concept of a headquarters-style hotel adjacent to the convention center was merely being postponed, not killed.

"It's a two-year delay in the opening of a hotel," Alexander said. "I don't think two years is going to make an enormous difference" in long-term convention center business.

Henson predicted that the Wyndham will be a "major success," adding, "I don't see how it, in and of itself, will doom the convention center. I think the convention center needs more hotels, and we will see several down the road."

Pub Date: 7/06/97

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