Mayor's hotel position miffs leaders Business officials, lawmakers puzzled by his insistence; 'A gigantic gamble'; Some speculate site at east harbor chosen with gaming in mind


A dangerous roll of the dice -- that is how much of Maryland's political and business leadership sees Mayor Kurt L. Schmoke's insistence on building Baltimore's biggest hotel a mile from the convention center.

As Schmoke stood firm last week with baking mogul John Paterakis Sr.'s proposed $137.6 million Wyndham Hotel on the east bank of the harbor, business leaders, city and state lawmakers and heads of tourist attractions struggled to understand his choice.

Many wondered why the mayor would risk so much political capital and good will on a heavily subsidized hotel that isn't next to the struggling, newly expanded Baltimore Convention Center and the downtown tourism district.

"It's a gigantic gamble," said Herb Smith, a political scientist at Western Maryland College. "For the sake of the city, I hope the mayor is right."

Schmoke tried to assuage the widespread fears at midweek by reversing a decision to delay opening any other hotel for five years and backing away from seeking $10 million in state loans for the Paterakis project. But neither move satisfied those who believe he should have instead developed the $150 million, 850-room Grand Hyatt proposed by Orioles owner Peter G. Angelos for two city-owned parking lots next to the convention center.

The mayor's adamant answer -- even as legislators predicted it would threaten other city initiatives in Annapolis -- perplexed his detractors and some allies.

"Let's be real clear," Schmoke said. "I believe Inner Harbor East is the best site. I'm not changing my mind at all."

Searching for an explanation for his unwavering preference for the 750-room Wyndham -- generally regarded as the riskiest of the hotels that had been proposed -- nearly two dozen leaders in corporate offices, City Hall and the State House proposed three possibilities:

* In a city with a diminished population and tax base, Schmoke badly wants revenue from gambling. He and Paterakis may be banking on bringing a casino, or at least slotmachines, to Inner Harbor Eastif gambling is ultimately legalized.

* Paterakis, who controls the H&S; Bakery empire and whose largess to politicians has earned him the nickname "the bread man," worried Schmoke's inner circle by holding a fund-raiser at the beginning of the year for Council President Lawrence A. Bell III. The first-term council president has made no secret of his ambitions to be the city's next mayor.

Meanwhile, the normally generous Angelos was frugal in donating to Schmoke during his hard-fought 1995 campaign against then-council President Mary Pat Clarke.

* The mayor has convinced himself that the Wyndham will spur more development and spread the vibrancy of the tourism district beyond downtown.

He also favors the Paterakis project because it is in the DTC empowerment zone, the $100 million federal undertaking to revitalize the city's poorest neighborhoods. By creating hundreds of hotel jobs in a largely barren area, along with new offices for Sylvan Learning Systems, Schmoke would have concrete achievements to extol to the White House.

The chief supposition is rarely spoken for the record. Many think the first casino to open in Baltimore would be at Inner Harbor East.

"If I were to build a casino in Baltimore, that's where I would put it," said Councilwoman Lois A. Garey, whose 1st District includes the 20 acres south of Little Italy. She opposes the scale of the hotel.

Other business and political leaders, Democrats and Republicans, suggest the same.

Good for gambling crowd

The Wyndham, with its big ballrooms, shops and restaurants, would be well-suited for a gambling crowd, they say. Paterakis controls the surrounding land and has made no secret of his desire for a casino as part of the $350 million redevelopment, which includes a marina and plans for offices and residences.

The speculation has been partly fueled by the 900 parking spaces proposed for the site -- more than twice the industry standard.

"Everybody says it's a beautiful setting on the water for a gambling casino," said Del. Robert H. Kittleman, the House Republican leader from Howard County who opposes the project, whether or not it is the site of gambling.

"It's very logical," he said of the speculation. "Paterakis wants to have a casino, and Schmoke wants the revenue."

The major obstacle is Gov. Parris N. Glendening, who has maintained a hard line against gambling since last summer, after Schmoke said they had a secret deal for legalizing slots.

Getting around opposition

Several theories have been floated as ways to circumvent Glendening's opposition.

One is that Glendening would not be around after next year's election, and another governor would approve some form of gambling.

If Glendening were re-elected, he might soften his stance, especially if presented with proof that Maryland's horse-racing industry were on the verge of collapse because of competition from tracks that have slots in neighboring states.

Some also have raised the specter of a public bailout of the hotel. House Appropriations Committee Chairman Howard P. Rawlings, a Baltimore Democrat who is highly critical of the Paterakis project, called it a "backdoor" maneuver.

"One of the disturbing things about this site is the expectation that this hotel will be built, and it will not generate the kind of business it's expected to generate," he said. "Then, the city comes to the state and says, 'We're having difficulty with this investment, and we need casino gambling.' "

Others believe the mayor's decision was shaped less by economic than political concerns.

Good to politicians

Paterakis, a millionaire many times over, has always been good to politicians. His relationship with Schmoke has grown closer in the past three years.

Paterakis, his relatives and the companies he controls gave about $5,000 to Schmoke during his 1995 campaign for a third term. By then, Schmoke had put Paterakis in charge of rejuvenating the city's markets and given him financial breaks for Inner Harbor East.

But in January, the political talk of the town was that Paterakis was favoring a man whom Schmoke has long considered an adversary. On Jan. 28, Paterakis organized a glittering, well-attended fund-raiser at the existing Hyatt for Bell, the council president.

Schmoke showed up and gave a short speech. But some of his allies were less than pleased. Housing Commissioner Daniel P. Henson III, who some say has mayoral ambitions as well, called Paterakis and bluntly asked him what he was doing.

"A lot of people had told Paterakis that Lawrence was a good one to watch," Garey recalled.

Less than a month later, Henson and three others on the board of the city's economic development agency recommended the Paterakis project over two competitors. Angelos made his pitch after the selection process was concluded.

The recommendation stunned tourism experts and business leaders, who predicted that without a hotel nearby, the $151 million convention center expansion would prove a costly failure.

But Schmoke shared the view of Henson, his longtime confidant who touted the Paterakis hotel because it would be directly on the waterfront and in the empowerment zone.

The mayor has maintained that his overriding goal is to push the Inner Harbor development east beyond downtown. Those who know him say he believes the gamble will pay off and he'll be credited with the vision for Baltimore's second renaissance.

"If you believe Mr. Paterakis, the mayor believes that's where the future of the city lies, in the area that is not yet built up," said Senate President Thomas V. Mike Miller, a Prince George's Democrat.

Schmoke, practicing the hard sell to persuade the City Council and residents to approve millions in bonds, insists it is the hotel of the future.

"We're stepping up," he said. "We're going into a different league."

Pub Date: 7/14/97

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