Westin builder to forgo subsidy Schulweis proposal won't affect aid for 2 hotels, city says


Shut out of city subsidies for his hotel, a New York developer has vowed to go ahead and build a 600-room downtown hotel without so much as a dime of public money.

The decision by developer Harvey Schulweis to build a four-star Westin Hotel directly across from the Inner Harbor on Pratt Street by the fall of 2000 adds a new wrinkle to the city's controversial attempts to add more hotel rooms for the newly expanded Convention Center.

The city has given the nod to proposals for two new hotels: a 750-room Wyndham at Inner Harbor East by baking mogul John Paterakis, which would get $50 million in tax breaks and public money; and an 800-room Grand Hyatt by Orioles owner Peter G. Angelos, which would connect to the Convention Center and get similar subsidies.

In the process, city officials have rejected a proposal by Schulweis to construct a 44-story, 800-room hotel at the former News American tract, financed in part by parking revenue bonds and tax credits.

But late last week, in an unexpected move, Schulweis said he would finance a scaled-back version of his proposal entirely with private funds.

"We believe . . . that it will be a successful project," Schulweis wrote in a Feb. 26 letter to Mayor Kurt L. Schmoke.

Schulweis said that Westin had received "serious expressions of interest" from more than 20 groups that would hold meetings at the hotel in its first two years of operation.

If Schulweis follows through on his decision, it could mean that Baltimore could suddenly have a glut of hotel rooms. That glut could lower occupancy rates and threaten the financial viability of not only the proposed new hotels but also existing lodgings such as the Hyatt Regency and the Renaissance Hotel.

Schulweis, president of Schulweis Realty Inc., based in New York City, could not be reached yesterday.

City officials conceded last night that Schulweis' letter caught them off guard.

"This came out of left field," said city Housing Commissioner Daniel P. Henson III. Henson is also a board member of the city's economic development agency, the Baltimore Development Corp., that recommended the Wyndham and Grand Hyatt and rejected the original Westin.

But Henson and Schmoke said that the city would not alter its plans to subsidize the Wyndham and Hyatt hotels -- the result of more than a year of often controversial decisions and acrimonious negotiations.

In a letter to Schulweis dated yesterday, Schmoke said:

"Obviously, local government has little control over what a private land owner may do with his property as long as the use conforms to all existing public codes and regulations. However, I emphasize that regardless of your plans we intend to proceed with the [current] hotel development plans."

But in a memo to members of the City Council, which have approved the subsidies for the Wyndham and are awaiting submission of the financial package for the Grand Hyatt, Schmoke seemed to doubt Schulweis' ability to build a hotel without public subsidy. Public subsidies help to keep room rates affordable even for the upper-end tourists who come to Baltimore.

"I have said to Mr. Schulweis and his colleagues that whenever a proposal looks too good to be true it usually turns out to be so," Schmoke wrote in the memo, also dated yesterday.

In his letter, Schulweis divulged few details of his new proposal, other than to say it would have a 200-space underground parking garage and 200 fewer rooms than his first proposal.

That initial $173 million proposal won the approval of the BDC staff, but was overturned by the board, which instead chose the Wyndham last February.

The board's selection of the Wyndham was made in part because of the belief that it would help spur development along the city's waterfront east of the Inner Harbor. The hotel is scheduled to open by the spring of 2000.

But the choice unleashed a torrent of criticism from industry insiders and state legislators, who complained that it was too far from the Convention Center to serve as a headquarters hotel.

Pub Date: 3/03/98

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