Bidding Starts Anew
TODAY'S "WILD WEST" of opportunity appears to lie in the hearts of the nation's older cities.
Municipal governments like Baltimore are inventorying their properties, assembling parcels of land into attractive sites, and creating public-private investment opportunities to lure developers and create jobs.
The 45-employee Baltimore Development Corporation (BDC), a quasi-public agency, serves this role locally.
On August 1, BDC began soliciting proposals for a four-acre site just west of the expanded Convention Center. To be considered for the opportunity, proposals must be submitted by noon on October 6.
The properties, formally referred to as Lots 6A, 6B, 7A and 7B of the Inner Harbor West Renewal District, are zoned B-5-1. Currently used for parking, the site could be developed for hotel, office, retail, residential, or parking use.
"It's not a `no-brainer' that this site should be used for a hotel," said M.J. Brodie, president of BDC, referring to Sun editorials criticizing BDC for choosing a hotel proposal for the Inner Harbor East during the bidding round that occurred the same time last year.
"Even a hotel next to a convention center will get only fifty percent of the business needed," he explained. "We've looked at hotels all over. Some hotels adjacent to convention centers have actually failed, like the one in Chicago that's since been torn down. There's no guarantee such a hotel would be successful."
The controversy over the selection of the four-star Wyndham Inner Harbor East hotel project should not have occurred, Brodie says. "You have to focus on what the facts have been. When our R.F.P. [request for proposal] came out last fall, [Peter] Angelos wasn't there in the competition. He didn't choose to bid on the site north of Oriole Park at that time."
In fact, the formal Angelos hotel proposal for that site did not come in to BDC until June 20, far too late to be considered. "If we hadn't continued with the project we'd selected, we wouldn't have been acting in good faith," said Brodie.
By that time, plans for the 750-room harborside hotel south of Little Italy were well underway; the deal was finalized by the Board of Estimates on July 23 after months of negotiations.
Funding for the $132.6 million project was cobbled together from several sources. The developers are putting up $80.7 million in equity and debt, while the remaining $51.8 million is to come from public sources. Of that public contribution, $46.3 million will be repaid. The City has made a $5 million grant, and an additional $500,000 for job training is anticipated from the Empower Baltimore Management Corporation. There's also a $5 million City loan, $19.6 million coming from parking revenue bonds, and $21.7 million in tax increment financing bonds.
The 26-month project is expected to create over 2,300 construction jobs and over 750 hotel jobs once open. It's also expected to generate considerable tax revenue during operation: $2.6 million a year for the City, and $2 million for the State. There may even be some profit-sharing for the City; that point is still being negotiated, according to Brodie.
Brodie stressed that the 45-story hotel will be constructed and operated "at no risk to the City." The entire financial package is being purchased by Patriot American Hospitality Real Estate Investment Trust (REIT) of Texas. The City has no obligation to pay any construction cost overruns.
The hotel is being developed by Stormont Trice of Atlanta. The architectural firm selected is Cooper Carry, also of Atlanta, which has designed many hotel projects. The site was owned by the Paterakis family, which owns the nearby H&S Bakery.
For the new round of proposals, Brodie is not sure a hotel on the site adjacent to the Convention Center will necessarily be the right planning choice. "Our only concern is not to glut the market with hotel rooms," he said. "The effect could be devastating [on existing hotels] unless the convention market grows."
Brodie is comfortable with the decision to develop the Wyndham project a mile east of the Convention Center. "It's not about having perfection, which you rarely have," he said. "You have to weigh the risks and rewards. This pushes the movement [of development] east of the Harbor. The project has incredible potential-the notion of a hotel literally on the water, we don't have that now. It could be a signature piece."
Now BDC's staff has to shift gears as it enters another proposal evaluation phase. Whatever project is selected for the site north of Camden Yards and west of the Convention Center, there's bound to be controversy and second-guessing.
Jay Brodie expects it. But he cautions, "Anybody who says there's an `easy answer' is not well-informed."
BDC can be reached at 410/837-9305.