Seven years old, changing like a chameleon, the one constant being 18 months from breaking ground… (Speaking notes, House Appropriations Committee, Annapolis)

Delegates: We have been told again and again by City officials that taxpayers are not on the hook for this project, that taxpayers won’t be liable for any losses and that they are not at risk. This was somehow going to finance itself if not through the developer contribution then through extra tax revenue it would generate.

HB1474 gives the lie to all that. Kudos to delegates Krimm and Young for blowing the whistle on the City’s “free lunch” myth.

HB1474  spells out clearly that the City must commit to four contracts with the MSA to take full responsibility for the Conference Center operations. It must commit to

– pledge the facility and the site as security for the MSA bonds (E) (2) p8

– market, promote and operate or contract the conference facility for that to maximize its economic return (F) (1) (I) p8

– contribute to a capital reserve fund to maintain and repair the conference center and keep it in first-class condition (2) (II) p9

– accept sole responsibility for all operating expenditures, including operating deficits (2) (III) p9

That is all at odds with the City’s statements.

A Project Overview document as recently as February says:

“The Project will be privately owned and operated and the developer is solely responsible for ongoing operations and maintenance… No general City or County taxpayer dollars will be used, and there will be no ongoing operational subsidies from the state or local governments.”

The Mayor and Board of Aldermen of the City have supported the project understanding that they are taking on no commitment to operations costs or deficits. This bill insists they take on the commitment to cover operating costs and deficits.

Boosters of this project will likely say the public-private partnership  is going to pass on all the City’s risk to the hotel business. That’s impossible.  Business can assume some risk, sure. For some time. But it cannot bear losses year after year with no turnaround in sight. And in the current market conditions that’s what conference centers are – a financial sinkhole. Almost all of them lose money year in, year out, requiring taxes to support them.

This is one crazy project – seven years old now. It has evolved shall we say or less politely metastasized. Costs have blown out. Sites have changed. Lots of inconsistent studies have been commissioned and published that are soon out of date. The conference space — the part needing the subsidies — has doubled in size but is now on the decline again. The PPP arrangements change and change and change…

Two things have stayed the same: it is 18 months from breaking ground and two to three years from opening. That was true in 2009 and it’s true today. That’s one constant, thank God.

Second the City and its taxpayers, they said, are not going to be responsible for any ongoing costs.

HB1474 proposes to fund a bad boondoggle. It proposes that the state and the city stand behind gifting a favored hotel developer up to $31m for a highly speculative upscale corporate hotel and conference center.

Public funds are being misused for a project that is:

– wasteful taking the MSA consultants own net operating results it values at $36m what is costing $65m (Matt Seubert, hotel accountant)

– destructive of existing businesses by being full service providing more restaurants and bars, gyms etc in a downtown already well provided with these, and adding 200 rooms or 10% to a hotel market already well served

– it redistributes wealth from the have-nots to the haves, from the taxpayers to the tax-avoiders

– it enhances the role of wasteful bureaucracy

– the hotel portion is a speculative investment because it is depends on turning day-trippers into over-nighters

– the conference center portion is a sure loser because regionwide and nationwide there is a glut of conference and convention space. (few cover their operating costs)

Please spare us this.


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