Notes for County Council meeting on five party MOU 2016.10.24

We are told again and again there’s no risk here to City and County revenues, and that there is a prudent margin of safety in the county’s 50% rule on tax increment financing (TIF). Now there’s some truth to that at the micro level, at the level of hotel tax or property tax at the project site.

And they say the hotel project’s money and revenues wouldn’t be there otherwise. And that is true too at the project level, at the level of 200 East Patrick Street if The Hotel Project actually gets built there and is doing business there.

There will be some new spending, some new jobs, some tax increments, some new hotel tax revenue out of 200 East Patrick. The Project boosters leave it at that.

But you as county officials, you cannot responsibly leave it at that. You must have a full county-wide perspective, not just a project view. If everything works out for the downtown hotel, a big if, but it’s possible then there will be $16m of direct new spending at 200 E Patrick, $1.5m of new taxes, 110 jobs. But that spending doesn’t come from outer space. It’s not gold meteorites. It’s not space aliens bringing money.  It’s down to earth money that would be spent somewhere else if not at 200 East Patrick Street. A lot of the hotel rooms booked at the DH&CC at 200 East Patrick St would have been otherwise booked at other hotels in the county and the city. Same with meeting spaces. A wedding more at the DH&CC is likely a wedding less at Ceresville Manor. A show at the DH&CC CC may be a show less at the Weinberg Center.

Because the money spent at the new Hotel will come from people with limited budgets and limited need for hotel rooms and restaurants, and meetings so less money will be spent at other hotels, restaurants and event places. As well as increments or increases in spending at 200 East Patrick St there will be decrements or reductions in spending. Once you broaden your perspective from the project to the city or the county you will see a rearrangement of spending, of jobs and of tax revenues — tax decrements as well as increments, job losses as well as gains.

There will only be net increases for the county or the city from new ‘foreign’ spending  — fro,m right outside the region. In the washup there may be no net tax increment at all at the local government level. The 50% rule at the project level may not save you at the county level. This is one reason why jurisdictions that have made use of TIF — especially California and Chicago — have such severe budgetary problems. TIF is a double-edged sword — increasing revenues at the project where the ribbons are cut and the political speeches are made but decreasing activity elsewhere.

Beware the ‘happy talk’ of the boosters with their spotlight on the one project isolated project.

Don’t lose your peripheral vision, the broader view, of what may happen outside the TIF project.

Staggering on and on

The City DED (Department of Economic Development) dates the start of this project to 2009. The first study by Pinnacle advisers was commissioned in that year and published in early 2010. Seven years has gone by and quite a lot of money has been spent and great effort expended but mighty little has been accomplished. Still no plans have been submitted to the City for the historic preservation and planning commissions to consider. There is no car parking plan.

The site is too small for the big and elaborate a hotel complex that is proposed. So there are moves to buy the Eagles building next door. If they can acquire that Eagles building and a larger frontage to East Patrick Street it would be logical to spin the main hotel 90 degrees clockwise and to have access/egress from East Patrick, the car drop-off and address at East Patrick. There would be only two left turns for drivers arriving from the interstates on the East St Interchange rather than three left-turns getting to South Carroll Street. Also it may be unnecessary then to demolish the Birely Tannery building.

Supposedly a traffic impact study was done back in 2014 but it has been kept secret and another one is needed.

My main point is: the City Hotel Project is still very fluid, undefined. It is now seven years along taking shape architecturally, financially, legally. It is not even at the halfway mark yet.  The way it’s going it could be another four or five years before ground is broken, if it ever is.

Meanwhile it is shutting out hotel/lodging entrepreneurs. I’ve heard that bankers are saying they want 50 or 60 percent down for any new hotel projects in Frederick whereas normally they’ll only ask 25 percent down. They are asking a huge premium on account of the City project: “We are worried how you could compete with 200 rooms full service,” they say.

This mismanaged behemoth oversized grandiose City Hotel project casts a dark economic shadow over downtown Frederick. We need to kill this awful, ridiculous project to liberate us, and allow a variety of entrepreneurs to do what Annapolis has done with six or seven fully self-financed hotels to be built, or adapted, creatively catering to a variety of lodging tastes and budgets.

Please say Enough now to this destructive, expensive, endless City sponsorship of a Marriott monopoly. Kill it now for the sake of healthy, creative, diverse, local development of lodging in downtown Frederick. Thank you.

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