Baltimore Sun reports on Frederick hotel as “growth catalyst or boondoggle” — with lotza COMMENT

The Baltimore Sun June 21 ran a report, text and video, on the downtown Frederick hotel project headlining the controversy as one of “growth catalyst or boondoggle.” We’ll run key quotes in Italic and comment on each:

Senator Ron Young in video:

(The downtown hotel) is a very much needed project. It is number one priority of the chamber of commerce. The City supports it. The County supports it. The downtown partnership supports it. 

The theme of a “small group” opposing the project comes up in

Senator Young

the text too:

Richard Griffin, economic development director for the city, said the opposition to the hotel, “although very expressive,” is small. 

COMMENT: Sen. Young overlooks the stance of his Frederick County colleagues on the delegation to Annapolis: chair Kathy Afzali, Sen Hough and delegates Barrie Ciliberti, David Vogt and Bill Folden. Sen Young as a supporter of the City-sponsored hotel is in the minority with five of the eight Frederick County delegates opposing it as a boondoggle. The senator was forced to bypass the regular appropriations process of public hearings and public comment time in the Senate Finance and House Appropriations committees and negotiate his deal directly with his Party’s leadership.

On the 7-person Frederick County Council there is a precarious 4/3 in favor of the hotel.  One of the four told me recently that criticism of the project had had the effect of improving it, hardly a ringing endorsement.

There are two websites and two Facebook pages dueling on the hotel issue, by far the most active of which is Jane Weir’s Friends of Frederick County (FoFC) FB site. The COMMENT section of the pro-hotel Frederick News-Post tends to get more anti- than pro-hotel comments.

Jane Weir leader of the FoFC opposition speaks in Baltimore Sun video

But the balance of public sentiment isn’t really knowable without a professionally conducted opinion survey.  When they claim the opposition is small Sen Young and the City’s Richard Griffin are, at best, guessing, at worst simply making the assertion of insignificance to delegitimize opposition and avoid discussing its arguments.

My impression is: (1) There is overwhelming support for the concept of having a hotel or hotels downtown, and (2) some of that carries over into support for the City-sponsored hotel on the grounds that it is the only project currently on the table. (3) There is a majority view that public taxpayer money should NOT be going to a hotel business. (4) Opposition to using local revenues (City and County) for support of the hotel is strong with some of those having little objection to state funding or to use of hotel taxes. (5) There’s a sizable historic preservation constituency opposed to the City-sponsored hotel because of the site chosen right in the heart of the historic district, based on the scale of the proposed building and its proximity to 2 story townhouses, and the ‘need’ to demolish the Birely Tannery buildings. (6) Among residents of E Patrick, E Church and E 2nd streets there is strong concern about the hotel’s potential impacts on downtown traffic and parking availability. Some of these constituencies against the hotel overlap.

Another opponent of the project is state Governor Larry Hogan who thinks public support for one hotel developer is unfair to other hotels, and has said no state funds will be released for the project. He zeroed out support for the hotel in his FY2018 budget.

It is patently absurd then for Ron Young and Richard Griffin’ to characterize the hotel opposition as “small.” The opposition is broad-based, multifaceted, and bipartisan.

Sen Ron Young again in the video:

But like any project, when I was mayor there is always a small group of citizens that resists everything.  There is the usual small group opposing it.”

COMMENT: Senator’s claim that the opposing group “resists everything” is without foundation. The FoFC group formed spontaneously out of a diverse collection of people who happened to develop a shared interest in this specific project. Many had never met one another beforehand. Leading members of the group say repeatedly they favor a hotel or hotels downtown, so long as they evolve organically (without City government sponsorship and financial support) and fit the historic district.  They think several smaller ‘boutique’ style hotels (20 to 80 rooms, and distinctive character) would work better in the historic downtown.

Rendering of revised hotel looking north from the Creek

Opponents of the City-sponsored hotel are not opposed to large Marriott style hotels just outside the historic district and some are fine with one a stone throw’s away on the Galleria site across the creek from the proposed City-Plamondon hotel. I’m all in favor of ‘infill development’ and repurposing of buildings including the former Visitation academy, the Post Office site and the old County Board of Education building. Owners should be free to subdivide such large tracts of land so that small projects can compete with large. The City has foolishly discouraged sub-division, preventing smaller-scale developments from competing, and artificially skewing the character of the downtown in favor of major, ‘connected’ developers.

One of the strongest arguments against the City-sponsored hotel is that City-sponsorship the one hotel is the major reason downtown Frederick has no investor-funded hotels. City sponsorship of this one hotel began in 2008 and was always premised on the favored developer getting tens of millions of dollars of public support. That huge handout to Plamondon has been a powerful discouragement to any others who would compete without such support.

Richard Griffin

“He (Griffin) said the project is expected to bring 280 jobs and have $26 million in annual economic impact.”

COMMENT: These are very optimistic numbers from a City consultant hired to help promote the project. In any case they are gross numbers for the one new hotel, not net additions. Given that visitors/customers have limited budgets much, if not all, of the business garnered at the new downtown hotel will be at the expense of other hotels. So there will be substantial offsetting spending declines and offsetting job losses that should be counted against the 280/$26m. The net change in Frederick hotel business and jobs is impossible to forecast, but it is unlikely to be significant.

“Everyone’s waiting for this project to get going so they can jump in and begin the process of the full realization of the east side of downtown,” he (Griffin) said.

“We believe it’s the next real game-changer for our community — not a boondoggle,” said John Fieseler, executive director of the Tourism Council of Frederick County. 

COMMENT: This is fantasy. There is no reason for anyone

John Fieseler

considering other developments on the east side to wait on the City hotel. Each potential development of housing, office space, mixed-use or commercial has to justify itself to investors based on the prospective net revenues of that business on its own lot. Few will have any connection to the hotel.

(Senator Michael) Hough, half Young’s age at 38, is a staunch conservative who represents the more rural part of Frederick County.

The Marriott is “not a financially viable project,” Hough said. He pointed to changes to the proposal over the years.

“It’s been repackaged more times than a bad Christmas gift,” he said. “Basically, the project is entirely reliant on government funding.”

During the Senate debate over the capital budget, Hough contended that state financing for the downtown project would put other hotel operators at a disadvantage. He pointed to the case of Randy Cohen, owner of the Clarion Inn on a highway outside the city.

Cohen said he has nothing against a downtown hotel. He just doesn’t want one built with public funds to compete with the privately funded conference center he wants to build.

Sen. Hough

COMMENT: Sen Hough is probably right about this. The latest version of the project announced by the Mayor May 18 looks like mere “repackaging.” Mayor McClement conceded the need to extricate City government from the business side of the deal with Plamondon by saying that the developer will take on financing of the conference center as well as the hotel.  What was initially described as a public-private partnership with the public funding the conference center is now to be a straight investor-owned and managed business after all.

This is a huge acknowledgement of the folly of a PPP in which government and public funding is mixed.

But apparently the bottom line is not changing much. Any public savings from shucking off responsibility for the conference center ($8.3m was budgeted) is likely to be consumed in increased public expenses in other parts of the project. The City is apparently taking on  new costs and new risk in building a much enlarged basement parking garage with foundation piles, walls, columns and a deck engineered to support the whole private hotel complex above. We write ‘apparently’ because the City apparently committed to the new plan without an updated project budget laying out the sources and uses of funds. There is likely a ‘handshake’ understanding between the City and Plamondon that he will be “made whole” offsetting his extra costs in taking responsibility for the conference center costs with new public concessions elsewhere. That is repackaging the same old 37% public subsidy deal.

Cohen, like other opponents, says the bidding process to identify a developer was rigged so that it would eventually be awarded to Frederick-based Plamondon Hospitality Partners. Both the city and Pete Plamondon Jr., co-president of the winning firm, say the process was fair.

COMMENT: Clearly the deal was rigged. The so-called ‘competed procurement’ has been documented in invoice time sheets as a sham with Plamondon’s bid submitted and worked on by the City’s consultants many weeks before the Request for Proposals was even issued. The City’s own purchasing rules for procurements were flagrantly violated with City consultants discussing the proposal with Plamondon in the so-called blackout period between the issue of the RFP and the submittal date. The scoring sheets show that the scoring of the two submissions was a travesty with Plamondon given points over

Pete Plamondon with model of the latest design

his rival for items that were clearly inferior.  The consultants billed heavily for work on the Plamondon proposal but gave the competing bid just a passing glance.

Plamondon… said he expects his and other hotels to benefit from a downtown conference center. “It’s going to bring more people to the market,” he said. “It’s really added, induced demand.”

COMMENT: Frederick is very late getting into the conference center business which boomed in the 1980s and early 1990s. Large conference centers were heavily overbuilt. For the past two decades in the age of internet-based video-conferencing and terrorism face-to-face conference attendance is in decline. Many conference centers will likely go the way of shopping malls.

Frederick is too remote from the heart of the Washington-Baltimore metro area to compete with established centers just off the Beltway or served by Metro. Transport to Frederick and from it to the three regional airports is difficult. Any downtown Frederick conference center will attract local events, but they are likely to be at the expense of other county meeting and event centers, not added demand. Lancaster PA and Cambridge MD are examples of similarly situated small cities like Frederick where publicly-sponsored have failed and become a heavy burden on taxpayers.

“The public dollars are going to the public infrastructure,” he (Plamondon) said.

COMMENT: Yes that’s what we’ve been told by the boondoggle boosters all along. They stretch the meaning of the term ‘public infrastructure’ to whatever they want to use public funds to support. They called the conference center portion of the hotel complex public infrastructure when it suited their purposes. They are defining as public infrastructure the use of public funds to purchase the land for the hotel business. Parking in a basement underneath the hotel is public infrastructure. Beyond that we can only speculate how they will stretch the meaning of the term since the City and Plamondon have not yet released details of the revised project budget reflecting the hotel downsizing and new arrangements as announced May 18.

But some local activists aren’t persuaded. They note that the Maryland Stadium Authority decided to pass on the project. Jane Weir, a retired chef who lives in nearby Middletown, is founder of group called Friends of Frederick County. She uses her Facebook page to oppose the project. Peter Samuel, a retired journalist who lives in downtown Frederick, launched a blog called Boondoggle to report what he sees as flaws in the proposal. Weir and Samuel are suspicious that the project’s potential has been oversold, the risks of building a conference center minimized.

“We’re worried that it’s going to be a huge white elephant — very ugly,” Samuel said. “We need smaller ones, boutique hotels that fit the scale of the city.”

COMMENT: Ugly financially. Also I tried to make clear I have no objection to a privately financed and large hotel on suitable sites, even ones quite close to the chosen site — such as the Galleria site immediately across the creek or the Brickworks site diagonally across from the County Board of Ed building. Hotels there would be better located to receive visitors from the interstates being right off East St. Both, especially the Galleria, would be walkable to the historic district, yet neither would disturb historic buildings or the historic district.

Weir said the dilapidated 1909 structure, which the Maryland Historic Trust has designated as eligible for protection, should be preserved and restored. An 183-room hotel, she said, would be out of place amid the historic buildings of downtown Frederick.

Fieseler, the tourism council director, said the building slated for demolition has little historical value.

“Nobody in the world is going to look at it and say that’s a tannery building,” he said. “There’s nothing distinctive about it.”

COMMENT: “dilapidated 1909 structure” the reporter’s term, doesn’t do justice to the building which is eminently restorable

Birely tannery building

since its basic structure is sound — the foundations, the walls, and internal columns plus the splendid smokestack is as true and plumb as the day the last bricks were laid. Much of the existing structure goes back deep into the 19th century. Mr Fieseler’s claim that the building has “little historical value” flies in the face of the findings of the state’s Historical Trust which judged it to be of great value, sufficient to be placed on the National Register of Historic Places. And it prejudges the findings of the City’s Historic Preservation Commission (HPC).  Fieseler is more dismissive of its history than the City DED/Plamondon official submission to the HPC. Nothing distinctive, he says. The high broad smokestack, surely, is distinctive.  Where in the historic district is there another like it?

The hotel proposal went to the city’s Historic Preservation Commission last week. If it passes muster there and gets other local approvals, it will go to the state Board of Public Works for release of the state money — probably in about a year, Griffin said. There the decision will be up to Hogan, Comptroller Peter Franchot and Treasurer Nancy K. Kopp.

Hogan spokesman Doug Mayer said the governor’s office normally does not comment on matters before the board. The board typically does not set policy. It’s charged with ensuring that state money is spent legally.

Hough said Hogan knows that Frederick County Republican lawmakers oppose the project. The senator said he will work to stop it at the board.

“It’s not over until they cash a check on it,” he said.

COMMENT: True, true.

The Sun report began:

Almost 50 miles west of Baltimore lies one of the nation’s redevelopment gems. Downtown Frederick, once a depressing urban center, now receives accolades for its historic charm, vibrant nightlife and robust high-tech economy.

What it doesn’t have is a downtown hotel and conference center. For local leaders, that’s a critical gap — and they’ve secured the state’s help to fill it. They’ve proposed a high-end Marriott hotel, an $84 million project to be financed with $31 million in public money, $16 million of it from Maryland taxpayers and the rest from Frederick County and the city.

The General Assembly approved the money this year with few of the strings the state usually attaches to such development. The project still needs local approvals and a final go-ahead from a state panel chaired by Gov. Larry Hogan.

State Sen. Ronald N. Young, a Frederick County Democrat, said the project is a priority for the city’s growing high-tech and biotech business sector.

“They think they can do international conferences here. They need a first-class hotel,” he said. “It’ll definitely spark other businesses in the area.”

But to others, the project is a colossal boondoggle. These opponents say it’s a textbook example of crony capitalism — a subsidy for wealthy developers. They say it would be out of scale in the historic downtown and would require the demolition of at least one historic building.

State Sen. Michael J. Hough, Frederick County’s other senator, compares the project to the Rocky Gap resort in Western Maryland and the Hyatt Regency in Cambridge — two money-losing ventures in which the state invested two decades ago.

“I’m not exactly sure why the state is still investing in hotels, given our track record,” the Republican lawmaker said. Rocky Gap lost money for years before casino gambling was permitted there under new ownership. The Cambridge resort continues to lose money, according to the Department of Legislative Services, but the state was repaid in 2006 and local officials insist it has stimulated growth in that Eastern Shore city.

A majority of the Frederick County delegation to the General Assembly opposed spending state money on the hotel project, but Young persuaded his fellow Senate Democrats to insert the expenditure in the capital budget. The Senate prevailed in negotiations with the House, and Gov. Larry Hogan did not contest the decision.

see http://www.baltimoresun.com/news/maryland/politics/bs-md-frederick-hotel-20170620-story.html

P Sam 2017.06.24

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