DHCC taxes proposed for funding historic district rehab — a peanuts proposal

The Frederick News-Post (FNP) reports a proposed scheme under which some of the hotel tax collected at the Downtown Hotel & Conference Center (DHCC) would be used for a special fund to rehab other buildings in the historic district. This rehab fund would constitute the ‘mitigation’ to compensate for the loss of the Birely Tannery building which project sponsors want to demolish to make room for the conference center portion of the hotel complex. 

The fund proposal comes from Preservation Maryland, a Baltimore-based state preservation group in a November 17, 2017 letter by its executive director Nicholas Redding to Melissa Archer the point person for the DHCC project at the state Department of Housing and Community Development. Redding who lives in Frederick County made his name in preservation working in Gettysburg PA. He has longstanding connections to the Frederick establishment having been an officer of the Frederick County Preservation Commission.

Mallory Panuska in the FNP reports that the Redding proposal has gained enthusiastic support from  the City of Frederick Historic Preservation Committee (HPC) which she reports voted unanimously at a recent meeting to endorse the proposal. (Nothing that we can find has appeared on the HPC agenda providing any public notice that they were considering the issue.)

Nick’s Nickels Fund

Key parts of the proposal quoting from  the Redding letter:

Redding

“It is well understood and accepted that the Downtown Frederick Hotel and Conference Center project will generate an ongoing dedicated revenue source in the form of increased hotel room tax. Therefore we propose that a small, to-be-negotiated percentage of that revenue be dedicated to the establishment of a corpus of a Fund that would be used for the rehabilitation of historic resources within the project’s Area of Potential Effects (APE.)

“The Fund would operate under a governing partnership between the City of Frederick, Downtown Frederick Partnership and Preservation Maryland and would provide revolving fund financing to projects resulting in the rehabilitation of historic resources. An initial emphasis of the Fund would be placed on facade restoration… to increase the impact of existing facade improvement grants (and) ongoing challenges with… ADA access, sprinkler systems, and second floor reuse.

“Guidelines, applications and operating procedures would be developed by the (Downtown) Partnership charged with management of the new Fund with review and approval by the DHCD and MHT, if desired.

“Preservation Maryland is prepared to commit its resources and staff to administering the fund…”

COMMENT: Redding’s proposal has a bunch of problems. Control of the Fund is thoroughly confused. First it is by a triumvirate (City, Downtown Partnership and Preservation  Maryland), then it’s the Downtown Partnership that would manage the Fund, and last it’s Preservation Maryland with two state agencies if they want to be roped in.

All this organization to take charge of a County collected tax? Can County government delegate to outside groups control over disbursement of moneys it collects? Does the County want to do that?  Redding doesn’t even include the County in his proposed ‘partnership.’ The Tourism Council doesn’t get a look-in either. And they are the main users of the hotel tax.

And how far would the DHCC tax revenues go? 180 rooms x $100/night x 365 x 70% room occupancy = room revenues of $4.6m/year. 5% tax = $230k/year. That’s if it goes well.

What is a “small, to-be-negotiated percentage” of that $230k for the Redding fund? 4 percent? That’s $9,200/year.

How far does nine grand a year go?

Maybe they negotiate 10%. That’s $23k/year. We’re still talking peanuts! Administrative costs would eat up most of it. Or it would fund an architect’s sketch proposals for one facade restoration.

The other problem is that the DHCC hotel tax money is already accounted for.

The County and the Tourism Council have proposed that 85% of it ($195k if the total is that $230k) will be dedicated to the project’s debt service. Their idea is that the remaining 15% or $35k would go into the regular Tourism Council coffers for tourist promotion — the Visitor Center and its advertising and marketing programs.

The FNP quotes Tourism Director John Fieseler as saying the City expects the DHCC’s hotel tax to fund its parking garage under the hotel, so it will be up to the City to decide.

This is all fantasy based on peanuts.

Plamondon should pay – my comment for FNP

Why is there even discussion of using tax monies to further subsidize this development?

Plamondon the hotel developer is the one proposing to demolish the Birely Tannery because, as he sees it, demolition makes the most business sense. This was his argument at the Historic Preservation Commission in the fall.

It was Plamondon who proposed this site knowing the complications of its two historic buildings and extensive archeological remains. Since he stands to benefit financially from the demolition of the tannery he should be the one asked to pay the full costs of ‘mitigation.’

If these mitigation costs are too much for his business to support, then he can scale back his hotel to allow the tannery building to be preserved instead of ‘mitigating’ its loss.

Copy of the Preservation Maryland letter:

HotelTaxFundPresMd20180112.pdf

Preservation Maryland Preservation http://www.preservationmaryland.org

2018.01.17

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