Anirban Basu, the Baltimore based advocate for ‘public private partnerships’ had about 800 words in the Frederick News-Post May 22, 2016 under the head “Downtown hotel & conference center will be a boon for Frederick.” Basu attributed the $81m cost estimate for the DHCC to the Maryland Stadium Authority (City or HAC consultants made that estimate.) And he called Carroll Creek Linear Park a successful public private partnership (there was no private contribution, it was a traditional public works project.)
He proceeded with strawman arguments knocking down supposed
‘Falsehoods’ held by critics, misstating the criticisms, then purporting to rebut them. The piece ended claiming the an independent MSA study “projects $1.5 million in incremental state tax revenue.” MSA has done NO study of the Frederick hotel project. Basu was referring to a study by Crossroads Consulting and Hospitality & Gaming Solutions dated July 2012 that was a critique and update of a 2010 study by Pinnacle/OPX consultants. The Crossroads study was “presented to” the Maryland Stadium Authority, among others. MSA did not do, or even endorse the study.
And the $1.5m is an estimate of new revenues from the downtown hotel, but makes no offsetting allowance for tax revenues reduced when the downtown hotel wins taxable business away from other hotels in the state. It is a gross $ number, not the net effect.
Basu’s piece was the standard baloney economics that has been used to gain and sustain support for the hotel project for six or seven years now. Real economic studies consistently show that crony capitalist ‘public private partnerships’ like the downtown hotel project in which governments subsidize private ventures can move spending and jobs around. At the immediate point there will be new activity, but it will be offset by reduced activity elsewhere. Overall they fail to produce economic development. To the contrary by promoting financially nonviable projects they tend to lead to waste and misdirection of resources, and lower economic growth. The waste involved in the City DHCC can be measured roughly by the difference between the prospective cost ($80m) and its value on opening ($30m) as estimated by the City’s financial consultant Municap based on typical cash flows discounted to present-$ — an issue of course not addressed by Basu.
Who paid for Basu’s shoddy propaganda
A Public Information Act request of Frederick County government has shown that Basu’s article in the News-Post was solicited and paid for by the backroom Hotel Advisory Committee (HAC). A letter by Mr Basu’s Sage Policy Group to Richard Griffin, Director of Economic Development dated April 19, 2016 refers to a telephone discussion the day before and formally proposes “a 700-750 word op-ed detailing the economic benefits and contractual protections associated with” the hotel project.
$1600 was Basu’s writing charge “whether or not the piece is published in any particular publication.”
The same day Griffin emailed members of the HAC (John Fieseler, Tourism Council, Elizabeth Cromwell, Chamber of Commerce, Kara Norman, Downtown Partnership, Helen Propheter, County DED) saying “I recommend that we all share the cost as in the past” asking John Fieseler to help by providing a “breakdown.” Griffin, on a City salary was executive-director of the HAC, calling its meetings hosted in City Hall, setting the agenda and providing staff.
Basu testimony to General Assembly appropriations committee paid for by Tourism Council
Another Frederick County document shows the Tourism Council of Frederick County paying $660 as Reimbursement for Professional Fees for advocacy in favor of the hotel project. It is unclear whether this was the total payment to Basu or just the Tourism Council’s share of a payment by the whole HAC, which comprises the City and County’s Departments of Economic Development so-called, the County Chamber of Commerce, Downtown Partnership and Tourism Council.
ETHICS: General Assembly members expect testimony to be paid for. But maybe readers of the Frederick News-Post should have been informed that Basu’s “boon for Frederick” article was solicited and paid for by the hotel advocates of the Hotel Advisory Committee. All it says at the bottom is: “Anirban Basu is chairman and CEO of Sage Policy Group Inc. He writes from Baltimore.”
FOLLOWUP April 3, 2018
Richard Griffin has subsequently written in an email to several people who picked up on this:
“Sage Policy (Anirban Basu) was an economist consultant to the Tourism Council on behalf of the Downtown Hotel Advisory Committee not the solely the City.
“The decision to hire Sage Policy was a collective decision by the Committee to review the project, prepare a written analysis, testify regarding that analysis, and prepare a written editorial.
“The City made two payments to the Tourism Council ($990 and $1,600) to assist with the cost of such work.
“The decision to hire was never a unilateral decision by me and all payments by the City were approved by the Mayor.
“I hope that helps clarify the City’s role in the work and effort by Anirban (Basu.)” end quotes 2018.04.03