Mayor says terms of hotel deal with Plamondon and historic mitigation both in “active negotiation”

The terms of the City-Plamondon deal for developing a hotel complex on the old Frederick News-Post are now in “active negotiation.” Mayor Michael O’Connor says this in a letter to Andy Stout, who wrote him questioning aspects of the City’s handling of the project.

“We are currently redrafting the MOU with the Plamondon’s to account for a number of changes in the structure of the project, but still within the intent of the original RFP,” the Mayor writes. “As this is an active negotiation, there are clearly details that cannot be disclosed until both parties have concurred. At that point the public will have an opportunity to weigh in and the decision will rest with the (Board of) Aldermen.”

Mayor O’Connor reiterates the questionable theme of the McClement administration that the arrangements being discussed ensure that “public dollars support parking and public improvements, while the private investment will support the hotel and conference center and assume that risk.”

Also still in negotiation with the state, O’Connor says, is a historic preservation ‘mitigation plan’ to compensate for the proposed demolition of the Birely Tannery. The state Maryland Historical Trust (MHT) has to sign off on a mitigation plan before the City can go to the Board of Public Works and seek release of appropriated state funds. Governor Hogan has said he opposes the hotel project indicating he will withhold funds.

The City’s initial contract with Plamondon (a Memorandum of Understanding signed in December 2015) envisaged state funds as providing half the $31m of total public funds for the $84m hotel. In May 2017 Mayor McClement and Plamondon announced a modest downsizing of the hotel and a major increase in the City parking garage underneath, but no revised costing. So less is known now about project details than before.

The full text of the Mayor’s letter (2014.03.14) follows:

Andy,

 

Thank you. I will do my best to answer your questions. Please feel free to follow up.

 

1.       The Plamondon’s have a purchase agreement with the Randall family. That is a private real estate transaction. The current MOU has the City assuming the purchase agreement, with ground rent being paid to the City, which would recover the purchase price over some term. The intent behind the City owning the land is the construction of public parking on the site, which the City owns throughout Frederick. The exact footprint of the parking is not yet known.

2.       An appraisal is being performed, and has always been anticipated.

3.       Also anticipated through the RFP process was the unique nature of the partnership on the project and the relationship between the City and the hotel developer. As a result, this is not a typical real estate acquisition. Our purchasing rules have been followed.

4.       We do not know what the mitigation costs will be until a mitigation plan is finalized with MHT,  and then that work is priced. It is our intent to have the equitable distribution of those mitigation costs shared between the public and private sectors, but it’s too early to say what that will look like or its impact on other elements of the project.

 

We are currently redrafting the MOU with the Plamondon’s to account for a number of changes in the structure of the project, but still within the intent of the original RFP. That revised document will be made public as its adoption requires Board of Aldermen approval. It is however still in active negotiation.

 

As this is an active negotiation, there are clearly details that cannot be disclosed until both parties have concurred. At that point the public will have an opportunity to weigh in and the decision will rest with the Aldermen. I can only assure you that my interest is in drafting a document that best protects the interests of the City, while fulfilling the intent to attract a full service hotel and conference facility to downtown. I believe the framework currently being discussed will ensure public dollars support parking and public improvements, while the private investment will support the hotel and conference center and assume that risk.

 

Thank you again for your interest in the project.

 

Michael C. O’Connor, Mayor

The City of Frederick

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