“No state support for the Downtown Frederick Hotel” — letter to Frederick County delegates to Annapolis FULL TEXT


Dear Frederick County Legislator: We urge you to advocate and vote against any state support for the City-sponsored hotel in downtown Frederick. This project has ten counts against it, summarized below. 

1. Bad start:This project was launched under the chairmanship of then superstar local businessman and philanthropist Mark Ian Gaver, since revealed as having lived the high life by embezzling over seven years some $50 million from a local bank. Gaver was the first chairman of the City’s Downtown Hotel Advisory Committee (DHAC) appointed to that position by Mayor Randy McClement and described as the City’s ‘point man’ for its hotel. Gaver set the DHAC on the path of meeting behind closed doors to conceal its operations from scrutiny. With its chairman appointed by the Mayor, meeting at the call of City staff, and housed on City premises, charged with spearheading a City project, and given the services of City-funded consultants, the DHAC as a City body was clearly required by State law to give notice of its meetings, to meet in open session and publish its agenda and minutes of meetings. But it didn’t follow the law because it was engaged in extracting tens of millions of taxpayer dollars for one of its own. Having received the detailed Plamondon hotel proposal and agreed in principle to help get public funds to cover a good portion of the capital cost they realized the only way to get State dollars was to contrive the appearance of a competitive procurement. (Emails contain indiscreet words to this effect attributed to the City’s lobbyist in Annapolis.)

2. Competitive procurement avoided:City consultants JLL proposed a competitive procurement method by which a site would be selected first, then in a second stage there would be open competition among hotel developers to develop the City-selected site. However, without any Board of Aldermen sign-off, and contrary to the consultant JLL recommendation, the DHAC adopted a single stage procurement under which only developers with control (ownership or contract-to-buy) over one of four sites chosen by the DHAC could bid for the lucrative City sponsorship. Only two of the four sites were really in play because a third was committed to offices and the fourth was the US Postal Service’s active downtown post office. The developer-brings-his-site procurement method arose out of a Plamondon draft. An item in an invoice for Jan 15, 2014 reads: “Coordinate with Pl regarding drafting hotel RFP.”  The unannounced winner was involved in writing the terms of the supposed ‘competed’ procurement!

3. Winner selected before RFP issued:  Plamondon had his proposal submitted to the DHAC by December 2013, many weeks before the Request for Proposals was issued mid-February 2014.  Invoice timesheets show that City consultants JLL who were hired to conduct the procurement under the direction of the DHAC put in about 100 hours with the Plamondon company before and during the supposed competitive procurement. By contrast the timesheets show only token attention was given to the ‘competitor’ Wormald. Many of the JLL hours dealing with Plamondon were between the issuance of the RFP and the Due Date for Submissions. This was in violation of City Purchasing Offices rules which after the RFP is issued confine lawful communications to written questions and answers to be made available to all bidders.

4. Scoring of two proposals fixed:Scoring of the two bidders by the DHAC was heavily biased to favor the pre-selected winner. Just one example: important attributes of a potential hotel site are its visual prominence and easy access for visitors, deserving at least 10 points of 100. But the outsider right on the gateway East Street would have scored something like 8/10 points to perhaps 2/10 points for the pre-selected winner. So that attribute was given just 2.5 points. Other examples of bias in the scoring can be cited. In short, the City DHAC committed a fraudulent ‘competed procurement’ and the announced winner was improperly selected to be the recipient of tens of millions of taxpayer dollars.

5. No need to use wrecking ball on historic tannery: The project requires removal of the Birely Tannery, Maryland’s last remaining historic leather tannery deemed by historic designators to be of “unusual historic importance.” Other sites nearby lack historic buildings. The State’s regulator Maryland Historical Trust wrote a scathing review of the quality of archeological survey work done for the City and the developer. It has not signed off on the project. 

6. Site wrong:Eight years after the project was launched City officials recognize that the heavily landlocked site has insufficient street frontage for vehicular access and seek to buy neighboring properties to be rolled into the site selected by Plamondon. Even though City taxpayers will pay for and own the land, the developer is being allowed by the City to conduct negotiations to buy it. A site plan submitted on the existing site was the subject of a scathing list of questions from City permitting staff.

7. County hotel tax misused for Plamondon’s benefit: In the Fall of 2016 at the behest of Plamondon advocates the County established a Hotel Development Incentive Program to be funded with a 60 percent hike in the county hotel-room tax and administered by the Tourism Council, a trade group. Beneficiaries are allowed to devote up to 85% of their hotel tax revenue to debt service on the capital invested in their hotel, remitting only 15% to the County for normal hotel tax revenue purposes such as visitor services and tourist promotion. The Program is written so that the sole eligible beneficiary is Plamondon.  

8. Gross mismanagement:The project has been managed with extraordinary ineptitude. Deadline after deadline has been missed. Studies done at considerable expense are now obsolete. Two state agencies, Maryland Stadium Authority and the Maryland Economic Development Corporation (MEDCO) each examined the City hotel project and found no justification for supporting it. The Department of Housing and Community Development made two grants to the City of Frederick to support the project but neither could be drawn on because the City failed to meet its contract commitments to the state on time. The Department declined further extensions, so the City forfeited State grant money.

9. Wordplay does not change fact that huge taxpayer subsidy remains:The project no longer involves a subsidy, City advocates say, because they have split the project into two parts — an underground City parking garage, providing on top a podium or platform on which the developer will build the hotel and conference center. The City as well as buying land, doing all the necessary roadworks and landscaping will now assume all costs and risks of excavation and the hotel’s foundation work in the old creek bed, the site of two centuries of crude industrial processing. The City will pay all the cost of the parking garage. If it were not for the hotel project the City would never build an underground parking garage in this difficult creekside location. Costs per parking space will be much higher than at the City’s other garages. A subsidy to the hotel by another name — a parking garage for the hotel — is still a hotel subsidy.

10. Subsidy not needed:Original rationale for the subsidy was that private enterprise would never invest in a hotel in downtown Frederick without substantial City, County and State subsidies. Now within two blocks of the City/Plamondon site at the empty Visitation Academy investors are building a hotel downtown without any special City or other support. The purported rationale for taxpayer support of the Plamondon downtown hotel has disappeared.

Solid evidence available for each charge:None of us have any personal stake in this matter beyond that of taxpayers generally. We all accept the need for hotels in downtown Frederick and favor even-handed regulatory and zoning changes to facilitate self-supporting investor financed projects. We are not political partisans. The corrupt cronyism that has permeated this City sponsored project, that the state is being asked to support, is unacceptable to people of all political persuasions. 

We ask you to take this letter seriously because standing behind each of the ten points the drafters have solid evidence — see frederickhotelboondoggle.us  

Please do not support this disgraceful project.

Signed

Jane Weir, Peter Samuel and 25 other signatories

2019-01-28


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