Submission made to state Office of Legislative Audits and Board of Public Works

COPY OF COVER NOTE: Supporters of the City-sponsored Downtown Frederick Hotel project sought another $10.5 million in the 2019 legislative session in Annapolis and were apparently unsuccessful in getting new State aid this year. But they have declared their intention to continue seeking funds. One avenue is an effort to revive an old bond bill grant of $5 million and a $250,000 DHCD grant made in earlier year but forfeited or forgotten. The Board of Public Works and DHCD will likely be asked to approve release of these $5.25m of state funds. I believe state officials should consider the following evidence that this project is corrupt, wasteful, unfair and unnecessary. I am hopeful you will conclude it is undeserving of a single dollar of state funds.

My standing? I’m a citizen and taxpayer of Frederick, Maryland and live and own a home downtown. I’m retired after a journalism career in Australia, New York City, Washington DC and locally as a newspaper and magazine reporter, pundit and specialist journalist-publisher (I founded Toll Roads News.) I’m all in favor of new hotels downtown but believe they should be fully financed by competitive private enterprise — as now proposed at the old Visitation Academy site. The more closely I examined the long saga of a City-sponsored Plamondon hotel project here in Frederick the more obvious it was to me that it was a corrupt, wasteful, unfair and unnecessary boondoggle that citizens of conscience must speak out against.

I have written at my website http://www.frederickhotelboondoggle.us and worked with the Friends of Frederick County Marriott Hotel Watch Facebook page group to expose the flagrant wrongdoing associated with the City hotel project. The attached pdf is a submission to the Office of Legislative Audits suggesting the Frederick project should be investigated. Meanwhile I urge the Board of Public Works to freeze any funds appropriated by the General Assembly.

Posted in Uncategorized | Leave a comment

Mayor says last shot at state hotel $s, public hearings bypassed again in backroom deals

Mayor Michael O’Connor is tiring of the City’s repeated panhandling in Annapolis on behalf of the downtown hotel boondoggle. A Frederick News-Post (FNP) report this morning (link at the bottom) quotes the Mayor as saying: “This is the last session we’re going to go through this process. We will find out what we are going to get in the budget this year. We don’t intend to go after it after this year.”

If state money is not obtained this year, then the hotel “will move forward without the extra funds,” the FNP reports. State money is not essential for the project to “move forward,” the Mayor is in effect saying.

That is a strong argument against state funding! 

Why should the State fund a project which the City says can move forward whether or not it gets State funds?

The News-Post report also details how Delegate Carol Krimm bypassed any discussion at the Delegation or through the normal appropriations committee budgetary process, thereby avoiding any public hearings. 

Senator Michael Hough (R – Frederick & Carroll) said: “It’s the same backroom deals to get this through… Millions of dollars are being appropriated for the downtown hotel without any public hearing in Annapolis.”

Hotel proponents know the project is so rotten it cannot withstand public scrutiny! 

Put it up for a public hearing and be guaranteed a bunch of citizens will show up or write pointing out to legislators the City’s corrupt and fake competed procurement, the City’s flouting of the Open Meetings Act by the behind-closed-doors meetings of the Downtown Hotel Advisory Committee, the incompetence involved in the City getting grants for the project yet never being capable of actually drawing on those grants, the scathing comments on the project by the Maryland Stadium Authority and the Maryland Department of Economic Development, the out-of-date market studies, the exorbitant per-parking space costs, the constant changes in the project, the fact that just two blocks away at the Visitation Academy a hotel is planned without any City sponsorship or public subsidies, etc etc. Plus as Rick Weldon of the Chamber of Commerce points out the downtown hotel boosters have been at this for a long, long time. He says it’s 12 years!

But the good news is that Mayor O’Connor recognizes the need to end the annual panhandling in Annapolis on behalf of this lemon of a project after this legislative session is done.

$16.5m?

The FNP reports that taxpayer costs (state, county and city) “are set to cover $16.5 million of public infrastructure, including land and on-site public parking and off-site road, utility, streetscape and creek area improvements.”

The News-Post doesn’t source this $16.5m or note that it is below other official estimates.  The latest City One-Pager (so-called) dated December 27, 2018 refers to “Public funds totaling $22.25 million” and shows $11.75m of that contributed by City and County taxpayers, and $10.5m from State grants. 

A single page table Downtown Frederick Public Infrastructure Budget details the categories of spending $22.25m:

Land $4.2m

Parking/podium $16.15m

Off-site works $0.4m

That is $20.75m

The rest of the $22.25m is $1.5m of ‘soft costs’ made up of preliminary development cost of $250k, architecture & engineering $408k, financial, franchise, legal & accounting (Is lobbying in here?) $77k, project management $767k, pre-opening costs $3k (the opening party?)

$16.5m, if it’s a real $#, is a welcome reduction in public commitment. But it will buy less than the $22.25m officially quoted. 

Where are the $5.75m savings?

Eagles property not bought $527k?

Reduce underground car parking from two levels (234 spaces) $16.15m to one level and (160 spaces) $11.6m? $4.6m saved?

We’re now at $5.13m saved, still $620k to go. If the parking garage is only one level then perhaps the architecture and engineering isn’t $408k? And the project management can be squeezed below $767k. And maybe Plamondon will shoulder the $3,000 ‘pre-opening’ (party) cost?

It remains a question whether the project so squeezed is permitable by the City Planning Commission. Without the Eagles land there is no street access to the parking garage beyond a single lane easement. A 2-way driveway ramp is twice the size of the easement.

Plus a 200-room hotel normally needs to provide a parking space for each guest room (and that provides nothing for conference/event attendees.) And the per-parking space cost of the garage already very high at $69k/space ($16.15m/234) for two levels gets even higher with just one level ($11.55m/160 = $72k/space.) 

We’ve asked the City about the $16.5m cost the FNP reported. And we’ll update/edit this when and if they clarify.

FNP report by Samantha Hogan:

https://www.fredericknewspost.com/news/education/funding/house-passes-budget-and-considers-million-for-downtown-hotel/article_1f895949-0bb6-5687-a755-5d34a1f3f1c8.html

UPDATE 11:19: Mayor O’Connor has responded to our question: “When we are fully aware of all of the sources of funds available for the project, we will be able to make the determination you are seeking. The program as currently conceived seeks $10.5 million in state funding along with $11.75 (million) committed from City and County sources. We have $5.0 million authorized at the state already, awaiting Board of Public Works approval. If some portion of the additional $5.5 (million) we are seeking is not realized, we will work with the partners, with funding in the project, to determine the next steps.”

So the City seems to think it has $11.75m City and County funding and $5 million of state funding which is $16.75m.  Maybe someone lost $250k in the arithmetic, and that’s the source for the $16.5m?

If the City also gets the $1.5m that Del C Krimm says she has got in backroom meetings with state appropriations legislators then there’s a total of $18.25m. That assumes the Board of Public Works releases $5m the Governor has previously said won’t be released.  And that the Governor goes along with the $1.5m extra that was never approved (or even discussed) by the Frederick County delegation.

So the battle goes on! 

At least there’s an end in sight if the Mayor sticks by his promise to work from what’s gotten this year and not go back again next year. That’s heartening!

2019.03.15

Posted in Uncategorized | Leave a comment

Hotel “not funded” in 2020 State budget, FNP confirms

The City-sponsored hotel downtown missed out on funding in the short 2019 legislative session when the budget for the following fiscal year is hashed out. Reported here February 27 (see link at end) and on the FoFC Downtown Marriott Watch Facebook page, the news is confirmed in the Frederick News-Post (FNP) today.

Samantha Hogan reports: “Hogan’s proposed $46.6 billion budget invests in education and transportation, while putting aside 6.5 percent of state revenue in a Rainy Day Fund. Highlights of the budget include a 10 percent increase in local transportation aid driven by highway user revenue formulas, a $6.9 billion statewide investment in education and multiple capital investments in roads around Frederick County. One item that is not funded, however, is the proposed hotel and conference center in downtown Frederick.”

Casting this as just the Governor’s budget is somewhat misleading. As detailed in the Maryland Reporter while based heavily on a budget proposed by Governor Hogan January 17th, the budget now being reported is close to the final budget of the General Assembly.  In the seven weeks since the Governor’s budget was released the state House and Senate have been working intensely on it. Reports from Annapolis are that the legislators are close to an agreed budget for submission to the Governor for his signature.  The key House Appropriations Committee, for example, is due to report Friday, March 8.

Normally money for the hotel would be included in local projects supported by ‘bond bills.’ For this budget that category is nailed down without funds for the hotel. Total for the whole state for local bond bills was agreed at $15 million, showing how unreal was the $10.5m being sought by the City of Frederick for the hotel. 

FNP: “Delegate Carol Krimm (D-District 3A), the county delegation’s chairwoman, said that she was disappointed by the lack of money for the hotel and conference center in the governor’s budget, but that she would continue to support the project and work to secure funding for it.”

Truth is that veteran hotel supporters on the delegation (Krimm and the Youngs) knew the hotel was near impossible to fund. So it wasn’t even discussed at any of the Friday meetings of the Frederick delegation. 

Did they even try?

Contrary to the FNP reporting they didn’t seriously try to get state funding.

Mayor Michael O’Connor is quoted: “Our plan is to continue to work with the delegation to do what we can do to secure the funds we need to get the project completed… Five million dollars has already been allocated by the General Assembly, and we need to work through the process to get that money through the Board of Public Works to get that approved.”

The $5m “allocated by the General Assembly” is a previous year’s appropriation which was never drawn on by the City because it cannot get its act together on the hotel. It doesn’t even have an adequate site and is still mulling purchase of the Eagles club site next door. As presently designed the parking garage has no real estate for an access roadway because of the lack of frontage on East Patrick St. No progress is being made on mitigation needed by the state historical trust for the demolition of the Birely Tannery.

Architectural and engineering g design and other studies are on hold pending state funding.

State officials have indicated they consider the $5 million mentioned by the Mayor to be a grant forfeited by the City of Frederick through the project not being taken to the State Board of Public Works in the year in which it was granted.  And Governor Hogan has said flatly: “No state funds will go to the hotel project.”  

Our previous report

http://frederickhotelboondoggle.us/2019/02/hotel-bombs-out-in-2019-session-no-delegation-vote-on-seeking-state-s-as-legislative-session-winds-down/

2019.03.06

Posted in Uncategorized | Leave a comment

Hotel bombs out in 2019 session — no delegation vote on seeking State-$s as legislative session winds down

The Downtown Hotel project looks most unlikely to get any state funding this legislative session in Annapolis. Both the Hogan administration and State legislative leaders said the project needed the full support of the Frederick County delegation before they would even consider it for State funding. 

Yet Delegate Carol Krimm and other hotel proponents have made no move to have the Hotel discussed or put to a vote at a Delegation meeting this year. They know the opponents of the project led by Senator Michael Hough are as strongly opposed as ever to state funding. Delegation meetings are held every Friday morning in Annapolis when the General Assembly is in session. 

A Hough staffer told us today: “They didn’t ever put state aid for the Hotel on the Delegation meeting agenda. It was not put up for discussion. And we’ve had the last Delegation meeting this year. The only way they could get money now is to bypass the Delegation and persuade Gov Hogan to completely change his mind. We don’t see that happening. So the Hotel looks like it’s without state funds for at least another year.”

Mayor O’Connor said January 15 in  answer to a question from me that the Hotel project was “on hold” pending the outcome of efforts to get State funding in the legislative session. If the legislative session is concluding without funding having been obtained, then the City has to decide what to do.

1. Wait another year, and try yet again?

2. Try to reshape the project so it can proceed without state support, putting the whole public sector cost onto City and County taxpayers?

3. Acknowledge the project as a mistake.

‘Infrastructure’ gimmickry went nowhere

One of the dumbest moves this year was an effort to rebrand the hotel project as ‘public infrastructure’ emphasizing the proposal to use state money for a City parking garage, and omitting all reference to the hotel. See the Department of Economic Development’s letter. During Frederick Day in Annapolis the project was described as “Downtown Public Infrastructure to build more public parking” — a reference to the $16.15 million 234 car-space parking structure proposed to be built underneath the DH&CC. Simple arithmetic exposes the absurdity of this as a City Parking garage: $16,150,000/234 = $69,000 per car parking space.

Walker Parking consultants told the City that new parking spaces must cost $15,900 or less in order to be financially viable. Three quarters of the spending ($12 million) would constitute public subsidy of the foundations of the hotel because spending $16.15 million on a mere 234-car garage is absurd.  Why should the State support such extravagance? 

The City has financed and built six above-ground parking garages without any State support. Building the seventh parking garage underneath the hotel would be just another waste of money on behalf of the hotel. Calling it ‘public infrastructure’ fools no one.  2019.02.27

Posted in Uncategorized | Leave a comment

State delegates misled on terms of hotel deal (letter to Del. Krimm)


Delegate Krimm: Richard Griffin wrote a misleading answer to your request for details of the terms under which the hotel operator will be leasing the podium roof of the parking structure (email January 16, 2019 17:06 EST). He encouraged you to share his answer with other delegates, so I am copying them.

Mr Griffin’s answer suggests the hotel operator is paying a ground lease specifically for the podium roof.  The payment Mr Griffin quotes is a Ground Lease related to the purchase price of the land and is solely intended to recompense the City for the purchase of the land. He quotes from Appendix D of the Amended and Restated MOU of July 2, 2018 which is almost identical to the Ground Lease terms in the MOU of December 23, 2015 at page 6, 10. Special Agreements (B) Ground Lease. 

Back in 2015 when the Ground Lease was written there was no podium roof. Then the idea was for the public sector to buy the land, carry a large share of soft costs, and pay all construction and fit-out cost of the conference center portion of the project. The basement level parking (a single level) along with foundations was to be financed by the hotel developer and operated by the hotel for hotel guests. 

The idea of having the City finance and operate the basement parking only arose in 2017 many months after the terms of the Ground Lease were settled. Only in May 2017 did Mayor McClement announce the new arrangements (reflected in the July 2, 2018 Amended & Restated MOU) under which Plamondon would take full responsibility for the costs of the conference center in return for the City taking on the financing of the basement parking and providing a podium on which Plamondon could build his hotel and conference center.

Contrary to Mr Griffin’s email the present terms do not ask the hotelier to make any payment at all for the use of the City-financed podium roof or for the foundations and structure that are engineered to support it. This giveaway is substantial. At $16.15 million for 234 parking spaces, each space is costing $69,000. The most thorough survey of underground parking costs in cities across America suggests $48,000/space (Rider Levett Bucknall quoted in Donald Shoup’s book on Parking updated by Turner Construction Cost Index) times 234 spaces = $11.2m. On this basis nearly $5m ($16.15m minus $11.2m) of the construction cost appears to be surplus cost attributable to foundations and podium beyond the cost attributable to the underground parking alone. 

Even underground parking itself as represented by $48,000/space makes no sense in Frederick. According to the revenue and cost estimates in the Walker Parking Consultants 2015 study for the City a 234 space parking garage would only break even and cover debt service if it costs $15,900 or less per parking space to build. That is, in order to have no negative impact on the City Parking Fund, the Sub-hotel City parking garage should cost 234x$15,900m = $3,720,000 or less. By this measure in spending $16.15m — the amount for which the City gets no financial return —  the podium giveaway is $16.15 minus $3.72m or $12.43m.

To reiterate: the present agreement between the City and Plamondon only proposes a ground lease arrangement for the proposed $3.4m land purchase of the Frederick News-Post site. It gives away the expensive podium free of charge to the favored developer.

Unfortunately the Griffin email is just the latest in a long list of false and misleading statements made in the eight year long effort to justify this disgraceful boondoggle hotel.

Peter Samuel 2019.02.03

Posted in Uncategorized | Leave a comment

$250,000 state grant for hotel from 2012 was forgotten by the City

A $250,000 grant the State awarded to the City of Frederick for its Downtown Hotel back in 2012 was forgotten and never drawn on by City officials. Kimberly Langkam director of Capital Grants at the state’s Department of General Services emailed Frederick Delegate Carol Krimm two weeks ago (January 15) under the Subject “12-032 Downtown Frederick Hotel & Conference Center” this: “The 2012 – $250,000 grant for the above referenced project, the funds are still available and have not been reverted.” (‘Reverted’ is bureaucrat-speak for unused grant money being taken back.)

Krimm passed the news of finding the missing quarter million to the City’s Hotel project manager Richard Griffin, who minutes later emailed back to Krimm: “Excelente. That is outstanding.”

The emails were released in response to Public information Act requests.

The City’s request for the hotel grant and its award by the State legislature was well publicized at the time. It began as a request for $1 million from the state.

Richard Griffin speaks at a Mayor & Board meeting

Under the headline “Frederick asks state to pitch in $1m for hotel” then Patti Borda at the Frederick News-Post reported: “McClement’s office asked the state earlier this month to include $1 million in the fiscal 2013 state budget for the project. That money would be used to help the city cover the cost of placing a right-to-purchase option on a property, as well as architectural, engineering and project management expenses, said Josh Russin, McClement’s executive assistant.” That was December 30, 2011.

March 22, 2012 the Frederick News-Post under the headline “City sets stage for downtown hotel site” reported: “The Maryland General Assembly is considering two bills that could provide some funding. One is sponsored by Sens. David Brinkley and Ron Young and Delegate Galen Clagett to pay $250,000 for the hotel planning and design costs. Clagett also sponsored a bill to increase the hotel tax from 3 percent to 5 percent, with proceeds to pay off the debt for the county’s visitor center and proposed hotel site acquisition.”

Apparently the General Assembly leadership and the Frederick County hotel advocates reached a deal that instead of $1 million the hotel would get $250,000 conditional on a matching $250,000 being provided by the City.

In June there was another reference to the quarter million grant in the backgrounding to a report on Mayor McClement’s comments on a forthcoming feasibility study: “During the 2012 session of the Maryland General Assembly, lawmakers set aside $250,000 for the first stages of the building effort, and the city had to make an equal match. McClement said none of that combined half a million dollars will be used for the hotel if the stadium authority’s study finds the market will not support a hotel conference center downtown right now. If the stadium authority comes back with a negative