A new agreement with details of the proposed downtown hotel and conference center project cleared the Frederick County Council despite opposition from its three Republican members.
The council on Tuesday passed the nonbinding memorandum of understanding by a 4-3 vote, split along party lines.
Democratic council members Jerry Donald, Jessica Fitzwater and M.C. Keegan-Ayer, as well as Bud Otis, who is unaffiliated, supported the agreement. Republicans Tony Chmelik, Kirby Delauter and Billy Shreve voted against it.
Frederick County is one of five partners that must approve the agreement for the project to receive a $1 million capital appropriation included in the Maryland General Assembly’s fiscal 2017 budget. Other partners are the city of Frederick, Plamondon Hospitality Partners, the Maryland Stadium Authority and the Maryland Economic Development Corp., or MEDCO.
The city Board of Aldermen on Thursday unanimously passed the agreement. The other parties are expected to sign off on the document within the next month, according to Richard Griffin, the city’s economic development director.
The county’s contribution to the $84 million project, anticipated as a $2.8 million tax-increment financing (TIF) bond under the approved agreement, took center stage in debate among council members Tuesday.
Under the TIF, the county will pledge a portion of the taxes generated from the project toward funding the development. All public funds will be used only toward the public portions of the project: a 20,000-square-foot-plus conference center, on-site parking and other infrastructure improvements, according to the memorandum.
Council members who voted in favor of the agreement framed the county’s support as low risk with high return on investment. They named more parking and increased tax revenue once the TIF bonds are paid off as two specific benefits for the county.
“I couldn’t see any skin in the game for us,” Donald said. “It’s almost an all-win for the county.”
But Shreve and Delauter echoed prior statements about risk to the taxpayers among the reasons for their opposition. If the project “goes south,” the burden to make up the cost difference will ultimately fall to the taxpayer, Delauter said.
Language in the document specifically states that hotel developer Plamondon Hospitality Partners will be responsible for operations, including financial shortfalls and losses, for the hotel and conference center.
Chmelik acknowledged that the agreement names Plamondon as responsible for shortfalls, but he noted that bankruptcy would put the state taxpayer on the line.
The Maryland General Assembly included a $1 million appropriation in its fiscal 2017 capital budget. During the 2016 General Assembly session, state lawmakers also pre-authorized $15 million for the next two budgets.
The new memorandum was required as a condition for the project to receive the $1 million funding allocation.
Shreve and Delauter also reiterated philosophical opposition to a publicly subsidized project when other similar projects have not received the same financial support.
Randy Cohen, owner of the FSK Holiday Inn, plans to overhaul his hotel and conference center property. He has criticized the public funding for the downtown hotel project when his own is being entirely privately funded.
Delauter on Tuesday read aloud a letter sent from Cohen urging the council to vote down the agreement.
Much of the new memorandum echoes terms of previous agreements, including a 2014 document approved by the then-Board of County Commissioners. Shreve and Delauter were among the commissioners who at the time passed the agreement by a unanimous vote.
One major change under the new memorandum is the owner of the conference center, now proposed as the Maryland Economic Development Corp. MEDCO is a state agency that borrows money and issues bonds to help state and local economic development agencies and private companies with projects that benefit the public.
Plamondon was intended to own the conference center under previous discussions and nonbinding agreements.
Plamondon will foot the $53 million cost of the 200-room hotel and corresponding retail component, the agreement stated. A combination of city, county and state funds will cover the remaining $31 million cost for public parts of the project.
The agreement also includes provisions that any party can terminate the memorandum at any time for any reason. It must be returned to the General Assembly’s budget committees for a 45-day comment period once it is signed by all parties.
The property at 200 and 212 E. Patrick St. is currently owned by a business entity formed by members of the Randall family. The Randall family also owns the parent company of The Frederick News-Post.