Downtown hotel 1

An artist’s rendering of the downtown hotel and conference center project, as viewed from the northwest corner of Patrick and Carroll streets.

Even after years of planning, the financing for the hotel and conference center planned for downtown Frederick is spurring extensive debate between advocates and opponents.

At the center of the discussion is the impact the $82.47 million project will have on taxpayers. Perception of which parties bear risk for the cost and return-on-investment varies, depending on whom you ask.

Opponents say the private portion of the project — the Marriott hotel — should not be paid for through any type of taxpayer financing or liability. Proponents stress that the public financing mechanism for nonhotel portions of the project — the conference center, infrastructure improvements, land acquisition and parking — will be paid back entirely by tax revenue generated by the project.

Adding to the discussion is the Frederick County Planning Commission’s approval last month of expansion plans at the FSK Holiday Inn Hotel and Conference Center near Francis Scott Key Mall.

Protecting the taxpayers

In an interview this week, County Councilman Billy Shreve said the downtown project requires tax increases and grant funding — political and financial capital that could go to other causes — to make it work.

“I’d like to see a hotel here. I just don’t think this mechanism is the best for the public,” Shreve said. “If there was a burning need and desire, it would get done without public financing. In general, a trained monkey can make a project work if you give him half the money.”

Councilman Kirby Delauter also called for a downtown hotel project “funded by the private sector, not the taxpayer.”

Residents and members of advocacy organizations such as Friends of Frederick County have also contested the project on the grounds that it lets private investors benefit at the risk of residents’ taxpayer dollars. Several reiterated their concerns at the city meeting Thursday, asking aldermen to delay a scheduled vote on the memorandum of understanding between the city and developer Plamondon Hospitality Partners.

“That money needs to be paid back,” city resident Jane Weir said of the bonds proposed to finance part of the project. “The people that pay it back are our citizens. We’re the taxpayers.”

Hillcrest resident Nicholas Bouquet also voiced objection. He said he didn’t oppose the concept, only how it has progressed. He called the project as proposed a “waste of taxpayer dollars.”

Positive return
on investment

Richard Griffin, the city’s economic development director and a key leader of the group pushing the project forward, repeatedly denied that the project funding puts any taxpayer dollars on the line.

“Unlike what you do hear, that the taxpayers [are] paying for this project, that’s not the case,” he said.

According to Griffin, tax-increment financing, or TIF, bonds the city and county will take on have been “much misunderstood.” Debt service on those bonds will be paid only by the increase in property taxes generated by the construction of the project, he said. Those dollars will be spent only on public infrastructure components of the project.

Griffin said the memorandum of understanding provides a “reasonable public return on investment” with balances to ensure protection of that investment.

Some elected officials also highlighted the project’s positive impact and limited liability.

Delegate Karen Lewis Young pointed to the economic and jobs impact and new tax revenue generated by the project, calling them “an extremely healthy” return on investment in an email between lawmakers and a constituent.

State Sen. Ron Young said he considers the hotel and conference center a public-private partnership that pays itself back. New tax dollars generated by the project will go back to pay the bond off — tax dollars that wouldn’t have existed without the hotel and conference center, he said.

“When we do a project like this, it is an impetus for making other things happen that generate many more tax dollars and services and improvements,” Young said. “It revitalizes and strengthens the area around it.”

Crossed signals

The two groups’ interpretations appear at odds, but neither is entirely wrong, according to Katie Barkdoll, the city’s director of budget and purchasing.

She agreed with Griffin’s explanation that city and county taxpayers won’t realize an impact from the TIF bonds. As part of the TIF requirements, if the project falls through or doesn’t generate enough additional property taxes to pay back bonds, Plamondon makes up the difference, not the city.

But city and county residents also pay state taxes. In that sense, there is at least a limited risk to their tax dollars, Barkdoll said.

The $14.8 million the project planners hope to get from the state through the Maryland Stadium Authority will also be bonded and paid back within the next 20 years. That expectation stems from a recent update to the project feasibility study the Stadium Authority conducted in 2010. The July update showed the state could leverage up to $17.8 million in bonds that would be paid off, including interest, through $1.5 million generated in state tax revenue over 20 years.

Unlike the TIF bonds, though, if the project doesn’t generate the revenue projected to pay back the state bond, it’s the state’s responsibility to pay back the difference. State taxpayers fund the state general operating budget. In that sense, Barkdoll said, taxpayers throughout the state have some, albeit limited, risk associated with the project.

According to Barkdoll, the real issue is term confusion — the various ways people understand and interpret “taxpayer dollars.”

“It means something different to different people,” she said. “People automatically see that the city or state is participating in a project like this and assume it means their local taxes are impacted. I think the communication could be tailored more to the audience we’re trying to reach.”

In a meeting Wednesday between delegates representing Frederick County and the city mayor and aldermen, Lewis Young called for a clearer message.

“Sometimes detailed presentations don’t get the message out. How can you better educate and communicate [with] the public?” she asked of Griffin.

Barkdoll noted that the opportunity to correct that failure is far from over. The memorandum of understanding approved Thursday represents only the first in a lengthy series of steps and approval processes needed for the project. There will be other chances for public feedback and discourse along the way.

The $82.47 million project cost includes a 200-room hotel with 24,000 square feet of conference center space with on-site parking, infrastructure improvements and a sixth city parking deck at the site of the old Frederick News-Post building.

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.

Follow Danielle E. Gaines on Twitter: @danielleegaines.

Follow Nancy Lavin on Twitter: @Nancy_Lavin228.

Downtown hotel project funding breakdown

Source: city of Frederick draft memorandum of understanding •city contribution will be reduced by $.25 million already allocated in Capital Improvements Program budget ••public contribution will be reduced by $.25 million already allocated in state capital bond bill

Field 1 Field 2 Field 3
Funding Source Contribution (in millions of dollars)
Plamondon Hospitality Partners $44.12
Private subtotal $44.12
city and county tax-increment financing (TIF) bonds• $5.00
Frederick County hotel tax $4.30
city of Frederick parking fund/Frederick County capital parking investment $13.00
Maryland Smart Growth Impact Fund grant $1.25
Maryland Stadium Authority (through Maryland General Assembly funding) $14.80
Public subtotal $38.35••
Grand total $82.47

Nancy Lavin covers social services, demographics and religion for The Frederick News-Post.

Danielle E. Gaines covers politics and government in Frederick County, splitting her time between Winchester Hall and The State House. Having grown up in Illinois, she lived in New York and California before settling in Maryland.

(27) comments

mpendergast3123

you might want to get some actual financial reports on some of the other convention centers funded through the Maryland Stadium Authority to see how they are working out. http://www.mdstad.com/completed-projects, this project will add more jobs to the community but they are mostly low paying job with limited benefits with a limited work force that will accept these jobs in Frederick.

Frayou

Again. I get so tired of hearing spending millions of dollars in the name of improvements for revitalization of downtown Frederick. I have a problem seeing this. Our politicians have this grand vision for duplicating a model "Georgetown" community. Question? For what purpose but to take a morning walk and stop at some restaurants for breakfast, converse and have a spot of overprice jo. Or have lunch or to have dinner in an overprice restrauants and evening walk. Let's cut to the chase. This is about big money people who have big money and means to increase property values and taxes

BstD59

I'm all for a hotel/convention center downtown...paid for only by private funds. There is something inherently wrong with tax dollars being invested in a privately owned money making concern.

DickD

This whole story smacks of a business plan. Get the politicians on your side and do a railroad job on the County and City tax payers, so Plamondon and the Randalls can make a fortune off us. We don't need it, we don't want it.

KellyAlzan

I cant see the MD stadium authority approving funding for this. Looking at their website, this proposed project does not coincide with the list of projects the stadium authority has been involved in.


http://msa.maryland.gov/msa/mdmanual/25ind/html/66stadf.html


.

jerseygrl42

no matter how the money folks sugar coat this deal, it remains a raid on the wallets of the tax-paying citizenry of this county and state ...if it does't work w/o welfare then it shouldn't be built...we need classrooms for the many hundreds trying to learn in trailers and this thing only benefits the plamondon and randall families

Boyce Rensberger

Long after the financial games are over, what will be thought of this building is how well it fits into the architecture and ambiance of downtown Frederick. Artists' conceptions can look appealing, but they have little or no bearing on what actually is built. Remember the promises that were made about the Wal-Mart complex replacing the Frederick Towne Mall--made and, after the deal was cemented, promptly broken?

nbouqu1

If only someone had warned the Board of Aldermen.... oh wait, someone did

Dwasserba

This was really helpful, thank you. First, this is a big deal. The Youngs aren't going to start a public "he said/she said" sidebar. Secondly, who's going to tell everyone in the rest of the state of their involvement in this grand adventure? I bet they've been hoping for an opportunity to risk tax dollars for a ginormous privately owned hotel. Did I get it right?

gary4books

This is a rich city in a rich state and all I hear is "can't do this" or "can't do that."

Well - can't never could.

Get the Hotel built and make this aa center for travelers from all of Maryland and even other close states.

Just do it.

We can do it and do it very well.


Let the philosophy of government and taxes be debated somewhere else.

KellyAlzan

That's all fine and dandy.

Do it with a developer that can afford it and has his own funding. Not my funding.

jerseygrl42

yes, get it built with private money that will benefit from it financially and if that math doesn't work then its NOT a good idea....

KellyAlzan

ATTENTION

All Roy Rogers restaurants are to now be BOYCOTTED effective immediately. We are officially at war with the city of Frederick and the Plamondoons.

Is anyone interested in picketing in front of the Roy Rogers restaurants? If so, let's form a committee and get this campaign under way.

I REPEAT:
Effective immediately. There is a boycott on ALL Roy Rogers restaurants. Even the ones out of county and state are franchises that the Plamondoons sold to franchisees.

All Roy Rogers restaurants are officially boycotted.

If yiu want a burger - go to Five Guys.

If you want chicken - go to Popeyes.


(This post has been copied and saved)

Sallyforth

I am very disappointed to be on the same side of an issue as Billy Shreve and he who shall not be named. However, the bull proponents are spewing about TIF's is mind boggling. Any money used to pay the bonds is money that is not going into the County's coffers. Granted, in thirty years or so when the bonds are paid off the County will have increased tax revenue. Until then the hotel gets public services basically for free because all of the tax revenue goes towards paying off the bonds. This means that current county and city taxpayers carry the load for the hotel.parking deck until the bonds are paid off. All the profits go to the hotel, all the risk belongs to the taxpayer. It's a bad deal. Anyone that says it's not is benefiting from the project in some way.

DickD

Strange as it may seem, I too side with Billy and Kirby - proves the old adage, there is good in everyone, now Billy and Kirby have proven it.

gary4books

EVERY one of us should benefit in some way or it is not worth doing. Government after all is to promote the general welfare. I think this is a good project . But if we do not all benefit, forget it.

thevoiceoffrederick

Is this is such a lucrative return then why aren't the banks and financial institutions and investors all over this project? It's not, it's will be a "loan" at below market value interest with horrid pay back plan. Politicians will say one thing in public to look good, stay neutral or lie, meanwhile they have puppets like richard griffin to do the dirty work while they can smile and be "the nice guy" this will bring a bunch of low paying jobs and be a mess for frederixk city. In the time frame this has taken to get here the plamandons have built eight hotels just outside the city limits limits, hummmmm I wonder why? All without a single tax dollar loan, as well as numerous other hotels all outside city limits while the ones in the city limits have become jokes, like the old Sheraton on rule 40 that's now a super cheap joke that has drug and prostitue bust on a weekly basis (keep ignoring route 40, east st and everything except market, Patrick and ever ready square) time to send the extremely wealthy plamandons a message, boycott all of their hotels and Roy Rodgers "restaurants" they are asking for the assistance, don't be fooled. I'm sure they will hold up the shield that they give back so much and that's a tired story, You give to make a good image. The community, well, take a few years off from support fake events like alive at 5 that makes tons of money through gate and booze sales and use volunteers and pay bands slave wages. If you don't send a message now, this will continue. Oh yeah , kirby, will y accept a contract for this if a penny of tax money is used? Be a real voice and say Your company won't bid or accept a contract if you feel so strongly.

KellyAlzan

There was never a Sheraton on rt 40.

It was always a holiday inn.

DickD

I think you are wrong. About 15 years ago we used to have functions there and I believe it was a Sheraton. The old Holiday Inn was down by the State Police Barracks on the Golden Mile, when the Holiday Inn bought this site, they closed the old one and sold it.

DickD

My mistake Kelly, I thought you meant the one over by Sears was never a Sheraton.

DickD

The one on 40 was a Holiday Inn, not a Sheraton.

bosco

The powers that be can spin it all they want - it's still using taxpayer/public money to benefit the Plamondon brothers and the Randall family. It's corporate welfare. Just because they label the public money as something else, it's still taxpayers money and should not be spent just so the Plamondon brothers can build a hotel and conference center.

I expect we'll see the pro-corporate welfare legislators go into full spin on this one. I still wonder how much the Plamondons and the Randalls have donated to the politicians involved in the last few years?

DickD

bosco, it is more than just campaign funds, it is future support of the FNP to the politicians.

KellyAlzan

I intend to be a very proactive participant in opposing this conference center.

As a business owner who's bread and butter comes from the DC area - I must see either I-279 widened or a bypass built before all else

gary4books

I would expect a lot more visitors from DC if they have a place to stay downtown.

nbouqu1

and you would be wrong. There is ZERO demand for this. You don't build hotels as the thing that will attract tourists. You build hotels in response to there being more tourists than exisiting hotels can handle. Even the studies done by the City on this 5 years ago had occupancy rates mired in the 60% range. They need to be at least 70% to be sustainable, and high 80s before you look to massively expand capacity.

gary4books

Lots of places to stay, but how many are convenient to Carrol Creek and the rest?

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