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.”
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.”
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.