The parties connected to a hotel and conference center planned for downtown Frederick have a new strategy for state funding in the next Maryland General Assembly session.

The group has decided that tying a $14.8 million funding request to the Maryland Stadium Authority may make the request appealing enough for Gov. Larry Hogan to include in the state’s fiscal 2017 budget. That’s the thinking of city of Frederick officials, developer Plamondon Hospitality Partners and other stakeholders, outlined in a draft memorandum of understanding released Friday.

The Stadium Authority has “a very, very strong track record of working on these types of projects,” said Richard Griffin, the city’s economic development director. “They have a lot of credibility with the state Legislature.”

Among the many projects the public corporation has supported through its tax-exempt bonds is an $80 million hotel and conference center in North Bethesda funded through a public-private partnership.

The drafted agreement between the city and Plamondon also calls for a combination of public and private dollars to pay for the $82 million project — a hotel and conference center plus on-site parking and a sixth city parking deck.

The property is currently owned by a company formed by the Randall family. The family also owns the parent company of The Frederick News-Post.

Under the agreement as drafted, Plamondon would put up $44 million for the hotel. The conference center and public infrastructure — including parking — would come from a combination of city, county and state funding, as well as tax revenue generated by the project.

The mayor and Board of Aldermen must approve and sign the draft document to make it final. Even then, it’s a largely nonbinding document intended to establish the terms of the partnership between the two groups.

City elected officials will review and discuss, but not vote, on the agreement at a workshop meeting on Wednesday at 3 p.m.

Stepping up its game

The partners were hoping to secure half of the roughly $15 million state funding during this year’s General Assembly session, and the remaining $7.5 million in 2016. However, Hogan, a Republican who took office in January, didn’t acknowledge the $15 million request during this year’s session.

The original timeline called for construction beginning in 2016, with the hotel opening in early 2017. That schedule can continue only if the state Legislature approves the full $15 million in the 2016 session.

Using the Stadium Authority as the vehicle for the state funding request is one of several new developments that project partners say will make the request carry more weight this time.

The Stadium Authority also recently updated information from its 2010 feasibility study of the project. The July update shows 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 a 20-year period, The News-Post previously reported.

That information is what Delegate David Vogt said was missing from the request in the last session.

“I wanted something that showed the state’s going to get that investment back,” he said. “The last proposal didn’t have that.”

Vogt, along with the rest of the the Frederick County delegation, unanimously backed the funding request last session. At least four Republican members indicated in October they may not show similar support in the upcoming session, The News-Post previously reported.

In an interview Friday, Vogt said the new studies and the memorandum of understanding will influence his decision.

“I think it’s definitely a more fiscally responsible approach,” he said of the latest plan for the state funding request. “As long as it’s executed and managed property, I think we have a path to success with this.”

State Sen. Ron Young was already on board with the request, but he agreed that tying the funding to the Stadium Authority might make it easier for other government officials to support it.

Jan Hardesty, public information officer for the Stadium Authority, credited the entity’s “on-budget, on-time reputation” with the General Assembly to its leadership role in other significant infrastructure projects.

Putting the pieces together

Even with a stronger starting plan, the state funding component still is undecided until the next session. Hardesty said it would be too preliminary for Stadium Authority leaders to comment on their willingness to participate with the public funding of the project.

Other pieces of the funding puzzle are also pending.

The memorandum includes $1.25 million from the Maryland Department of Housing and Community Development’s Smart Impact Growth grant. The city received $350,000 through the grant in 2014. The economic development department applied for $1.7 million more in grant funding in September, but hasn’t heard back yet, Griffin said.

The funding breakdown also includes $4.3 million from revenue through the Frederick County hotel tax based on the assumption that the Frederick County Council will approve the long-discussed increase from 3 to 5 percent. Griffin said he discussed the tax increase for overnight visitors in the county with all council members, who would review the tax increase at a future workshop and public hearing.

Council President Bud Otis said Friday that nothing had been scheduled yet. He said he would support the hike of 2 percentage points only if the rest of the council did.

“If we’re going to do this, we have to do it all the way,” he said. “I would support it if everybody can get on board and behind it.”

Despite the various funding sources still unsecured, Griffin said he was optimistic everything would come together.

“The costs of doing an urban infrastructure hotel and conference center are high ... but the return on investment to the community is also high,” he said.

The feasibility study projected the project would create 280 direct and indirect jobs with an annual economic impact of $25 million. As part of the memorandum, the city of Frederick will also receive 10 percent of the annual net profits from the conference center, although Plamondon will maintain and operate it.

The project is also expected to generate $745,000 annually in city and county property taxes, part of which will go to the $5 million in tax-increment financing that county and city officials have agreed to contribute to the project.

Follow Nancy Lavin on Twitter: @Nancy_Lavin228.

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

(17) comments

bosco

So please enlighten me about why the taxpayers should pay for developing this property when Holiday Inn has similar plans for their property at FSK?

Oscarpot14

This is a piss poor excuse to utilize tax payers money. NO! NO! & NO!
Show up and be heard. Lest we forget-there are more pressing needs for the limited supply of tax payer funds. Please lets make this a bipartisan effort for defeat-we can NOT afford this.

elymus43

Hopefully Annapolis will not fall for this project. There is enough hotel and motel rooms in Frederick available now for conventions. No companies are going to come to Frederick with Washington, DC. this close.

Hammer

Boondoggle! Wait until we see the cost of a failed project that consumes valuable downtown real estate.

DickD

So, the FNP owns the property or at least the Randall's do, so now you think it is okay to give Plamondon tax money for their private profits. Doesn't surprise me, but I am against it, let Plamondon come up with their own money to make their profits.

Dwasserba

Most everyone dislikes this who pays city taxes and it doesn't matter. We could stand on train tracks and have more hope of a futile gesture of dissent making an impact. Clean it up, move on, get 'er done.

jerseygrl42

this is a terrible idea with plamondon putting up half the money and the taxpayers the rest...and oh yeah we will get back 10% of the conference center $$$ while paying for 100% of it...just another feeding at the public trough excursion....a bad deal for the taxpayers ! Greed does interesting things to some who seem to feel that if the money comes from the state , somehow its FREE....

DickD

[thumbup][thumbup][thumbup][thumbup] Yes, and Senator Young and Voght are for it, one Democrat and one Republican. Somehow they see a golden lining it for themselves.

KellyAlzan

I am very much against this idea of using tax payer dollars for this private venture.

Who at the State of Maryland can we write to opposing this idea?

Can someone start a Facbook page opposing this idea / proposal?

No Way. should our money be used. Not when our schools do not have adequate funding and not with I-270 being in dire need of widening or a new interstate cut around Buckeystown, Poolesville, Darnestown.

MCEDDE21

First of all, we need an honest and complete report on the financing. We need to hear an objective financial analysis, taking into account the PRESENT AND GROWING competition (which Ms. Krimm doesn't see, for some reason—FNP Oct. 11, 2015). I would suggest that the City fire Richard Griffin for incompetence.

Then, I’d like to hear more from the rose-tinted glasses set, like Ron Young; the weakening voices, like David Vogt; and, lastly, from the always impassive Mayor of Frederick who, as in any matter of consequence, remains silent.

MCEDDE21

The original cost of this project to the taxpayers was $10 Million. (FNP, “City Notes: How much tax revenue should help downtown hotel?”--August 17, 2014). Last month’s FNP editorial put the figure at $15M. ('Picking winners' & GOP hypocrisy”, October 16). Now, the figure is set at $38M; i.e., Plamondon pays $44M, making us almost equal partners—except for the fact that we’ll keep paying, while Plamondon reaps all the profits (if any).

FNP, May 28, 2015, “City, county officials hear next steps for downtown hotel and conference center project”: Cost of project estimated at $64M (plus an additional $15M for an additional parking garage if needed. (Of course, they knew it would be needed all along.) Seriously: Is somebody getting played, here?

And let’s not forget that there are two other, larger projects already in the works: Two hotels and a 35,000 sq ft conference center for the FSK Holiday Inn (all private financing); and a hotel/conference center for the Jefferson Tech Park project ($40M in public financing).

Presumably, it was Richard Griffin who made the astonishing claim that, “The feasibility study projected the project would create 280 direct and indirect jobs with an annual economic impact of $25 million.” He’s saying that the average salary for 280 service sector workers is $89,000? Rubbish!

There is one other thing that the downtown project needs: A Hollywood-style “Walk of Fame” out front, with big brass stars and the names of every local pol that supports this boondoggle. Also, maybe a bust of Richard Griffin in the lobby.

MCEDDE21

Here's the link to the Staff Report for Wednesday's BoA Workshop agenda: http://cityoffrederick.granicus.com/MetaViewer.php?view_id=12&event_id=1825&meta_id=62948
A few items of note:

1. The promised economic benefit of 280 jobs and $26M of economic "impact" (reported in the FNP) is actually this: "create 110 direct full-time jobs with an annual payroll of $2.9 million and additional 170 indirect jobs for a total of 280 jobs with a payroll $11.9 million." (Thus, the “economic impact” is not $26M but, rather $14.8M. The average wage for the 110 FTE jobs is roughly $26,000/yr—presumably to include “benefits”; while the average for the 170 “indirect” jobs is $70,000... This is a far cry from the $86,000/yr average, extrapolated from the $26M/280 jobs figure.)
2. Total public financing is projected at $38.5M with a total project cost of $82.5M.
3. The hotel will cost $27.4M, while the external improvements and parking facilities will cost $20.5M. The conference center will cost $4.5M. (The remaining $30M is taken up in land acquisition costs, “FF&E”—whatever that is--financing and attorney’s fees, etc.)
4. There is a potentially troublesome clause pertaining to the ground rent (Sec. 10, b): Currently, the City does not own the land, which is problem #1. Problem #2: It proposes to buy the land and lease it to Plamondon for $81,000/yr; allocating 40% of the land value to the hotel and 60% to the conference center.
Here’s the rub: This is described as a “triple net” lease, which normally means that the lessor (the City) is responsible for maintenance, property taxes, and insurance. (We would need to see the actual lease agreement to be sure but, it could mean that the City is on the hook for the entire complex and not simply the part which it owns; viz., the land.)
5. The City projects the cost of buying the land at $5.2M. (Leasing it for $81,000/yr. seems like quite a bargain.)
6. Plamondon retains the option of buying the land from the City at mutually agreed-upon terms. In light of the continuing string of financial losses from its land deals (like the airport park/Flying Dog Brewery debacle), the City has already proven itself a patsy. This, of course, raises the specter of another rip-off in the making.
7. The City may receive up to 10% of any profits.
8. The report is signed by Richard Griffin.


bosco

There should be no public financing of private projects and/or properties. If the state government is flush with cash enough that they can get into the hotel business - maybe it's time for some lower taxes!

KellyAlzan

I-270 needs Widened FIRSTsize>color>

KellyAlzan

Over my dead body.

I don't want one cent of my tax money spent on this stupid foolish idiotic idea (hotel conference center).

Our schools need money first.

I-270 needs money first.

We do not need a hotel conference center.

If the Plamondons don't have the money - then find a developer that does. Its that simple. Why would the city support a developer whom hasn't the financial ability to see it through?

The location is trafficly (yes, trafficly) a nightmare. Put the hotel conference center where the soon to be old Walmart is on Monocacy Blvd, or build it at the old Fredericktown Mall property, or build it at East Alco's land.

DickD

Can't put it on Monocacy Blvd., Fredericktown Mall or East Alcoa's land, the Randall's don't own that.

KellyAlzan

LOL

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